‘Airlines need continuing govt support to survive’


The effects of COVID-19 pandemic on the air transport industry are not abating, making airlines struggle to stay afloat. Although the Federal Government has released a N5 billion stimulus package for the domestic carriers, the amount is considered a drop in the ocean if the airlines are to get out of the woods. The Chief Executive Officer, Arik Air, Captain Roy Ilegbodu, in this interview with KELVIN OSA-OKUNBOR, examines the lingering challenges airlines are grappling with since the outbreak of the pandemic. He also talks about the effects of the depreciating naira against other currencies on airline operations and the deplorable state of airport and air navigation facilities.

 

The Federal Government recently rolled out a N5 billion stimulus package for the aviation sector. To what extent will this resolve the problems of airlines?

What we got was definitely not enough as we could have done with a lot more. The impact of the pandemic has been quite significant allover the world. Globally, governments have massively supported airlines, so we did expect a bit more from our government. However, we also understand that the government itself faces significant challenges from all other sectors of the economy. Therefore, we do not think of ourselves as unique. So, we appreciate the little we got; something little is better than nothing. I think that helped in its own little way, aiding us to surmount some of the challenges we face.

What are the challenges of the airlines?

We have the challenge of foreign exchange – that is one big issue. The exchange rates have virtually gone up significantly by approximately 40 per cent since COVID-19 struck.You realise that our industry itself is tied to the supply from outside Nigeria.To support an aircraft with spare parts you need all sorts coming in. So significant sums of money are spent on maintenance, the airplane on a daily basis must be maintained. You can’t compromise maintenance of aircraft. The tyres on an airplane, some people don’t realise how much we change those tyres. You can’t use an aircraft tyre for example the way you use your car tyres till they get burst. You have to change them regularly whether they look old or not. It’s quite significant for us to face all this and now coupled with the exchange rate, so we do need more help from the government. As much as government can give, we will appreciate, especially if that can be resolved (Foreign exchange) that major aspect for us.

What has been the response in passenger traffic since the pandemic broke out?

Passengers are not really travelling as much as before; we’ve seen that however, some airlines may not notice that now because the capacity has also dwindled. What I mean by that is that the airlines have suffered so much so that their fleet sizes have gone down. Therefore, you will not notice that passenger numbers have dwindled but as airlines start to recover, it will become apparent that people are no longer travelling as much as they used to do pre-COVID-19. But the good news is that the vaccines are here and so it gives everyone hope. I do expect that in the next couple of months, there will be a lot more movement and things will start to come back to normal.

Could you confirm information in the public domain that a new airline with the name Nigerian Eagle is coming out of Arik Air?

Well, in reality there is no connection between the two. That said, you are aware that NG Eagle is solely owned by Asset Management Corporation of Nigeria (AMCON) and of course you know that Arik Air itself is in receivership and the receivership was instituted by AMCON, which is based on the fact that Arik owes significant sums of money to AMCON. So if you can infer from there that’s the relationship.

But, an Arik Air aircraft was painted in the brand identity of the supposed new airline, Nigerian Eagle?

I can boldly say that those airplanes in our industry we call it recovery. So, they have been recovered. If a company is owing and it cannot pay, those airplane were actually mortgaged to AMCON and it is very clear that at some point they take their assets and that is what was done, So, the fact that they carried the name and logo of Arik doesn’t mean they belong to Arik, the owners have taken their property. Of course the opportunity was given to Arik to pay, I don’t think that happened so I think it’s pretty straight forward. In law, those are mortgaged assets and the owners of the assets have every right to take their assets.

What about challenges associated with aviation fuel and the effect of foreign exchange?

Well I can’t give you that information accurately here but suffice it to say that aviation fuel is tied to the exchange rate. Our aviation fuel is imported so anything that is imported is affected by enumerations in dollar/naira exchange rate. If we say Forex has gone up by about 40 per cent then it is safe to say prices of jet fuel have gone up too by about 40 per cent.

Domestic carriers now land at the runway of the international airport in Lagos before taxing over two kilometres to                                        the domestic wing. How does this impact on airlines’overhead?

I cannot even begin to quantify it. It is actually a huge drain on not just Arik but all the other operators that have to do night operations. That can be resolved by installing the Runway lights at the local runway which can make us save huge sums of money. An airplane cycle starts when you start the engine and you are burning fuel, the wear and tear on the engine. So, for every cycle, it doesn’t matter if that cycle is from here to Benin or from here to London or from here to the US, it is one cycle. So, it costs money and that cost is the same whether it is London or Dubai, it is one cycle.  For instance, when the engine is brand new, you say it has 20,000 cycles of life and so you fly 1000 cycles every year, that means that you expect those engines to run for 20 years at 20,000 it goes to zero you cannot use those engines until it goes back to the hangar for overhaul and those materials that are time related are replaced, those cost for us are much. So that trip for us from the international airport, 10 minutes sometimes more across runway, it’s something we calculate daily; any time after 6pm you know that that is additional cost for the airline.

What has been the response of the airport authority to this complaint?

We continue to engage the Federal Airports Authority of Nigeria (FAAN). Anything that brings savings to an airline we will likely pursue vigorously but we also note that FAAN themselves face challenges in respect to funding. I think the entire industry is in a situation where significant sums of money need to be injected into the system to assist. With the US airlines even not flying at full capacity, the government has supported them with funding, that is important. To make government aware that an airline itself to a nation is not necessarily about an airline, most airlines will not be profitable apart from the so- called low cost carriers, but when you take the entire network of services they provide as a portfolio, hotel chains, other support services on ground, ground handling and all that are profitable because the airline exists, that overall contribution to the GDP of any country is very critical.  That is why the government should have its eyes opened when looking at an airline, especially in the areas of the airlines’ contribution to the country’s economy. These vaccines for COVID-19, are flown in by air. So many things, you can’t quantify; just take so many service providers, SAHCOL, NAHCO, airports facilities, MM2, forget about the staff, that effect of the entire system is very important. So those nations that realise that take advantage to make sure that the airlines exist. It keeps the economy going, tourism all sorts. If you go to Ethiopia, the country is centered on aviation; Ethiopian Airline built one of the biggest hotels in Africa, they’ve taken over the country’s airport terminal fully, you can see what they are doing, they are actually taking care of cargo transportation in and out of their country. They have a huge network, they may not necessarily have a robust domestic network like us here but I think their global network is quite interesting. Until government becomes aware or someone is able to say this is what the airlines contribute to the economy, that is when they will see why you need to keep the airlines alive.

Source: Latest Nigeria News, Nigerian Newspapers, Politics

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