Aligbe: Without Legislative Backing, Airport Concessions Lack a Legal Basis

Industry consultant and CEO of Belujane Konsult, Chris Aligbe is of the view that the concession of airports must have legal backing. He also spoke on the government’s new policy for the establishment of a national carrier. Chinedu Eze presents the excerpts:

The recent statement made by the Minister of State for Aviation that if airline wants to partner with Nigeria to establish a national carrier that the airline would be given conditions and two of the condition are that the carrier would have to transfer technology to the Nigerian personnel and build Maintenance Repair and Overhaul (MRO) facility. How is that possible?

I listened to him and first and foremost I think every partner will have condition for partnership and will offer also his terms for partnership, it is a two-way thing. No partner will come without his terms for partnership and no partner will come into a place and not have terms for partnership. If you remember what happened with Virgin Nigeria, they came and we did not offer any conditions for that partnership and all that the former President, Chief Olusegun Obasanjo did was to accept that Richard Branson was going to invest and he gave him everything he asked for and that eventually became a fiasco.

If you go to Saudi Arabia, United Arab Emirates (UAE) they have conditions for those who are coming to invest and those who are coming to invest also have the perks of their investment and also attractive conditions to enable them invest. So it is a two-way thing, that is the way I see it, but I think that the first thing is for us to say, yes we want a national carrier and this is the kind of national carrier we want. It is the kind of national carrier that we want, and we should clearly state the terms of that establishment, I think we need to do that. And when you make the terms clear and available with all the backing laws and regulations, then those who are coming to invest will look at it, and then when that look at it, they will say well we will come up to this point or we are not willing to invest beyond 30 per cent or 20 per cent.

These are the terms, so it becomes a competitive thing. So the conditions are a two-way thing, the investors will come with their terms, Nigeria will have their terms but our terms must be attractive to investors for them to be able to come.

But from what the President said recently that the priority of his government now is not the national carrier, don’t you think the Minister was running too fast?

Let me tell you, this is the way I see it. When the President said it is not a priority for now, those who don’t want or those who don’t understand the whole idea of national carrier have tried to tell the President he has to make huge investment in establishing a national carrier and that there is no money. They told him that the little money that is available is what is required for other areas like agriculture, security, health and education. That is what people have said to the president. And from that perspective the president was absolutely right when he said it is not a priority from the point of allocating resources from the lean purse that we have.

I also do not support the idea that the President or Nigerian government should invest huge sums in the formation of a national carrier, the government should not. The government should facilitate the establishment of a national carrier through what it has done to some other sectors, like making available an intervention fund available to the industry. It may not only be for the national carrier butt made available to the industry, that the industry will access through their banks and pay for it.

It is not something that we go in there as government investment; government should not invest those funds. I have always said that the airline needs money to take off but it should be from the funds that will be at single digit interest rates and long-term repayment period. There are funds, if you know how much money we have in the pension funds, it is running into trillions, these are available funds that can be put into investments that yield profit and it should come as a loan in single digit interest with long terms repayment. That is all that we need; it should not be taken from federation account. I don’t support that. So I think that is the President’s position but if it can come without government funding, it is a priority.

Let me tell you why it is a priority for this country. Without a national carrier we are facing a lot of challenges. We are losing a lot in terms of money and in terms of creating jobs. Everyday you hear a Minister say Nigeria is importing $1 billion dollar worth of rice annually, that Nigeria has to cut that back. In each sector they are looking at how much Nigeria is losing by not revamping that sector. In the aviation sector we have to come to a point to identify what Nigeria is losing. The country is losing over $3 billion dollars annually in the airline sub sector. Are you not going to cut it down? If you are in charge of a sector where you are losing $1billion or $2 billion, what about the sector where you are losing over $3 billion, are you not going to cut it down?

So that is the crux of the matter; it is not only all these arguments of whether we can do or we cannot do. Look at what we are suffering at the hands of foreign airlines, the airlines are complaining, they can’t transfer their funds, they can’t do this and they can’t do that and Nigerians are beginning to suffer. They want to travel to the US, they are prepared to book you from here to London and then they want you to pay differently from London to US where they know they will collect forex from you.

Our naira is no longer easily acceptable by the airlines for long distance travel particularly travels that goes beyond first destination point. Once you have two, three destination points they find a way of making you pay the other destination points in hard currency. We suffered this many years ago until we managed to resolve it but this time it has started again. The only way to address this is to have our own carriers that can at least wake up and challenge the excesses that we are beginning to experience. The airlines have their own arguments. If you look at it, yes you cannot make all the money and you can’t transfer it but they should recognise that we are facing economic challenges, which many countries also are facing; whether it is Greece or whatever.

So we will have to establish a flag carrier, so the Minister is brining the other side of it saying, you want to come to Nigeria? We are willing to have you but you must come with this and this. So the Minister is making it clear, this is something we need but we need a different model, it is not a model where the government will pump in money but the model where whoever is coming will have something to bring onto the table.

Is it because the airlines cannot transfer their revenues earned in Nigeria that they hiked fares in order to exploit Nigerians?

No, I don’t think the airlines basically want to exploit Nigerian travellers; the airlines won’t do that, but remember they are in business. They are in business and they want to make sure that they stay in business. They are reacting to the economic circumstances they are facing. You see there are so many things that are happening.

The other day my son went to buy a ticket from Qatar Airways. He went online and got the rate at $895, then the airline rate is 200 to the dollar. Then we used POS to pay, the bank charged it at black market rate of N320 per dollar. Now he complained and went back to the bank, the bank said, no it is the airline that used the N320 per dollar. My son now went to the airline and the airline denied, saying its exchange rate is N200 per dollar; that it was the bank that took the money. Even the airline advised him to cancel that ticket and that if he cancelled it he would only lose N10, 000. So the bank has taken in excess of N85, 000. So the banks are playing some game; in fact, it is an issue.

I told my son that we would protest to the airline first to refund the excess, if they don’t refund we protest to the Nigerian civil Aviation Authority (NCAA), consumer protection and next to the Central Bank of Nigeria (CBN); that the bank has no reason to use exchange rate that is not the airline’s exchange rate to accept payment from intending passengers. So there are so many games, between the banks and the airlines. The banks don’t have dollars; they take off excess money from passengers and pretend that it is from the other side, the airlines, that it is coming from.

The airline said it is not them and even advised us to cancel the ticket and come and rebook; that we will only lose N10, 000 for rebooking against 85,000. But the truth of it is that if the airlines are not being able to transfer their money from the CBN, they are building up funds such that they don’t know what the Naira will become tomorrow for them to be able to meet their obligations. I won’t even be surprised if some airlines begin to buy their dollars from the parallel market. Even Nigerian airlines that have to pay for maintenance and crew training overseas are buying theirs from the parallel market.

So airlines are trying to cope with the circumstance they find themselves. So I don’t see the foreign airlines charges as trying to take it out on Nigerians but trying to stay alive. And nobody should crucify anybody for trying to stay alive because our own Nigerian airlines are facing the same challenges.

Do you think that there is a correlation between the value of the naira and the new tendency of these foreign airline to build a kind of operational hubs outside Nigeria, like what Ethiopian Airline is doing in Lome, Togo, South Africa Airways in Accra with African World Airlines (AWA); it is also alleged that British Airways threatened it would be moving operations to Accra? How does that relate with our policy?

Well the truth of it is that they have watched us; they believed that sometimes within the democratic dispensation that we will adjust and wakeup in the industry. They have watched us but we have not woken up and so they are beginning to find ways where it is easiest for them and it is going to be pretty terrible if we stay and they go to where they want to go. But I tell you one thing BA will not move its operations out of Nigeria, British Airways is one of the most resilient airlines that operate in Nigeria and because of long standing relationship and UK businesses under Nigeria and so they know that it just takes one single policy to strengthen things and when those things strengthen out, Nigeria will overtake the countries all around because the market is here.

And again they know that if they move out one or two Middle East airlines will try to move in and when that happens it becomes very difficult for them to recapture the market. I am not very much afraid of that but I am sad about it because it is high time we did something differently and we need to, if this dispensation will offer it to us, lets wake up and do it. There is no reason why we will not immediately focus on building our hubs, Lagos, Abuja, Port Harcourt and Kano as regional hubs we need to focus on that. And that is why I said no foreign airline would come to Nigeria to build you a hub for the simple fact that they know Nigeria has the capacity to generate its own airline that will be in contention.

But they know that Lome is small, they know Ghana is now a global hub for NGOs in West Africa, so Ghana is picking up properly but there is no way Ghana can meet one quarter of Nigeria’s market or potential in the aviation sector. Nigeria is the point but we cannot keep saying Nigeria is the point without waking up to explore it, we must have to explore it. There are so many things to be done, our airports are critical and a national airline is critical to it. So we need national carrier, we need to focus on the hub, we need to develop our airports and we need to open up our policies somehow, we need to help our domestic airlines because they are suffering. They have their own problems and there are also problems external to them.

How do you evaluate the effort to develop airport facilities?

As long as Nigerian government thinks or believes that the Federal Airports Authority of Nigeria (FAAN) can and should run airports so long will we remain at the level where we are. Things will only change if we immediately do a transparent concessioning of our airports and this should be a matter of urgency; unless we do it, we will not bring sanity to the airports. But even before the concessioning issue starts, there are decisions that we have to make; we need to sanitise our airport environment. There are things they will not wait for terminal concessioning or airport concessioning for us to do. I keep saying look at our flagship, Lagos airport, the access roads are the business of government. You can concession the airports roads whether from Oshodi into the airport.

If you look at what is happening every day there are allocations along the road for houses or offices to be built. People are not looking ahead, when the construction comes how will we redesign the roads to make sure we have easy access to the terminal building? I think, honestly speaking, the government should put an immediate stop to further allocation of land along the airport corridor. They should stop immediate allocation of land until a design have been brought up, approved for construction of the roads; otherwise government will start paying for buildings that will be destroyed.

And government will pay because they approved for those buildings to be there. So, that should be an immediate decision and then government should clear all tankers from the airport corridor, they are doing nothing there, they are not for Jet A1. We need a holistic approach to airport sanitization; it should be a major issue that should be taken at the level of the executive and legislative.

One will also ask; where is the framework for concessioning? There must be legal frameworks; there must be legislative framework. Look at what is happening with Petroleum Industry Bill (PIB), for a long time it is being debated. Look at the energy sector, the unbundling that happened in NEPA, these are happening in legislative frameworks, maybe the government may have taken a different decision but when this new government came and they saw that it went through the National Assembly, that a framework was put on ground, it is not something you can easily upturn. That is what investors look for when they come into your country.

Talking about airport concession, terrorism and general insecurity, there is an argument even at the level of Airport Council International that in some countries government should take charge of airport management. What is your view?

First and foremost there is a difference between concessioning and privatization. Privatization is that you completely sell off and you have no hand in it, like telecommunication companies. You only put a regulatory agency to regulate them but you have nothing any more to do with them. It is a different thing from concessioning. Concessioning is that you are ceding out a right to do 1, 2, 3, 4, 5, things but you are also there yourself looking at things.

So nobody will concession security. When you concession the terminal and the airport, development and everything, security is in the hands of government; nobody ever concessions security. If you go to other airports that have been concessioned security is not in the hands of airport managers. Go to Heathrow, Gatwick the security is in the hands of the British government. So, the people arguing about security are just using it to try to stall what ought to be.

In South Africa other people are managing the airports but the security is in their hands of government. Having said that, there must be a difference between concessioning and privatisation, I don’t agree that we should privatise but I agree we should concession. So the security issue is a non-issue because when you concession you don’t concession security even when you privatise you don’t give out the security of the state because airport represents the state. Even Gatwick, you know who owns Gatwick; he is a Nigerian, he is not in charge of security. So that should be taken out, it is a useless argument.

What is your candid opinion about the agitation of Bi-Courtney Aviation Services Limited that it ought to be given the General Aviation Terminal (GAT) at Lagos airport in accordance to the agreement it had with the federal government?

Then talking about the concessioning that we have done, I told you there are no frameworks, all the concessioning arrangements, if we take the flagship in concession, which is Bi-Courtney; it is sitting on a legislative framework void. Nigeria has not established frameworks for concessioning that is why I said the National Assembly becomes critical on this issue to establish the frameworks so that all the concessioning will sit on this framework. Even up till today people don’t know, before even Virgin Nigeria came in, Virgin was no sitting on any framework.

The Act establishing Nigeria Airways is still there, the first thing for you to have done is to repel the Act because they are brining a new arm; that is the work of the legislature. So before you start repeal the Act setting up Nigeria Airways and then you can go ahead. So we need to look at the entire laws, it is something we should go for because the economic dangers are immense for our nation. So if it was not sitting on a void, the issue of court and all these things are a lot easier. Even the court decisions for me since the court has talked about it, it is no longer subjudice I can talk about it.

There is so much prejudice and the court themselves for whatever levels they went to ought to know the exact details of what they are doing or they decided to push it by the side. Secondly, the duration of the concession, that is why the government is resistant of giving out GAT because of the controversy, was it 12 years that the President approved, was it the Minister that extended 36 years? If the Minister has done that does he have such powers to do that? Even if the court affirms something that generality of Nigerians or people in the industry don’t believe should have happened. If they affirm what does not make sense to government and the generality of the people it will not work.

So they have just loaded a gun with bullets without firepower. The industry today does not believe that everything was well with that concession, they didn’t believe that it went through the proper processes and so the industry does not care about that and the industry makes up the government. For you to say pay N32 billion, handover this property, government does not handover its property under no circumstances.

But I think we need to resolve that issue, I believe that Bi-Courtney has made great effort in investing in that sector and so it is something to be applauded. I think we should resolve the controversy but I think in resolving the controversy government should move away from its grandstanding and Bi-Courtney should drop off its legal guard robe and come to the table as a business concern. If they keep talking about laws, justice and whatever, the justice that they are pointing to most of us don’t believe it is justice and government does not believe it is justice. What they hold today as justice most Nigerians don’t believe it is justice, and I personally don’t believe it. But it is an issue we need to solve because it is destroying our image externally.

And then the whole idea of operating regional, if you look at it, the beauty of that terminal, is the space that it has and the way things are operating. If you start another major operation there that airport will lose its ambiance. It was built basically for domestic operations, even though there is something in their mind that it could be used for regional. But again these are approvals given by one who has no respect for laws, he has no respect for processes and procedures because if he had they would have done environmental impact assessment to know whether a major airport operating domestic, regional shout sit at the point where it is sitting. If they did that environment impact assessment they will know that it will not happen. Look at the problem today with the parking bay, there had been accidents of aircraft hitting their wings there. If they start regional operations from there, you will have additional six flights a day in that place.

Look at the lounge; it will not be enough for that. Again there is no room for that expansion in that airport because Arik has taken the other part of it where it should have been extended, you know that was a major problem in the early days when Bi-Courtney wanted to extend it and Arik came, it was almost a fistcuff between Babalakin and Arumemi (owners of BASL and Arik respectively). That was why that airport was not extended and that is why there was no space for the extension of that airport. The terminal is not equipped for regional operation no matter what anybody wants to say. Again why were Virgin and Arik moved out of the international terminal some years ago? I still insist that, that international terminal is too small; it is not conducive for you to combine domestic, regional and international operations.

That was why they were moved out to go and operate domestic flight elsewhere. These are the situation and so you cannot now wake up and start an argument that you want to combine domestic and regional operations in that terminal. For me, I do not see it as feasible; I do not see it as reasonable, given all the circumstances that I have reeled out to you. If for example like Bi-Courtney that says he owns GAT and finally GAT was handed over to him, he can now says okay, I am moving all domestic operations to GAT and MMA2 will now be for regional operation, then you know he has separated them.

But for regional and domestic to be operated within the existing terminal of MMA2, for me as an industry man I do not support it. We need the two terminals to keep operating domestic because domestic operation will grow over time so even when we finish addressing international terminal, we all come back to talk about domestic terminal. We are only hoping that sooner than later that Lagos airport in the Lekki zone will come up and ease some congestion at any point in time.

But I think urgently we need to look at the airport on a holistic basis but the policy is to concession the airport and to put in place all the legal requirements through the legislature and through the executive to bring into being all the necessary frameworks that will lead to successful concession. Privatisation should be ruled out.

I am sure the budget has been approved now, I think we should look at the Nigerian Airspace Management Agency (NAMA) to see what they require because as we are looking forward to improve the industry, the more aircraft that come into the country the greater the development is, the higher the requirement for airspace management. And so they should look at that. And I also think the regulatory agency also must be completely equipped by training. We know that training is the major thing NCAA offers and without that we won’t have effective regulation, we will run into trouble.