Iyal: Long-term, Single Digit Loans Necessary for Airlines

Former Senior Special Assistant to the President on Aviation Matters and the Managing Director of Afri-Air International Limited, Captain Shehu Iyal, in this interview, stressed the need for government to facilitate long-term, single digit interest loans, to enable Nigerian airlines to succeed, Chinedu Eze present the excerpts

How will you describe the aviation sub-sector in terms of performance when compared with the past?

It has advanced and advanced greatly. You can seethe number of private jets that parked at Lagos and Abuja airports. Some of them are for charter services and some areowned by private individuals and some are owned by corporate organisations that need to travel to places at their own convenience. So I will say the sub-sector has advanced; in fact, it has advanced more than was expected. 

In terms of scheduled commercial flights operations, will you also say that the aviation subsector is doing well, and how will you rate Nigerian airlines in the last 10 years?
There is a great leap and great fulfilment in airline business in Nigeria; notwithstanding the circumstances and situation they found themselves. And you can see the number of airlines we have today and you can see the facilities at the airports from what we had 10 years ago. You can see the new planes that are coming in. The aircraft are quite modern, cost effective and very safe to use. 

What is your view about the cost of domestic flight services in Nigeria?
You have to be fair to the airlines, when talking about cost of domestic flight, considering the cost of aviation fuel, which you know is a major factor. What of the cost of acquisition of these aircraft, which you know is very high and you pay heavily for aircraft leasing and insurance. If you are in Nigeria you know what we go through. But overall, I think the fares should be looked into and stabilised for better conditions both for the passengers and the airlines.

But for now, I think the demand side is higher than the supply side. And sometimes it determines the price. Most airlines in the world don’t acquire aircraft directly; they lease.

It has been agreed that Nigerian airlines pay more for insurance and aircraft leasing. What is your advice for government and the operators with regards to high rate of insurance and leasing in the African region?

Yes there is. There is need for the government to come in either with finding or to create some kind of guarantee for the airline industry. There is no how we can continue with the current rate. All over the world, the interest is single digit. Government dedicated some funds to the Manufacturers Association of Nigeria (MAN), which should be disbursed to serious minded businesses under a single digit interest rate, long term regime. Government should also do the same for the aviation industry. It should earmark funds to be accessed on long term basis and on single digit interest rate. That will go along way to help airlines for the purchase and leasing of aircraft. If it is leasing, the government should find a way or an organization that can stand as a guarantor for these airlines. I think it should help a lot. 

There is misconception about flight delays. Air travellers believe that all flight delays are caused by airlines alone. What do you think could be responsible for flight delays and what role should the regulatory agency and airlines play to curb flight delays?
There has to be a very strong synergy between the two. The infrastructure in some of the airports is not adequate. The check-in counters may not be adequate. So, sometimes those issues create delays. And again; other things that cause delays are the non avialability of aviation fuel and bad weather. But for a passenger, all he knows is that the airline is responsible for the delays. So, normally, there are three variables that control flight operation. The weather, technical issues and the availability of aviation fuel. Indeed, the most important factor in any flight, in any operation is the avialability of aviation fuel as at when due or when needed. These are the things that the ordinary passenger doesn’t know. And so there has to be a way of passing this information across. But there is another solution, some of the infrastructural deficiencies can be reduced greatly if there is collaboration between the owners of these airports, that is the Federal Airports Authority of Nigeria (FAAN), and private investors on infrastructure development. This will enhance state-of-the-art airport facilities, which everyone can benefit from: the airlines, the passengers and government, which will earn higher revenues, as the airports attract more users.

The VIP movement, which is a very big factor in flight delays, seems to be defying all solutions. What is your take on this?

VIP movement itself does not take 30 minutes but such delays could be incurred because of backlog and buildup of aircraft on ground and in the air. The control tower has to stop aircraft on ground and in the air. It is this process that could cause delay, but the VIP movement takes about five to 10 minutes. There was never a time that VIP movement is 30 minutes because I was in the Presidency and I was involved in some of those movements. The control tower has to clear the aeroplanes that are up there before it starts clearing those on the ground. This is the process that could cause more delays. But I think nobody in his right senses and nobody who is responsible can create a delay for 30 minutes because of VIP. 

In the effort to curb flight delays, the airlines are thinking of codesharing. This means that a passenger can travel with any airline, no matter which airline he has its ticket. Do you think this will work?

Well, I think with time and maturity it can work. But it is not something anybody can impose on them. It is something that they, on their own will decide to do. I think we are almost there, with the association like AON (Airline Operators of Nigeria) and other groups that are talking to them, they will realize the value. You know some of these airlines are created out of ignorance and most of the people that established them don’t know what is in there until when they get into the market. But I think the plan is very good and it will help a lot. 

Let’s look at the area of safety. What is your evaluation of safety in aviation industry right now?
I think from my own experience, which I think is quite reasonable, our safety level has greatly improved. When last did we have any accident in any of our commercial airlines? So I think it has greatly improved because of training and retraining, seminars, courses and the kind of equipment we are operating in the country now. And whether you like it or not, I think you must give kudos to NCAA (the Nigeria Civil Aviation Authority). Whenever there is possible infringement, they come early enough to stop it. Commendation should also go to the Nigerian Safety Investigation Bureau (NSIB) for what it is doing. I think it is doing a great job. They are properly equipped now and they have a lot of trainings for their personnel. And from time to time, they give safety recommendations emanating from their accident and incident investigations . The same thing goes with NIMET (Nigeria Meteorological Agency) about weather. I receive weather reports daily from them. I also receive warning reports on safety.  So, safety wise we have gone far, far ahead than where we were some 10 years or five years ago because of training and retraining, proper equipment, navigational aids and landing aids that we have, runway lights that have improved even though there is room for more improvement.

In the area of airline funding, how can government help in terms of facilitating credit facilities?

Certainly I have said it and I will repeat myself. The government can come in by creating special fund that can be disbursed through the Bank of Industry (BOI) at single digits. This is strictly for airlines and strictly under the supervision. If we have that, I think it will go along way in improving the situation that we have here. 

What are some of the policies or recommendations that you will want the government to implement in order to address the challenges in the aviation sector?

They should look into the taxations. There are too many charges, they should be streamlinedor possibly reduced. If possible some startup companies can be given tax holidays because aviation business is capital intensive. So if there is something like that it will go a long way in helping to sustain businesses in the aviation industry.

What is your take on concession?

Well, my idea may not be the idea of everyone. But I think concession should be total. If I am going to take an airport and do the concession, and run it for awhile, the concession should be total; not just the terminal. And when I mean total, I mean, inclusive of the runways. People may have contrary view, citing  national security but I think there can be a synergy between what company is given the airport and the security and the regulator. The most important thing is that we must have a very strong, efficient, well trained, well equipped regulator and then we can move forward.
I have seen it in Niamey, Niger Republic. When the airport was under the state management it was like any other airport in Africa. Then it was given out in concession and everything changed. It has modern facilities now and it is run efficiently. Most of the people that work in that airport are the indigenes of the country with expatriate supervisor.