INTERVIEW – Allen Onyema, CEO Air Peace: ‘Nigerian airlines still in extremely complex situation, yet very strong’

Mr Allen Onyema, is the chairman/CEO of Air Peace, Nigeria’s largest airline, and also the vice-president of the Airline Operators of Nigeria (AON). In this interview, he says high taxation is still a huge challenge. It has to be reduced, especially the cost on aviation fuel. Accessing forex for the operations of airlines, he says is one of the crisis most challenging.

He points out that the cost of running arline business is high but he hopes it will change. He also speaks about other couple of elements that are both challenges and opportunities.

Excerpt:

Air Peace in the last eight years, what has been the growth trajectory?

We started in 2014 with seven aircraft and today we can boast of about 38 planes plus over 25 on order. We are keeping to our business plan right from day one. The growth of Air Peace has been like this because it is not for profit making. It is not for self-enrichment that I floated it. I decided to do that in order to give back to society.

My happiness is seeing thousands of indigents having their means of livelihood through Air Peace. That is why we don’t take money from Air Peace to bring to other businesses, instead, we bring money from other businesses to Air Peace to continue growing our capacity.

Nigerian airlines can compete with any other airline in this world, it is just that we need that support. Air Peace is pro-Nigeria and we don’t owe anybody an apology for being pro-Nigeria.

What has been the role of the regulatory authority, NCAA, in the oversight of airlines?

I have to give NCAA kudos. The NCAA has done very well. The kind of oversight they bring to bear on us is very appropriate and they can only continue to ensure and assure safety, we have no problem with that. What they do to Nigerian airlines, the other CAAs don’t do half of it.

They are also performing under circumstances that other CAAs might not be able to cope with. I am an advocate of taking CAA out of the civil service salary structure. The wages being paid NCAA inspectors are very poor. NCAA as a matter of urgency and safety concern, their wage structure should be removed from that of civil service with immediate effect. The NCAA is losing staff, they cannot compete with the airlines in getting the right workforce.

What is the state of the airline industry today with the multitude of challenges the operators have pointed out in recent times? Have the issues you raised been addressed?

If you are talking about foreign exchange (forex), those challenges are still there. It is very difficult to procure forex and when you see it, it comes at a high cost and our ticket fare, the only source of revenue for the airlines, is in naira and remember all our operations are dollar-denominated except the catering that you bring onboard the aircraft. So it is a very huge challenge for the airlines in the country.

Then you talk about aviation fuel. When aviation fuel was N400 per litre, we cried out. We never knew the thing could go to over N900 one day. So you can imagine the unit cost per seat on the aircraft when you look at the kind of aircraft Nigerian airlines use, it is about N67,000 to N68,000 per unit cost, that is we must not charge below that amount and anything below that amount, you run into a problem. But you see airlines charging N50,000, N40,000 just to have some revenue but at the end of the day that is not sustainable at all. Something may give way. But it is happening.

On aviation fuel, we have seen several interventions from the federal government

Yes, President Muhammadu Buhari came to our rescue by intervening in the aviation fuel crisis; making available a certain quantity of fuel to us, not for free but at a controlled price instead of the market price. Though it is not steady and not enough, but it is very helpful.

The permanent solution to the fuel issue is for Nigeria to refine its own aviation fuel. As long as we continue to import aviation fuel, we will continue to have this problem. We have crude oil, I don’t see the reason why Nigeria should be importing the by-products of crude oil.

To what extent has the forex issue affected the operations of airlines, especially in terms of carrying out your scheduled maintenance?

You don’t know what we go through. Many of the foreign maintenance organisations sometimes threaten to sell off your planes, sell off your engines because they don’t believe sometimes, we have the naira but we don’t have the dollars. You don’t just go to the market and buy any dollar. If you buy cash, you may not be able to transfer it. Many of us don’t want to go through third parties.

Because of this scarcity of foreign exchange, Nigerian Airlines have been exposed so dangerously to outsiders wanting to cash in, into the unfortunate situation to either dupe us or put us in trouble because some would come and tell you, ‘I have $2m in Hong Kong’, they would give you a good rate and tell us who you want us to transfer to.

We don’t want to be involved in that kind of thing because we don’t know the sources of the funds. You don’t know if they are products of corruption, drug business or terrorism. So it is very difficult.

So we all wait until we get legitimate funds through the Central Bank or through our banks and they don’t come that easy. And it is not the fault of CBN, the Central Bank only disburses what it has; it has to do with our earning capacity. If we don’t have it, we don’t have it and everybody has to understand.

It has been said that Nigerian airlines are not capable of competing with big international airlines. What would you say about this?

Nigerian airlines are very strong. Nigerian airlines have capacity. Nigerian airlines do what foreign airlines and others cannot do. Given the circumstances that we find ourselves in. If you bring the foreign airlines to come and operate in this country as indigenous airlines, with all their money but are not going to be given any preferential treatment, so they operate under the same circumstances as we operate, operate under the circumstance where in the morning you don’t know if you have fuel to fuel your aircraft. You have a 6:30 flight and you are still looking for fuel at 8 o’clock and the vendors have said there is scarcity of aviation fuel. Even when you buy, the price you buy in the morning may not be the same three hours later.

Let the foreign airlines come and face the circumstances we face in this country without being given preferential treatment. Let them come where they said your aircraft would be inspected and you have to wait. Let them come and stay in a terminal where over 2000 people would pass through one screening machine. Let them come and go to Abuja airport where 10 airlines are scrambling for a small space. Let them come and find themselves in that crowd where there are no conveyor belts and they have to carry their loads on their heads. Let them come and perform, let us see.

Foreign airlines will never last more than 72 hours before they walk away. So let us give credit to the Nigerian airlines, they are doing patriotic jobs for the country.

The truth is that Nigerian airlines have been so demonised by even people who are supposed to protect them and of course the flying public. If they knew the truth, they would give kudos to these airlines.

You recently stated that 95 per cent of the causes of delays are not within the purview of airlines….

Yes of course I still say it and I stand by it. AON also stands by it. 95 per cent of the delays Nigerians experience flying domestic operations are caused by things beyond their control.

Let’s start with when you have your aircraft on the ground and you need to get a spare part, to clear with the customs, it might take you days, weeks to get it out. There is another one called an end-user certificate. My aircraft was on the ground sometime for three months to get an end-user certificate because some parts of the aircraft are classified as dangerous goods. I am not exaggerating, other airlines are facing the same thing.

Things like this deplete your capacity. Secondly, you talk of airport infrastructure. I have told you what is happening in Abuja. Once your flight leaves on time from here to Abuja during that peak time in the morning, all the airlines are camped into one small place which has no conveyor belt and you are given two counters each when Air Peace alone is doing 28 to 30 flights out of Abuja alone not to talk of other airlines.

Again, most airports don’t have night landing facilities. So what you do in order not to cancel flights is you sacrifice Lagos, Kano, Port Harcourt or Abuja where you have night landing facilities. This is happening every day. Is that the fault of the airlines?

You also have the issue of bird strikes. Who is supposed to pursue the birds? Once you have a bird strike, where the aircraft is scheduled to go for that day would be affected? One of our Airbus aircraft just had one and the thing destroyed the engine. Also, the behaviour of unruly passengers also brings to bear what you see at the airport.