Africa: More Nigerians need to travel by Air as 10m pax a year is too Small says Dana Airline COO
Domestic airlines’ merger is not the solution to the challenges operators are grappling with, the Accountable Manager, DANA Air, Obi Mbanuzuo, has said.
Although the proposal has worked in other countries, according to Mbanuzuo, it still remains a mirage in Nigeria because carriers are too weak.
Mbanuzuo, who spoke in an interview at the weekend in Lagos, said airlines could collaborate in many areas while maintaining their individuality.
He said airlines in Nigeria were too weak to exploit the merger option because the weaker partner in the deal could pull the other operator down.
Mbanuzuo said operational partnership, by pooling equipment and personnel on some strategic routes, could enhance the capacity for many airlines.
But the operational environment, he said, is not yet ripe for such arrangement because each carrier has its structural template for operations, which differs from airline to airline.
He said there were more problems to be addressed in the sector beyond merging of airlines, adding that if the aviation sector must be positioned as a catalyst for economic development, the government should rework its policies to address challenges of inadequate infrastructure, including landing facilities at airports.
Mbanuzo said: ”I do not think airlines merging is the answer to the problems of the industry. We have to find structural solutions to the problems.
”The merger proposal should generally be for two competitors. In this case, one partner or airline is bigger than the other or sees the other as a threat or as a complement to its operations.
“For instance, if there was an airline flying mainly into the north ern parts of the country, we may decide to merge for a more pan- Nigerian airline. I think part of the reasons people are calling for merger is to make airlines stronger, but it will not work.
“Among the current operators, some of them are very weak, so when there is a merger, the weak one will pull the stronger down.”
Citing some failed merger arrangements across the globe, Mbanuzuo insisted that operational co-operation among airlines was the way to go.
He said: ”There are many cases around the world where merging of airlines has not worked. Sometimes, airlines operate very closely but, they do not merge. Air France /KLM is a very good example. They still maintain their individual identities.”
Mbanuzuo said airlines would perform better in Nigeria if operators and the regulator took a closer look at why the cost of operations was high.
He said the regulator, Nigerian Civil Aviation Authority ( NCAA), should go beyond prescribing the number of aircraft an operator should have in its fleet and take steps to stimulate policies that would drive passenger traffic.
”There are many other things to do in the industry, but people are not do them. In South Africa for instance, there are about 40 to 50 times the number of airplanes we have in Nigeria, but our gross domestic product is higher.
“If you look at the industry currently in Nigeria, there are more than 10 million travelers per annum, but South Africa has about 70 million travelers on domestic travel alone.
“Their civil aviation authority has about 500 workers regulating hundreds of airplanes, but in Nigeria the NCAA has over 1,000 workers regulating how many airplanes,” he said.
He said through a deliberate policy, the government should make air transport attractive by reducing aeronautical charges to enable them reduce air fares.
Mbanuzuo said: ”The first thing is to make the air transport industry a mass market because many Nigerians still look at it as something for the elite.
“Air transportation is not for the elite. If you go back to history, the United States is the largest air transport market in the world though it is projected that in the next few years China will take over.
“In the US, the advent of carriers like JetBlue Airways, which people say are low cost carriers, made a difference. We call them low cost carriers, but they are actually mass carriers. They compete with other modes of transportation, including road and rail because they can sell tickets to people, who go by rail or road to fly. “
He said airlinescould attract more passengers, if there was a cost-friendly environment. He noted that with lower fares the passenger traffic could increase.
He said : “ That is what we need to try here in Nigeria. How can an airline with the current policies operate that way?
”We can’t price against road operators. As an airline operator, I would like to sell some seats on-board each flight we operate for like N5, 000.
“I would like to do that because it extends the market. We are 180 people; why should only 10 million be flying per annum?
“Out of the 10 million, only about three million do multiple journeys; it is too small and not right. We could drive the industry higher than it is right now if we could drive price down.”
He said airlines were grappling with many challenges including the huge cost of aviation fuel.
The DANA Air boss said: “Nigeria is the fifth producer of crude oil in the world, yet we don’t refine our own aviation fuel. Petrol is subsidised, but aviation fuel is not. Currently we buy between N250 and N270 per litre and each one hour flight burns an average of 4, 000 litres, which is a lot of money.
“An average aircraft will have about 100 to 120 seats which are not always full. Divide that with the cost of fuel. We prefer fuel to be refined locally because we believe it will drive prices down.”
He added:” Well, many of our airports are not certified, except Abuja and Lagos.
By Kelvin Osa-Okunbor