Fadugba’s intervention has led to the release of several aircraft operated by African airlines seized by lessors in Europe, America and other parts of the world due to inability to honour financial obligations. Aircraft manufacturers, engine makers, lessors and MRO centre operators across the world fall over themselves to be part of his annual MRO conference which he rotates from one African country to another.
He does this to promote the level of awareness among airline operators in Africa about current trends in global aviation. On the sideline of the just-concluded MRO conference in Addis Ababa, Fadugba spoke on a variety of issues in world aviation, especially as they affect Africa and Nigeria. To him, no private airline has the capacity to be national carrier in Nigeria. Excerpts:
Will the face-off between the NCAA DG and the National Assembly not send wrong signals to the international community?
It will be very dangerous for Nigeria to politicise the aviation industry. Now I am not privy to all of the information that the Senate may have. However, I want to say that I have utmost confidence in Dr. Harold Demuren. What he has done has been to transform the industry on the regulatory side and to transform the perception of Nigerians abroad. United States Federal Aviation Administration, International Civil Aviation Organisation, International Air Transport Association have all paid tributes to him for what he has done to transform aviation in Nigeria.
And, therefore, I believe it will be wrong now that we have the Dana Air crash, very unfortunate and tragic, to call for the head of Dr. Demuren. But I want to commend the Senate for the interest they have expressed in the aviation sector because it is a long time since we had a Senate with a lot of interest in aviation; but let us not politicise what we have, let us not call for heads to roll unnecessarily. Let us not push Dr. Demuren out of office unnecessarily. When his time has come under the rules, he goes and we respect him for what he has achieved.
Let us not send him packing for any alleged irregularity that has not been proved. What does this do to Nigeria to push out the most successful person, internationally recognised in Nigerian aviation industry’s history? I have a lot of respect for Dr. Demuren; I have a lot of respect for the Senate, but what I am saying is let us calm outbursts down, let us look at the aviation sector objectively, let us not rush to judgement, let us not unnecessarily tarnish someone’s image who is well respected globally. So I don’t support any call that he should be removed from office due to the Dana accident.
Why has the aviation industry in Africa in general been backward?
The most pressing issue facing the African aviation industry today is safety. We lag far behind the rest of the world in aviation safety; efforts are being made by African governments and aviation bodies to enhance safety on the African continent, but the fact is that we still lag far behind. I am pleased, however, that following the conference in Abuja recently, African countries, including the African Union, committed themselves to improving aviation safety.
That is the first priority for Africa. People in Africa must feel that they are being flown from one point to another safely, efficiently, reliably and affordably. I believe that steps are on the way to enhance safety in Africa. Secondly, the issue we face in Africa is lack of cooperation among African airline operators. If you look around the continent, you have more than two big airlines: Ethiopian Airlines, South African Airways, Egypt Air, Kenya Airways, Royal Air Maroc ,etc.
The remaining ones are small, weak, under capitalised, lack the depth of management and capability to the drive the growth of the airlines they are running. What we are saying is that for African airlines to ensure that they improve their market share in Africa, at least for now, they have to come together, work together, cooperate, attain economies of scale; which means they need a critical mass of size, fleet, traffic, etc to be able to compete effectively with the Middle East and European airlines that are gaining market share in Africa.
Seventy-eight per cent of long haul traffic out of Africa is carried by non-African airlines. That is not acceptable, but that is what the situation is today. If you add to that fact, foreign airlines are now coming into Africa, to operate domestically and regionally; an example is Fastjet Airlines backed by Easyjet in Europe. What we are facing is that African airlines are facing huge competition on the long haul, and now they are going to face competition internally in Africa. And
you can be sure that the passenger in America or Europe, he wants to book on an airline in Africa from point A to B, from Lagos to Johannesburg for instance, if he sees a non-African owned airline in Africa vis-a-vis an Africa airline, I am sure because of the safety record and other factors, they will patronise the non-African airlines. That does not mean I am against Fastjet or other airlines. What I am saying is that the African airlines have another chance now, perhaps the last chance, to work together or, one by one, they will fall by the way side.
How do you assess the airline industry in Africa?
Over 20 years ago, we had Nigeria Airways, Ghana Airways, Zambia Airways, Air Afrique, Air Zaire, etc. Where are they today? They have all gone. They are now history. We do not want to see more airline casualties in Africa. If we take Nigeria as an example, if you look at airline casualties in Nigeria, it is probably one of the highest in Africa. Now, everywhere I go in the world, people say,’ Nick, Nigeria is a strong powerful nation, a rich nation by Africa standard, a well educated nation by Africa and even global standard’; Oxford, Harvard Cambridge, MIT; there are more Nigerians than probably any other African country. We have the market, the intelligence, and the resources and yet we have not been able to optimise the aviation and airline industry in Nigeria.
Now, you don’t have to be a rocket scientist to find out what is the problem in Nigeria. And the problem is when you compare with Ethiopia Airlines, you find out 100 per cent commitment to the country first and yourself second. So, in Ethiopian Airlines, when they set out to run an airline, they are not thinking of personal gain; they are thinking of driving the country forward. Every Ethiopian talks with pride and passion about how to drive the airline. Even those who have retired are still passionate and are still backing the system. And Nigerians can learn from this because we cannot afford to allow the aviation industry in Nigeria to continue to remain backward because air transport is too vital for economic development.
We have a large country skies wise; and we have roads, rivers and railways that are not really meeting the needs of the people; and, therefore, air transport is very crucial and critical to the economic development of the Nigerian state. And I want to implore the Nigerian government to please focus more efforts on the aviation development. I believe the government is very committed to the aviation development. I have met the Minister of Aviation and I think she is truly committed and I want to commend her for the airport development projects. I have inspected the airports in Lagos and Abuja. They have material development. However, I will urge the Minister and her team to visit South Africa, Egypt, Ethiopia, Morocco, just to look at the infrastructure; they far exceed in terms of quality of what we have in Nigeria and I can’t understand it. So what the Minister is doing is a wonderful job, but we still have a long way to go.
In summary, what must the government do to improve the sector ?
One, no political interference in the NCAA. We must not turn it back to the old days. So we must have an independent NCAA. Two, the government must raise the bar in terms of the financial capacity of airlines in Nigeria. They must have the capacity to run sound, safe and profitable airlines. Three, government must ensure sound aviation infrastructure in Nigeria, probably through public private partnership because I don’t think government has the resources to develop the airports on its own.
Four, we must put a greater emphasis on aviation training. Five, we must place emphasis on maintenance, repairs and overhaul with the facility preferably in Lagos where the business is so that we can drive the efficiency of aircraft operations. When you look at Nigeria, you have more and more modern aircraft coming, aircraft that can operate round the clock; and yet due to lack of basic things like airport lighting, the aircraft cannot operate efficiently. Who do you blame? You can’t blame the airlines. We must all work together; government, regulators, service providers, airlines, to move aviation forward.
Why did the plan to form another national carrier, Virgin Nigeria, after the demise of the Nigerian Airways, fail?
When Virgin Nigeria was formed, I was not in favour of that particular business plan because I believe it was not advantageous to Nigeria. Here we are, we sold 49 per cent of the national carrier for about $24.5m. If I put a wide-bodied aircraft on the Lagos-London route, I can make more than that in a few months, and yet we gave half of the national carrier to a foreign airline (Virgin Atlantic) that was already enjoying the market in Nigeria. And we gave them five of the most lucrative routes for seven years as part of the package. I actually wrote to President Olusegun Obasanjo at that time to express my concern that the deal was not in the interest of Nigeria. The reality was that I thought that the airline would not survive, and it did not.
If you take a very close look at Nigerian airlines, you will discover that virtually none of them has good corporate governance. What would you advise on this?
Most of the airlines in Nigeria are privately run. It is a family business, it is a private business. So they have their own corporate governance which we cannot question. If we are talking of the government airline, then we can talk of corporate governance. But the way you run your own business, whether you succeed or fail, is almost your own business. But because Nigerian airlines are flying the travelling public, I believe we need to say something. It is a tough job to run an airline. I respect those running airlines in Nigeria.
The margin is minimum; so they deserve commendation for even trying to run an airline. But any airline in Nigeria which is under-capitalised, under-resourced in terms of management capability; lacks training, lacks technical resources or commitment or plan should be grounded immediately. I believe the Nigerian Civil Aviation Authority should rigorously enforce financial rules and regulations for airlines in Nigeria. We have heard about financially distressed airlines (not in Nigeria yet) which cut down on training, maintenance, etc.
We do not want this to occur in Nigeria. And, therefore, I strongly advise the NCAA to audit airlines in Nigeria on monthly basis. In the United Kingdom, the UKCAA actually publishes the financial situation of airlines. You have to report, whether monthly or quarterly, to the CAA. Whether it is traffic statistics or financial aspect, you have to do this. We should do the same in Nigeria and Africa. Every airline in Nigeria must be IOSA certified. I believe in Nigeria, what we need is not many airlines but just a few good airlines; strong airlines.
Why are Nigerian airlines not merging?
This is not a problem peculiar to Nigeria. It is an African problem. We had the Organisation of African Unity; what was it all about? Unity. Now has the African Union-unity? We talk widely and freely about cooperation and coming together and meanwhile we are not doing a lot. If you look at the European Union, you discovered that the OAU and AU had been there. But when you look at Europe, it is almost like a single market, aviation wise. Meanwhile, Africa is just like 54 countries, with weak economies, so many of them, small airline industry; they don’t have the critical mass; they don’t benefit from economy of scale. So when you see it, it is an African- wide problem and then we zero in on Nigeria. My experience with Nigerian airlines is that they are reluctant to work together,and yet, individually, they cannot succeed to the level that we require. And, therefore, the Nigerian government has to encourage the airlines to work together.
Can the Nigerian government do what was done in the banking sector consolidation by raising the benchmark?
Yes. I believe that is it. We have to raise the financial bar in Nigeria such that anybody getting into the airline business must have the financial resources; training; etc with a minimum fleet of XY, aircraft size, aircraft age, technical agreement, etc. All these should be overseen by the NCAA. We need tougher regulation of the airline industry in Nigeria. We need to raise the bar. Gone are the days when you make some money in shipping or oil and gas and then you want to float an airline. No! We must move forward. If you get into the airline industry, you must do it with the full commitment and energy needed to do properly. We do not need any fly-by-night airline. Those days must go. I agree that the bar must be raised. If we can do it in the banking industry, why can’t we make it in the airline industry?
Nigerian is planning to establish a private-sector driven national carrier. Do you think this will help Nigeria own a formidable carrier?
I am concerned about whether the private sector in Nigeria has the capability to provide Nigeria with the national carrier that we need; because Nigeria Airways unfortunately folded; it was officially shut down by government in 2004, although I disagreed with government on that politely. I disagreed because I was a witness to the turnaround of Kenya Airways way back in the 90s, having visited the airline in the 80s. And I saw an airline that was in a worst shape than the Nigeria Airways. And yet the government of Kenya committed the resources, commitment and the determination to turna round the national carrier, they recognised the importance of a national carrier for national development and, therefore, they did not take the easy option of closing it down, they took the tough option of turning it around and I believe this is what Nigeria should have done with Nigeria Airways.
And I was very unhappy because Nigeria Airways had all the requisite in a way; lacked cash of course but had the history which we could have built on as an heritage. Since Nigeria Airways was folded, we have not seen emphasis on training. Of course every airline in Nigeria is training but not with the emphasis of Nigeria Airways. Every individual airline now is competing for its benefits, but not necessarily for the benefit of the country. I don’t question the integrity of the airlines in Nigeria, I question whether they have the capacity to build an airline that Nigeria needs; that is why I say government should support a private-public partnership in which government cooperates with the private sector to form a national airline that we can be proud of and which will perform the functions that are necessary of a national airline.
For example, I believe that many airlines in Nigeria lack the financial means, fleet, training and resources to really get up to the level required to compete with the international airlines. It will take them many many years. The government is talking about a national carrier. I am not privy to what the government is discussing internally, but I have not seen an open discussion or a debate, I have not seen a blueprint yet. We are all waiting anxiously to see the blueprint. But I will like to implore the Federal Government of Nigeria to ensure that Nigeria has an airline that we can all be proud of, and that drives economic development, whether we bring all the existing or some of the existing airlines together.
Don’t forget that Asset Management Company of Nigeria, by default, virtually owns most airlines in Nigeria. I believe personally that AMCON should convert all the debts to equity which they are already doing with Aero for example; in which way AMCON then becomes the shareholder (de-facto) of the Nigerian airline industry. And then you can merge the airlines, you can maximise the resources they have and, of course, being government driven, you can reach where we want to be with a strong airline. But I am not sure whether AMCON has really reached that point, but, right now, I know AMCON plays a decisive role in the aviation industry and I know Mr. Chike-Obi is really committed to rescuing the aviation industry in Nigeria.
However, we have seen an intervention fund that was misused. The good intentions of the government with intervention fund don’t materialise. Nobody knows where the money is today or whether it will be repaid. That is not good for Nigeria.
The intervention fund failed to achieve its objective. The government we understand is making plans for the purchase of 30 aircraft for private airlines. This I believe may be well intentioned but needs different packaging, a re-thought. I want to assure the government and the Minister that I am fully behind what is being done but it should be tailored to ensure that it succeeds.