BATTLE FOR A SLICE IN THE SKY MARKETS
It started not too long ago as a cold war when the Honourable Minister of Aviation Princess Stell Oduah drew the plunged into battle line the British Airway (BA). Then it was a fight fighting on a sideline with the Nigerian Arik Airlines, a private airline, over parking slots sharing at the London Heathrow Airport. That war ended swiftly anyway as a win-win, but much of the gains seemed to have favoured the Arik Airlines.
Whatever tactics that was employed to achieve the success of that war may not last for too long and may not be applicable to another one that could come up again between Arik and any Nigerian flag carrier designated in future on the UK route and who could also wish to prospect and operate at the Heathrow Airport. When that happens, we shall know on whose side lies the sentiments of the Ministry of Aviation even as another war is now brewing over airfare pricing for the first and business class passengers on the UK route, because the firing line of this new war is again in the direction of the BA.
These air war campaigns that are being successively directed at the BA alone, so it seems from media reports, are not within a reasonable understanding of any of the articles in the Bi-lateral Air Services Agreement (BASA) between Nigeria and the UK. But as things have played out at some of the public hearings of the National Assembly House Committee on Aviation in support of the Ministry of Aviation actions so far on this matter, it is doubtful if there have been exhaustive recourse to international best practices on this discourse before certain indictments were pronounced on our competitors. What we do not know also is whose interest would the current war serve in the long run?
First, the wars on parking slots were never and are still not the concern of governments unlike the frequencies of bilateral flights which are the major components of any BASA between two countries. Basically, parking slots are not frequencies of flights but function of airports to absorb the frequencies of flights. Clearly, they are functions of airport capacity and therefore, the responsibility for sharing, or allocating them to airlines, are vested commercially on the airport terminal operators. While the Nigerian government single line of bureaucracy allows the cabinet minister to control the management and operations of all the nation's airports through the FAAN a non- autonomous public agency, the British Airports Authority (BAA), an autonomous commercial entity, supervises all the British civil airports.
Most if not all the British airports terminals including those at Heathrow, are on concessions to some airlines and private investor companies. Because it is a preferred airport in London, some airlines flying to Heathrow, buy parking slots in excess of their capacities as market strategy, and resell them to the needy or desperate airlines at competitive prices. That desperate situation confronted Arik when it sought for self help from the ministry of aviation to secure part of the BA parking slots from the Heathrow terminal operators instead of bidding and buying from the competitive market.
Secondly, air ticket pricing, like the airport parking slots, is not of significant concern or interest in the articles of the BASA between the Nigerian and the UK governments. Ticket pricing or air fare is determined mainly by market forces and not by any government bureaucracy or bureaucrats.
It could be true that first and business class passengers from Lagos to London pay higher on BA than passengers in the same class categories from Accra to London on the same BA. However, if we compare the available statistics at FAAN on these categories of passengers with the total number of international passengers in a particular year, it would be difficult for the campaign of any reduction in price fare for first and business class passengers, to get support from the generality of the public and stakeholders if there are good representations of interests at the public hearings. For instance, from the 2010 passenger traffic statistics available from FAAN, less than 2.5% or 110,000 out of 5 million international air travelers, travelled in first and business classes.
This means that less figure than 110,000 could have travelled on BA including VA. This insignificant number can consist mostly, senior government officials, legislators, corporate Nigerian and foreign executives etc. The questions to be asked therefore are, whose interests would the House Committee public hearing serve? Why are we being too particular about BA and VA ticket pricing on first and business classes and why are we not looking at the price lists of the others like Lufthansa whose fares on economic class to London now is N250,000 as against BA N195,000 and over N600,000 to the US as against BA N300,000? What are the attractions in BA and VA classes that cannot be resisted for cheaper fares on other airlines?
We should distance fairly from the common argument that air fare pricing is determined only by cost of fuel, ground handling and parking slot charges and air navigational and air traffic control charges. One most important not publicly discussed is the cost of the premium on insurance associated with threats and the risks to airlines safety and security at airports servicing their flight operations particularly abroad because airlines do not want to offend their hosts. Make no mistakes about this, the risks associated with our airports including the premier ones in Lagos and Abuja are many and they are the reasons why none of them has been licensed yet by the NCAA in spite of our regulations and oversight being rated by ICAO as CAT One. For me, these risks justified the cost that is being passed on to our senior government officials and legislators who like to find an escape routes from the national inadequacies for comforts in other foreign environment.
Today, the risks at our airports include the inability of government to set standards on insurance for ground handling companies and flight operational services providers for frequent accidents resulting from: unrated ground handling equipment drivers colliding with large body aircraft parked on the aprons; cases of aircraft controlled to land on closed runways or those cleared to land when herds of cattle are crossing and unresolved cases of aircraft accidents investigations for well over six years, where there are clear cases of air and ground services errors other than the conventional beliefs of pilots errors.
There are concerns also on the porosity of our airport perimeter fence and insiders threats both of which are still challenges to our national aviation security programmes. Most foreign airlines would rather spend more money to employ private security companies for passenger secondary screening and on the rescreening of checked in and carryon baggage than to rely on our airport security screening processes. These risks vary with the threats to each airline at various airports. While it could be low for some here, for others it could be too high to be ignored. These are the factors that determine the high insurance cost for foreign airlines at our airports and are therefore, passed on fares to Nigerian passengers.
There are other areas of serious concern and neglect which border on our ways of doing government business in Nigeria and which are some of the hidden causes of these unnecessary wars with our foreign airline competitors. These should be the concern too for the NASS Committee on Aviation where the members should be asking questions not only at the public hearings, but also from government policy makers, the bureaucrats in the ministry and the Nigerian airlines operators.
Questions such as; why are there no established regulations and authority in accordance with the Nigerian Civil Aviation Act of 2006, and six years after, for monitoring the commercial activities of the Nigerian airlines operations or for empowering government economic and trade agencies such as the FBIR and the CBN to monitor the revenue generated from local and foreign ticket sales on passengers and cargo with a view to ensuring that their balance sheets show the desired benefits expected from BASA and also to ensure the sustenance of their operation in the market?
If government concern is how to pay the high cost of first and business classes for senior government and legislative officials on the BA or how to create a market for our unprofitable airlines, the option would be to enforce a complete ban on BA for government officials and legislators, and mandate them to travel only on Nigerian airlines to countries abroad. That option however does not means a ban on BA but a challenge for the Nigerian airlines to increase their capacity. To increase that capacity, intervention of public fund into any private airlines or the establishment of a national carrier cannot be an answer as such options can only be a return to the abuses and corruptions of the past in the defunct Nigerian Airways.
The alternative to all these is to encourage the private airlines to merge or to recapitalize with sourced fund from the banks or from the capital market. Such funds should be spent only on fleet acquisition or renewal that could improve their competitiveness.
Ojikutu writes from Lagos.