Global Business Drive latest News/ E-Commerce
Story by Pearl Ngwama
As stakeholders in the Nigerian aviation industry continue to seek solution to the myriad of problems facing domestic airlines, the Managing Director/CEO, Top Brass Aviation, Capt. Rowland Iyayi, has offered recipe to alleviate the challenges and sustain the carriers in business. Iyayi who spoke to Global Business Drive in an exclusive interview in Lagos, Nigeria lamented that if the 2005 recommendations of the Paul Dike Committee on aviation of which he was a member were implemented the industry would have grown and stabilized rather the government put them in a white paper that was gazetted and left on the shelve.
He noted that Nigerian airlines are plagued with multifarious problems, some of which are multiple taxation, multiple entries granted to foreign airlines and policies. He stressed that the Nigeria Civil Aviation Authority (NCAA) as the regulator is meant to address most of these problems and not regulate airlines out of business. He emphasized that airlines in Nigeria do not compete on fares but on capacity; “that is why almost every airline is focused on Abuja, Lagos and Port Harcourt. So if you identify that as a regulatory agency what have you done to address the problem? Nothing,” he regretted. Iyayi cited the example of Ghana saying that the Director General of Ghana Civil Aviation Authority refused giving Top Brass Aviation license for a schedule service but a charter license to avoid creating competition for Ghana airlines. “I cite the example of Ghana; I went to Ghana to pick up a license for Top Brass Ghana and the Director General of the Civil Aviation Authority (CAA) there told me, look, I can’t give you a schedule service license, I can only give you a charter license. He said no; he can’t, that they had only three schedule airline operators and they will keep running those ones until such a time they see the market has grown enough or one of them has failed. He said that if he introduces more competition he will kill some of the airlines, so you find that they have regulated that part of their business though it is deregulated.
“Reason is that they want to manage growth and sustain it and I came here in 2005 in the Paul Dike committee and in my own subcommittee of Finance we came up with a lot of proposals which over the years I had looked at as things to put in place to help the industry grow in the same direction that overall we’ll see appreciable growth,” he explained.
One of the proposals which Iyayi maintains is still relevant to grow the industry among others is that airlines should be licensed in tiers because all the airlines may not want to do the same thing. He averred that there will be a need to categorise airlines into three different tiers – tier 1, tier 2 and tier 3. “For the tier 1 license you can say airlines operating aircraft with a maximum number of seats of say 20 will get that license ; separate and distinct from airlines in tier two that will operate aircraft that will sit up to 100 passengers and then tier three can operate up to A380,” he said.
He explained that by this the market has been segregated, airlines in the lower areas with 10 seaters to 20 seaters aircraft cannot be competing with B737s in tier three; rather those airlines will be focusing on the unviable airports, the airfields that you don’t have any airline going to. “If I have 10 seats and I can fly between Ibadan and Akure and I carry three people and I don’t need to break even because of the economics of the type of aircraft I’m operating and right now because there is no service people don’t know that it is possible but the day you introduce a service all of a sudden you’ll find there is a demand. So I said to them those are the areas that policies need to address,” he explained further.
Iyayi urged the government not to relent in giving certain operators who have gone into some niche market pioneer status because what matters is the operator being willing to take the risk to go into an undeveloped route and the NCAA expressing satisfaction that the operator has the capacity to manage that route. However, he said then the NCAA should give the operator about three years to operate alone on that route to avoid competition and this is to allow the operator break even on its investment “because you’re going into a route that you have nobody you’re incurring cost for the development. So that pioneer status helps you as the airline breaking into that market to ensure that you recover your developmental cost and then once you develop, once your pioneer status elapses and other airlines decide to join you, then of course it’s up to you to now know how to manage the competition. But it gives the consumers even more benefits, you have already developed the route; people now know that it is possible to provide service along those routes and even more people are coming in and I said it will also create jobs that we don’t have in this industry,” he declared.
According to him the fresh pilots who have not worked at all need to acquire the experience to sustain the industry in future and the option of some airlines going into unviable routes can create jobs for them. “Right now we have about 400 pilots, fresh from school, no experience, and no jobs; in 10 years these are the same pilots we’ll be looking to sustain or hold this industry to grow if we’re not going to import experts. If they don’t have experience today when will they have it and where will they get it.
“So we have these multifarious problems plaguing this industry and you see when you fundamentally address the flaw that I see it will take care of some of the other issues,” he stated.
