Nigeria’s operating environment harsh for airlines — Onyema, Air Peace boss

Mr. Allen Onyema is the Chairman and Chief Executive Officer of Air Peace Limited. In this interview, he says domestic airlines go bankrupt because most policies in the aviation industry are anti-development

You are neither a pilot nor have you worked in the aviation sector, what informed your choice of investment in the industry?

My primary constituency is the legal profession. Besides that, I am into so many other businesses. Aviation is not the last and definitely not the least of my interests.

I am neither a pilot nor an aircraft engineer but here I find myself today running a commercial airline business. The question is why aviation? I am into this because someone convinced me in 2007 that this could provide massive job opportunities for the teeming unemployed people in this country.

In 2003, I knelt down, cried to God and asked him to help me in my chosen endeavour and I would give back to the society. And one thing I don’t want to do is to make a vow to God and not carry it out — it is dangerous. I have no apologies to anybody for my belief in God. I told God that if he would protect me in all my assignments for my country, I would give him one per cent of my gross earnings and I will dedicate it to evangelism and helping the indigent.

I did so well by opening an account with Zenith Bank. I call it God’s account even though it is in my personal name. At the other end, I was giving handouts to people and many were coming to me, and some felt I didn’t know what I was doing with money. That was as far back as 2006. I would give money to some people; they would squander it and come back for more.

I started thinking of how to help people genuinely, effectively and efficiently without having this kind of problem. A friend suggested I go into aviation; that one Boeing 737 could give jobs to about 700 people directly and could create a whirlwind of opportunities for several other people.

The first time I had a stint in aviation was in 1998 when some people approached me and asked that we float a cargo airline. I brought my money, but they didn’t bring theirs, and the dream died. So, when someone mentioned it again in 2006, I decided to give it a shot. I started training myself. I was warned though, that it was a turbulent business without profit but it could create jobs. And that is true. Aviation business favours the government because investors pay a lot of taxes; it favours workers that make their livelihood from it. The banks also get returns from it but the owner of any airline does not smile to the bank. All over the world, aviation is a service-oriented industry that brings no profit to the owners. That is why I say people who own airlines should be respected and applauded; it is like making sacrifice for the development of the economy.

Looking back, would you have invested in something other than aviation?

With what is going on in the aviation industry, the temptation is to regret ever coming into it. But I don’t want to regret it. I give thanks and praises to God. It has been tough, but when I see the faces of the people who earn a living through Air Peace, I feel fulfilled.

A lot has been said about the challenges in the industry. What has been your personal experience?

The challenges are enormous and they have been there even before I came into the business. They have been there for over 50 years and they are still there. Personally, I feel sad because I know that things could be better. If other countries are getting it right, why not Nigeria?

There are so many challenges including multiple taxation, high cost of acquiring aviation fuel, high cost of procuring spare parts and bringing them into the country, and our Customs officers not understanding what it means to support airlines and what AOG (Aircraft on Ground) means.

The AOG means there is something wrong with an aircraft and all over the world, such aircraft is given express attention. If you send for the parts of an aircraft under AOG status, it is given express clearance because that aircraft must be made to fly. As long as it is on the ground, the owner loses money.

But in Nigeria, Customs can decide to keep it as long as they wish. Nigeria is the harshest operating environment for any airline, especially the domestic airlines. Besides these, we have poor airport infrastructure, poor understanding from the passengers, and the poor governance structure of some of the airlines could also be a challenge.

Another major problem is multiple designations being given to foreign airlines in Nigeria, while Nigerian airlines are not being encouraged at all.

You recently said that the industry loses $2bn annually importing expertise. Where do you think should be the starting point in addressing this problem?

There is a dearth of qualified aviation personnel in Nigeria, especially in aviation engineering. Nigerian pilots are some of the best worldwide; they can compete with any pilot from any part of the world. However, in engineering, it is not the same.

Nigerian aviation engineers have not been up to speed like our pilots. I don’t want to believe it is because we don’t have a national carrier. We have airlines that are operating.

How did our pilots get it right? The world is a global village; they should strive to learn so that we can stop importing engineering expertise.

It is painful that in Air Peace, we outsource our maintenance to a British firm and we are paying through our nose. I would love that money to be domiciled in Nigeria.

What we need to do is for the government and good spirited people to sponsor trainings because it is a lot of money and those being sponsored should be serious. In Air Peace, we have trained several pilots from across the country because here we don’t talk about tribe or religion. We have also trained engineers even though our fleet is being maintained by a foreign organisation. We stated in our contract that they must train Nigerians and we have over 40 of them being trained and are getting type-rated on our equipment.

Some stakeholders believe that airline operators are also problems to themselves as some of them do not have credible business plan for their products. What is your take on this?

Yes and no. I agree that just like in every other business, some people in the industry can float a business without really having a sound business plan. It is not only in Nigeria, companies go bankrupt all over the world. However, I agree that here in Nigeria, not necessarily in aviation, but let me limit it to the industry, where there may have been airline owners who were doing things that were absurd and bizarre; a situation where you keep passengers waiting for three hours because you want to travel as the owner and the aircraft must wait.

There could have been a situation where a Benin-bound flight is diverted to Abuja because the owner would like to go to Abuja first and he will even come into the aircraft and insult passengers.

Besides this, when some owners make money and they don’t even know that what they have may not be enough for maintenance, they spend out of it and run into problems. Some also borrow beyond limit and without any intention of paying back.

These are not the situation at all times. Sometimes, some armchair critics will say Nigerian airlines should merge and relinquish control but I believe some of them say it out of envy and it is unfortunate.

The question is why Nigeria has one of the highest rates of airline failure in the world. Recently, the Nigerian Civil Aviation Authority said over 150 airlines had operated in this country and we have only about six viable airlines remaining.

All the owners couldn’t have been bad or useless managers. The major problem with aviation in this country is government policies. Majority of the policies do not support the growth of the industry; that is the major problem. It is not about the owners.

You see people giving advice on what should or should not be done, such that some say airlines should merge; I am not merging with anyone.

What specific policies would you want to see implemented?

We lack policies and implementation too. There are some places the policies are in place but are not being implemented. In some places, there is total lack of it, like in aviation. In fact, the policies we have working now are anti-development of the industry. Multiple taxation will never allow airlines in this country to grow. Multiple designations given to foreign airlines are not only working against domestic operators, it is also working against the economy of this country.

Our foreign reserves are being depleted by the multiple designations being given to foreign airlines; so the industry will never grow. Those policies must be looked into. We must also make it compulsory that our airport infrastructure should be working.

How much would it cost to put airfield lighting in our airports? The money the Federal Airports Authority of Nigeria receives every day is enough to do a lot of things. In my terminal at Lagos airport, there is only one security scanner attending to over 1000 people daily. How much does it cost to procure one? Let them hand it over to Air Peace, I will buy two scanners and employ people to manage it. If FAAN allows it and the Customs allow it to be cleared on time, I give you the next one month and there will be two working scanners there.

These things cost nothing compared to what the airlines pay to aviation agencies. Policies should be pro-domestic airlines so that they can grow and help the economy to grow too. We are the people providing the jobs not the foreign airlines.

Do you share the view that domestic airlines lack capacity to handle multiple routes regionally and internationally?

How can anyone say that? The Nigerian domestic scene now is over populated with aircraft. For now, we are suffering from ‘over capacity’ on the domestic routes. Air Peace has acquired about 22 aircraft and only two are for international operations; the rest are for domestic operations. I don’t know what number of fleet that Med-View has but I know that Arik has about 10 now.

Where do we want to put these planes? We have only four viable airports in this country which are Abuja, Lagos, Kano and Port Harcourt. The most viable are only Abuja, Port Harcourt and Lagos. If you put more than one airline on the other routes, they struggle; the traffic is low.

I put two to three flights to Owerri daily; Dana goes to Owerri daily; Arik does too, but it is a huge struggle when you consider the number of passengers each airline gets.

On the regional side, I do not agree that we do not have capacity to cover the 16 ECOWAS countries. We have enough equipment; the problem is that these African countries are also doing everything possible to make sure that no Nigerian airline succeeds because they are protecting their airlines. There is a particular airline that is being celebrated now even by our own system; they are also part of the problem.

They find it difficult allowing us to go into these Africa countries. We have the capacity but what we lack is support and the enabling environment to operate. If you talk about international routes, I agree that for now, we cannot go to all the countries of the world but there are ways of doing that.

Domestic operators should be encouraged to grow or they will continue to be in the doldrums. This current government has given me about six designations such as London, China, South Africa, India, United Arab Emirates and the United States of America but the question is: has anyone bothered to find out if these countries have allowed us to come in yet?

Nigeria is a huge market for foreign airlines and they will do everything possible to make sure that no single Nigerian airline succeeds because the moment that happens, there will be problem for them. It is international aeropolitics and we are playing into their hands. They protect their own airlines and we are not being protected. For instance, why should Ethiopian Airlines have five destinations in Nigeria without any Nigerian airline flying into their country?

They should be limited to one entry and if they want more, let them go through a Nigerian carrier to distribute for them, so the money remains in our country. America is the home of aviation worldwide, yet with its robust economy, it still controls who comes into its airspace. Recently, all the gulf airlines’ entries were cut down to protect American airlines, but Nigeria with its weak economy still allows other countries to deplete what it has left in its foreign reserves.

That is why I am crying out. I don’t like the way we are celebrating Ethiopian Airlines in this country; it is a shame. Let the government encourage and support domestic airlines to fly into international routes and foreign airlines will fail because they depend on Nigeria’s traffic for revenue. I am a proud Nigerian, so when I see things I don’t like, I say them.

Any country in Africa that gives our airlines problems should also be given problems by the Nigerian government. The other day one of our sister airlines was stopped from entering Europe; I see those things as politics. I am not defending whatever they might have done but whatever it was, others are doing it too.

Recently, someone talked about a national carrier and suggested that international destinations should be reserved for the national carrier that is being planned. I find it bizarre. The gullible in the society can take it seriously.

Government should be wary of certain advice that hurt the industry. We don’t need to kill domestic airlines to pave way for a national carrier. Even advanced countries only have flag carriers; the idea of a national carrier is moribund. What Nigeria needs is a maintenance facility. Air Peace alone has taken out about $60m on maintenance alone in the last two years; imagine what that could do for the country.

What we need is a maintenance facility not a national carrier. The government should support those doing business in the name of the country. This government is interested in making the industry to succeed because they have given us destinations to operate, but they should also stop the unrestrained entry of foreign airlines. They should be made to codeshare with domestic airlines.

Despite all the challenges we talked about, many more people are still interested in investing in airlines.  What is the attraction?

I don’t know what it is for them. Mine was to create jobs and I have proved that.  Some may go into it because of the crowd they see at the airports, but they forget that Nigerians pay the cheapest fare worldwide and it is only through fares that airlines make money. Even when you carry a full load, you don’t make one per cent gain in Nigeria — you only count loses.

All over the world, the gains from commercial aviation is marginal. Nobody gains anything here; it only gives you name. And if you are talking about investing, you must think about safety, which means you must be sure of who is in your cockpit. You must take into consideration that  pilots earn a lot. A lot of people come in and close down within months.

Before I came in, I was told that if I manage it well my business will be intact. I was told to forget profit, that profit starts coming in after seven to 10 years if well managed, but it will also be marginal — about two to three per cent. We are succeeding because we care about humanity and not tribe or tongue.

What are your long-term plans? Are you looking at listing on the Nigerian Stock Exchange in the next few years?

In the next few years, five years to start with, I want to see an Air Peace that has at least 25 wide body airplanes for international flights. We want to use Air Peace to attract tourism into this country.

Nigerians should start paying commensurate fares for their flights. It pains me that a Nigerian who does six hours from Lagos to London pays higher than a South African who does nine hours from Johannesburg to London.

Nigerians are being ripped off. It pains me that foreigners will tell us that we are unsafe and we are made to pay more on insurance. We pay the highest premium on insurance. What I pay as premium on one aircraft is what the legacy airlines of this world in America and Britain pay on one aircraft.

You can see why the Nigerian domestic airline is bedevilled with a lot of problems; insurance is one of them.  We have a lot of problems and policies need to be changed for us to get there. All we need is a fair playing ground. We want to be supported; let us compete evenly.

Air Peace is not going to merge with anybody. When we grow to a certain extent, we will invite the public to come in. By then, we would have laid the foundation for that. – Punch.

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