Records have shown that most domestic airlines collapse easily. Experts have predicted a 10-year ceiling for most of the airlines which have went under in the last three decades. In this piece, ANTHONY AWUNOR and MIRACLE IKEFUAKU examine why some of the local carriers have short lifespan.
Stakeholders in the nation’s aviation sector have attributed the inability of most Nigerian airlines to stay in business for a very long period of time, due to lack of corporate governance, ageing fleet, harsh operating environment, corruption and lack of adequate support from the government.
According to the director- general/CEO, Institute of Directors Nigeria, Victor Banjo, there was a serious impact of poor corporate governance, high incidence of fraud and corruption on the growth of domestic airlines particularly.
Banjo, who spoke on the topic: “The Importance of Corporate Governance” at the 4th quarterly Business Breakfast Meeting organised by the Aviation Safety Roundtable Initiative (ASRTI) at the Golfview Hotel in Lagos recently, pointed out that recurrence of high incidence of fraud and corruption have been linked to poor enforcement culture which negatively affects the efficient running of the airlines.
He said that corporate governance provides the controls and discipline operators need and that adoption of corporate governance practices promote effective leadership and corporate sustainability,
Adding that controls and discipline can moderate the desire for excessive profit which leads to unethical practices and fraudulent acts, Banjo said ,“Good corporate governance thrives when you have a rationalised policy determination process. This is only achievable when we have clear sighted political leaders who are committed to the development of Nigeria as opposed to sectional and parochial interests. Ethiopia, Namibia, Rwanda, Cote D’Ivoire, Togo, Ghana and Senegal are getting it right in terms of airline management and airport infrastructure, as with other areas of human endeavour. What is stopping us?”
The policy and strategy analyst added that in other places, airlines struggle but not within a life span of five to eight years as recorded in Nigeria, stressing that corporate governance was very important to the management of airlines.
He also stated that airline operators cannot be accountable to themselves, pointing out that situations whereby ministers govern companies was not the right process.
On Nigeria Air, Banjo said that there should have been directors for the carrier but these board of directors (BoD) were not put in place before it collapsed. He therefore, advised that Nigerian government should concentrate on creating good business environment for airline operators in the country.
In his remark, chairman of the occasion and director of studies, Centre for International Advanced and Professional Studies, Prof. Anthony Kila, said that Nigeria Air was conceived on powerpoint, shared on Adobe and died on Twitter.”
According to Kila, the Nigeria Air project was embarked on without due consultation and communication with people that matters, adding that there was no industry engagement and when a project was done like that, it is bound to die.
President of Aviation Roundtable (ART), Elder Gbenga Olowo, who set the ball rolling at the event said the think-tank believes the announcement to bring back the national carrier was a vote of no confidence on the existing airlines.
Olowo said, “The announcement of Nigeria Air in the last three years of President Buhari shook the industry. That announcement was a vote of no confidence on the sector; that the airlines that are existing are not doing well. ‘We are going to float another airline.
“And three years after we suddenly learnt that project is being suspended and that made all of us to start speculating why, how, what happened and we will continue to speculate until we hear exactly what happened. I will say that it destabilizes the sector because in planning with the Nigerian airlines in the last three years, they would factor in that announcement. If I were to be the MD of a Nigerian airline, I would factor in the arrival of a very strong competitor.”
Olowo challenged the federal government to come out and tell Nigerians whether the project was only suspended or it would be resuscitated. Project Nigeria Air was suspended in September after a Federal Executive Council (FEC) meeting where no actual reasons for the suspension has been given, other than statements from the minister of state, aviation negating its counterpart in information, culture and Tourism claims about investors not forth coming.
Olowo equally advised the Airline Operators of Nigeria (AON) to go and pursue the Fly Nigeria Act so as to increase their revenue generation.
“AON should go and put up the Flight Nigeria Act Bill so as to make gains. Your costs are so much and you can’t control them. The only way is to increase your revenue by pursuing the Fly Nigeria Act,” Olowo said.
In his own speech, chief executive of Overland Airways, Captain Edward Boyo, said airline operation in Nigeria was not for the weak in heart and that Nigerians were fond of talking down the domestic airlines, a situation that was not helping the airline.
According to him, hubs were supposed to be created by local operators and not foreign airlines and talking down these local operators by all and sundry has become public entertainment.
”The challenges domestic airlines face are caused by Nigerians, we encounter delays because of the hostile environment and here you cannot run an airline without being politically savvy,” he said.
He said part of the reasons why Virgin Nigeria failed was because they superimposed foreign mentality into the system, pointing out that airlines were meant to be self-regulatory entities.
Boyo however, disagreed that corporate governance was the reason airlines fail, maintaining that “Corporate governance is not the reason why airlines are not working. It has to do with the environment.”
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