Bernard Bankole is the President of the National Association of Nigeria Travel Agencies. In this interview with ABIOLA ODUTOLA, he laments the hard time Nigeria’s local airlines are going through. He specifically berates a recent review of the exchange rate and the plan to increase tax on air travel. Excerpts:
How would you assess air travel in Nigeria?
Air travel in Nigeria ought to have overgrown this state, as it is supposed to grow along with the population of the country. Nigerian government has a role to grow the industry. Recently, we were happy when it was possible to make a triangular trip in a day (Abuja from Lagos, Abuja to Port Harcourt and back to Lagos). But what we have today is the opposite, because you are not sure if you will make it to Abuja and from Abuja to Port Harcourt, owing to one operational reason or the other, that the airlines always come up with.
But a lot of critics argue that the problem of the sub-sector is technical. What do you think?
The issue is not technical, but having to do with the economic implication for airlines servicing different routes in the face of high taxation. Today, the cost that government levies on those tickets is enormous to The Point that the local operators can barely survive. There is no airline that has spent more than 40 years in operation, and that is a shame. Nigeria has produced a lot of domestic carriers and within a short period, they die naturally.
Are you saying part of the problem besetting the airlines is not caused by mismanagement on the part of operators?
Not quite. The economic environment matters a great deal. Government policies matter a great deal for the survival of private businesses. Government needs to engage stakeholders at a meeting to really understand how to move this industry forward. They need to understand the challenges operators are facing and support them to stay in business by ensuring that right policies are put in place. There is no time you will be at the Abuja airport that power outage will not occur at least three or four times in two hours. We use airports all around the world, and hardly do they have power failure. Why is ours different?
Is the current administration doing anything differently to restore confidence in the sector?
I think the current government has the political will, financial power and the commitment of the presidency to transform the sector, if the administrators do not have ulterior motives. What we are asking for is not farfetched. They can be done if they (administrators) are willing and have full commitment to getting things done. After all, the Abuja runway was promised and equally delivered within the timeline. What makes it different from others?
How would you assess the regulation of Federal Airports Authority of Nigeria and other agencies?
Has anyone been able to account for how much FAAN collects on Passenger Service Charge?
How much?
For every international traveller, $50 (N15,300) is charged, while their local counterparts are charged $10 (N3,060) each. What are we doing with the money? We are not going to just sit back and allow the government insult our intelligence. If these government agencies are not living up to expectation, then let us change the personnel. And if they have a problem, let us bring in other experts to manage them.
The cost of international air travels has gone up recently. What is the feedback you get from passengers?
The truth is that customers are not finding it easy because it means that their cost of operations too has to go up. Their staff members need to move if the company must generate new businesses. But mind you, moving the Rate of Exchange from N306 to N359.5/dollar is not the doing of the International Air Transport Association. The operating airlines, which IATA represents as their global clearing house, need to move to a reasonable rate. The only way they can get Foreign Exchange is to go for export proceeds’ rate and that is N359.5 to a dollar.
What do you want the government to do in order to address this?
Government should start making some provisions that will enable the airlines to have access to official rates, which is still at N306.
But that would be for the international airlines alone …
The local airlines are also affected because everything about airlines is denominated in forex. So, the sector needs some level of intervention. Government needs to consider the sector as a critical vehicle to move the economy forward, so officials don’t continue to see it as a leisure vehicle that it is not. Aviation is one sector that makes it faster and simpler to achieve economic gains. The moment they realise this, they will start seeing its impact on the economy.
Foreigners are not going to trek to your country; neither would they come by road or by ship. They have to come by air transport, looking out for infrastructure on ground. It is only in Nigeria and nowhere else in the world that the queue of returning citizens is far longer than that of visitors. Everywhere in the world, the reverse is the case. These are fundamentals that are wrong and should be addressed.
Government plans to increase the tax on business and first class travel tickets. Will it work and what is the implication?
This is what happens to government that does not go into full consultation with the private sector before making economic policies. You are not making these policies for animals. There are pressure groups like ours that should have been engaged on what they are planning and we would brainstorm together to help them take reasonable decision on how to move the industry forward, instead of backward. Such idea depicts lack of understanding.
Taxes in Nigeria are some of the highest in the world. Let us start to do the tax breakdown, then you will understand that the taxes are high. People will tell you that taxes in other developing countries are also high. But if they are high, you are guaranteed to get value for your money. There are services that come with the fees. Here, you pay but you hardly get the services to accompany the payment you have made. We would not sit back and allow some people to deceive the masses.
Taxes in Nigeria are some of the highest in the world…People will tell you that taxes in other developing countries are also high. But if they are high, you are guaranteed to get value for your money. There are services that come with the fees
Some operators argue that some foreign airlines exploit the local carriers. Is this true?
Foreign airlines are not exploiting us. And if for any reason they are, then the government created the windows to be exploited. We have Nigerian Civil Aviation Authority that is responsible for air traffic and pricing regulations. There is a department in NCAA that mandates all airlines to file their tariffs. So, every airline files their tariff and if there is anything untoward, NCAA has the power to call them to order. So, British Airways, Air France and others will not just wake up and say this is what I’m going to sell in Nigeria. They have to file it in, which tells us that they are always in the picture. If the authorities feel that we are being exploited, then they created the window for it. The fault is not that of foreign airlines.
So, are local carriers disadvantaged for their inability to do international operations successfully?
The problem is two-fold. We have to learn to separate management from ownership of an airline. It is always a bone of contention when it comes to Nigerian businesses. When you do that, then you will see the business thrive very well. That is one of the problems our airlines are
facing.
The second is an indirectly inflicted pain coming from the government. If government can give them some soft landing in some areas, then it will augur well. There is nothing wrong in them paying less for parking fees and tariffs. What do they enjoy as an indigenous company? They need this support.
That gives them a competitive edge and comparative advantage, being a local carrier, over international carrier. But they are lacking in this
area.
Don’t you think there is a problem with foreign airlines having multiple destination in Nigeria?
I don’t see a problem with that. We just need to create a level playing ground. They need to learn the way other countries are doing it. Ethiopian Airlines opened up its airspace and the airline and Ethiopia are doing well in the aviation world. Didn’t South Africa also open up its airspace? For your information, British Airways has a regional hub in South Africa. We need to create a competitive market. The only way to support yours is to give them an edge for comparative advantage.
