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Privatisation, Panacea To Nigeria’s Aviation Sector’s Challenges

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Leadership Nigeria News Today

By BAYO AMODU

Mr. Seun Peters is the managing director of Interjet Nigeria Limited, an indigenous firm that specializes in sale and maintenance of aircraft. In this interview with BAYO AMODU, the renowned lawyer explains how Nigeria’s aviation sector can overcome most of its challenges and other salient issues in the industry.

What are your views on the current state of the Nigeria’s aviation industry in terms of infrastructure development?

First of all, I must commend the Minister of State for Aviation, Senator Hadi Sirika, for what he is doing. I commend him for his efforts in terms of concessioning of the facilities at the nation’s airports. This is a step in the right direction. The major challenge we are facing in the sector, which I think we can overcome is that if we privatized 80% of the aviation industry and put it in the hands of private operators, it will be run properly that way. Bureaucracies in government do not allow some things to run smoothly and it is expensive with aviation. We need to do it right. I think the government should work on concessioning some of these things.

The labour unions have always been the issue when talking about concession. How do you think the government can address such issues?

If the plans they have are made known to the labour organisations; I mean if government can sit down with them, tell them the advantages of concessioning some of the government’s assets, there would be less agitation in the aviation industry.

Apart from privatization of the airport, what are the other things you think the federal government can do to boost the aviation sector?

Aviation, as we all know it, is a very capital intensive industry. If the industry is well funded, I think it will go a long way in making the country one of the best in aviation industries in Africa. All we just need is funding and funding in the right path and not funding into private pockets. A good example is the acquisition of landing equipment. We need to refurbish them and change the equipment from time to time. This is going to cost money but if they are properly funded, then it will go a long way to boosting the sector.

Most of the airlines barely survive, what do you think is the major problem and how do you think such can be tackled so that the aviation business can be profitable as it used to be?

Well, first of all, I think putting personal sentiments apart, what happened with the case of Nigeria Airways where staff families were flying the aircraft for free and the airline being run like a family business is not the best. Such attitude is capable of killing any business anytime. I think if we can overcome this aspect and run the business professionally, the sector will perform better. It is also important to possibly, bring in expatriates from abroad to jump start the sector and run it professionally. For instance, in the case of Ark Air, the airline has a lot of facilities; I would have thought the government would think of using that as a national carrier. Now it is in the hands of Asset Management Corporation of Nigeria (AMCON), why can’t the government pump in money in that area, buy more planes and run it professionally. I think that would be the answer to some of the problems.

But do we need expatriates, don’t we have capable hands?

We have capable hands but as I said, that sentimental issue is always there and the Nigerian factor of doing things. However, if you bring in professionals to jump start it, maybe a pioneer managing director who has a contract term of two years to start it, then he would train Nigerians and hand over to our people.

How has the relationship between Interjet Nigeria Limited and Diamond Aircraft been since you started business with them?

The partnership started in 2011; my former partner who was the managing director at that time was the pioneer MD of Interjet Nigeria Limited. He went for a flying show in Dubai. At the flying show, he actually went on the aircraft and as a pilot; he told the pilot flying it that he could fly the plane. The pilot was surprised that the guy was able to land the aircraft on his own at the flying show which was a kind of exhibition. So they were fascinated by this and got talking with him. He told them he was living in Nigeria and that he could partner with them. Soon after, Interjet signed a distributorship and agency agreement with Diamond, that’s how the relationship began.

You have successfully executed aircraft supply with NCAT, Nigerian Airforce, which other area are you looking at to expand?

We have supplied the Air Force with five aircraft and a simulator; they are also looking at buying more and we are discussing with them. The Nigerian College of Aviation Technology (NCAT) had been doing research into how to get aircraft to re-fleet. They have gone to Bell Helicopters and all the leading brands that sell trainer aircraft but they kept going back. They went twice to Diamond Aircraft and found out that Diamond had all the specification they needed. They went directly to Diamond but the company sent them to us as their representatives in Nigeria and that was how the relationship started with NCAT. Apart from the Air Force and NCAT, we are presently looking at opening some business links in Ghana at the moment because most of our aircraft are trainer aircraft which they use for training pilots. We are talking to the school in Ghana to develop more businesses. For Nigeria, we are also trying to serve the flying school in Ilorin.

Stakeholders are interested in buying Diamond Aircraft products, what could be the attraction?

First of all, I think the brand name is more or less like, when you mention cars, you mention Mercedes Benz. Diamond aircraft are strong, durable, and have their characteristics. So Diamond is well known in the aircraft business. Basically, that is the reason for the attraction.

You were into maintenance business before, now you are into sales, what evolved this switch and how has it impacted your business?

We were both into maintenance and sales at the beginning. With the objective of our company, Corporate Affairs Commission (CAC) says that we are both Sales Agent and Maintenance Company. The reason why we changed the name was because we were formerly known as Interjet Maintenance and we found out that it was limiting our business exposure because people thought that we were only into maintenance. Most times, our client asks us if we do sale and we let them know that we do sales. So we found out that the name Interjet was limiting our business exposure. For this, we decided to drop the “maintenance” and use the name Interjet Nigeria limited. We have since changed the name from CAC and formalized the documentation to that effect.

Let us deal with the Dollar issue. How has forex affected your business?

That really has been the challenge because we all know what happened in the forex market, a year or two ago, where we had sky-rocketing exchange rates. This is mainly the reason why the supply was delayed. The contract with Interjet was awarded in 2015, and you will wonder why we are supplying one in 2017 because what was paid at that time was not sufficient due to the fact that Dollar rate went high. For this, we had some delays with the rate and that has been our major challenge because the Central Bank of Nigeria (CBN) rate that we were awarded the contract with was different from the bank rate and other rates existing in the market. If we decide to go to the black market, we will be short-changing ourselves. Even at the bank rates, we are still being short-changed because the contract was awarded at CBN rate of 305.5 and the bank rate at 2017 is 325.5. Though, the contract is denominated in dollar, but it’s to be paid in Naira, so we are already being short-changed because of the disparity between the CBN rate and the existing bank rates. That has been our major challenge.

So how are you going to tackle the challenges?

We have written to NCAT to try to get us the CBN rate but we have been told that it would not be possible because we have to go through a bank and the approval CBN gives the bank is at 325. However, NCAT, being a government organization is using the prevailing exchange rate of the CBN which is what is recommended in the contract. So, that disparity is still going to be there; we don’t know how we are going to resolve it.

Do you sell aircraft to individuals?

We sell to individuals but we don’t really have a market for individuals because, as I said earlier, the aircraft we build at Diamond are mostly for training of personnel and student pilots. We do configure certain aircraft for pleasure, but it would be built to your specifications. We have a few in Europe and other countries where individuals buy, just for their pleasure. But here and maybe due to the cost, individuals hardly buy.

How much does one go for now?

Well, there has been a price increase but there are different models. With close to a million Dollars, you can get the best of them.

Are you also involved in the supply of spare parts?

Yes we are. The contract with NCAT actually came with great surprise but what we have done now is to open a channel of communication between NCAT and Diamond Aircraft where they can liaise directly with them for spare parts. However, in the future, we plan to have a storage for spare parts where they can come to us.

 



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