- High airfares in Nigeria have negatively affected businesses, profit margins, and tax revenues, necessitating government intervention.
- The outgoing government has brought stability to the aviation industry and made advancements in infrastructure and technical capabilities.
- Expectations for the new administration include maintaining and improving upon the progress made, appointing a competent minister, and avoiding setbacks in leadership appointments.
The Chief Executive Officer (CEO) of Precision Aviation Handling Limited (PAHCOL), Mr Samuel Oluwole, in this interview with Nairametrics, speaks about the effect of high airfares on cargo business, the performance of this outgoing government and expectations from the incoming government. Enjoy the conversation.
NAIRAMETRICS: What is the impact of high tickets on business in Nigeria?
Samuel Oluwole: The current situation is not new to Nigeria. The current situation was propelled by the exchange rate for the airlines and since they cannot repatriate their funds out of the country due to the current situation at the Central Bank of Nigeria (CBN), they have been forced to adopt this method to stay in business.
They are not government enterprises, but private companies. The only thing is that they have gone overboard with the situation. For the reason of appropriate pricing, they have done all those indices.
When you look at our country for instance where the take-home pay is not enough to carry you to the bus stop, then, one begins to look at it as outrageous and crazy, but in terms of them staying in business, they have done what they could.
However, the approach is going to affect business negatively. Whatever you are bringing in, it affects your profit margin as an importer and the only thing you can do is to transfer some of these increases in rates and fares to your customers.
Also, if you are paying tax for example and your profit is eroded in that direction, the tax revenue accruing to the government equally drops. From all these angles, whether on passenger or cargo flights, there is a negative impact and the government must address the issue.
I remember the minister of aviation about two months ago, saying that the case of airline tickets would be addressed before the tenure of this administration runs out, but here we are in the last stage of the administration and nothing has been done. Meanwhile, we want all the foreign airlines to keep coming into Nigeria.
I think one of the priorities of the next aviation minister is to prepare a paper for the Federal Executive Council (FEC) to give special attention to the aviation industry, vis-à-vis a unique window for the airlines and the movement of forex in and out in terms of the ability of the airlines to be able to repatriate their funds at a particular point in time.
The airlines are still doing parallel market rates because you can’t get the forex, yet, you want to do business. Some of these goods are perishable. You have to go to the parallel market for you to get whatever you need and it hits into your profit margin.
However, it is not just to create the window, there should be an intentional purpose to help these foreign airlines repatriate the proceeds of their legitimate business in the country.
NAIRAMETRICS: What do you mean when you say airlines are going overboard with their current charges?
Samuel Oluwole: The airlines have been hyperbolic about it. Similar routes all over the world, including where they are having similar problems in West Africa it is still about 30 per cent lower than what they are charging in Nigeria. They believe anything goes in Nigeria and they know how to sort things out behind the scenes. They act with impunity when it concerns Nigeria.
Same six hours flight, they are charging less within other countries in West Africa. All these are not good for the Nigerian economy. The government has to look into the effect of this on the economy. Whichever way it is, whether the airlines have gone overboard or not, it is still something the government has to look into because of the negative effect on the Nigerian economy.
NAIRAMETRICS: What is your assessment of the Federal Government in the aviation industry in the last eight years?
Samuel Oluwole: I think that the outgoing administration has done a lot for this country, never mind the last aspect we discussed airfares and others. There are always minuses here and there. The reason I think it has succeeded is because of the stability it has brought to bear. They have corrected themselves as we move along over the last eight years. We have had the same minister for eight years now and that speaks volumes.
Also, the executive officers in the agencies have been stable in the last eight years. So, that has helped to have the sort of an environment where you can make progress. Look at the repairs and installations in the two airport runways in Lagos and Abuja. These are little things that the government has come up with. Eight years before now, those things that were done were cosmetics; look at these terminals’ development in the last administration. Most of those terminals are going bad gradually. When it rains, you will see rain coming through the roofs.
They concentrated on beautification, whereas we in the industry are more concerned about the technical details of the industry and that is what this administration has done.
Also, look at the performance of the Nigerian Meteorological Agency (Nimet) in the last few years. As it is, Nimet can comfortably tell you about the weather situation for the next three days. Also, look at the Nigerian Safety Investigation Bureau (NSIB), we now have the facilities where the black boxes can be downloaded locally instead of taking them abroad for interpretation. All these are the developments that we have witnessed that made some of us very happy about the industry.
NAIRAMETRICS: What are your expectations for the new administration in the sector?
Samuel Oluwole: I think they should improve on what they meet on the ground and take it to the next level. The government should appoint a minister who knows its onions. We don’t want a minister who will need about five to six months to learn on the job by going to the various airports across the country. We need someone who knows from day one what the length of the runways is across the country. The current minister is an industry man in terms of professionalism.
We can speak the same language. Look at the Chief Executive Officers in the various agencies, they are all industry men. These are the things we want to see, not just to go and bring a farmer who was planting groundnuts somewhere to be made the heads of any of the parastatals. These things will set us back.
Even if the minister is a wrong appointee, the professionals don’t joke with them at that level.
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