Chairman/Chief Executive Officer of Nigeria’s biggest airline, Air Peace, Allen Onyema, speaks to OYETUNJI ABIOYE about the challenges facing the Nigerian airline industry and the carrier’s plan to begin international operations to Dubai, South Africa, US and India next month, among other issues
Air Peace has grown to become the largest airline in West Africa and Central Africa in less than five years of operations. How did it happen?
First and foremost, I give thanks to almighty God. I see the hands of God in everything we are doing. A lot of things that have happened would not have happened without God. The idea to start the airline in the first place could only come from God. I was told by a lot of people how risky the business was and still is. But we have put everything we have into it. God made it possible for us to have integrity. Most of the things happening here are as a result of integrity. We have shown a lot of financial prudence and discipline. I have focused on what we want to do – sound business plan. We are not diverting money from the airline business to other business. We use the money for what it is meant to do – to run the airline, grow and expand it. Again, we have dedicated workers and management; and the love of Nigerians for the airline has been great. The flying public in this country has been very magnanimous by making us their preferred airline.
The airline seems to have a very aggressive fleet expansion plan, having become the first Nigerian airline to acquire the wide-body aircraft called Boeing 777 and registered in Nigeria. What is the driving force behind these acquisitions?
Before you go into any business, you need to study the business and the environment. You have to know the airline business, for example, is a risky one. What are the factors that have made many airlines in Nigeria to fall by the way side? You really need to know where you are coming from; where the other airlines are coming from and what has been responsible for their failure. All these we did before we decided on the route to take. We knew that most of the problems with Nigerian airlines in the past involved the lack of capacity, and not having enough planes to meet the demand of the teeming flying population. Again, you don’t have any Nigerian airline succeeding on the international scene. So, from the outset, we started with seven aircraft and we have never stopped buying aircraft. At every point in time, we know that when we increase our capacity, it would make us to compete favourably. Importantly, our bank, Fidelity Bank, has been very supportive, and it is because we pay back our loans. That has helped us to be able to increase our fleet to satisfy the flying public and compete favourably. We have not stopped buying planes and within a very short time, we now have over 20 planes flying. We have ordered 10 Boeing 737 Max planes; we have ordered 10 Embraer E195 jets and 20 others are on purchase rights. The Embraer jets will start hitting the country in less than 11 months from now. We are Nigerians and we should have the opportunity of flying the best civil aviation planes ever.
The driving force is that Nigeria has been stigmatised as failure in the global airline industry and we decided to make the difference. We wanted to be different and we decided to show that we are a very resilient people in Nigeria. We have very resourceful people. They have not been given that opportunity to rise; we have the international aero politics trying to bring Nigerian airlines down. So, we decided to do things differently, both in the way we run our affairs and in the way we expand. We decided to acquire the single-aisle planes for our domestic operations and we have gone to acquire the wide-body planes.
How do you react to the claim of some aviation stakeholders that your airline is just buying jumbo planes and keeping them on the ground, thereby wasting resources.
They are only talking without the knowledge of the industry. This is one of the reasons Nigerian airlines fail on the international routes. They use only one aircraft. The day that aircraft goes deck, you disappoint passengers on the international arena. We want to represent Nigeria well on the international arena; we want to be good ambassadors of this country. We want to make Nigeria and government proud that they could provide one private airline that will for once launder the image of this country internationally. That is why we have waited this long, to acquire at least four jumbo planes before we hit the ground running. That is what is done. That is why on July 5, 2019, we are going to hit Dubai through the Sharjar International Airport. We are starting our international operations with Dubai through Sharjar on July 5.
We invite Nigerians to come and patronise their own. We know some airlines are trying to run us down. Everything is set to give this country what it deserves on the international route, both in fare and the equipment (plane) we will be using. We are using the beautiful Boeing 777 planes which even the legacy carriers will be proud of. The aggressive fleet expansion is needed to plug the holes and compete favourably on the international scene. And there is no looking back.
Why has your plan to begin some other foreign routes aside from Dubai suffered setback?
The Federal Government has given us the right to fly to about six international countries. However, those countries have to give you landing right into their countries for you to be able to fly there. It is one thing for your government to designate you to fly to a country; it is another thing for the host country to give you landing permit. Overtime, you find out that most countries tend to stifle Nigerian airlines. I know of a country that it took them three years to even respond to our mails. This happened even after our government has given them the necessary documents to show that we have been designated to fly there. The reason is simple: They want to protect their indigenous airlines by stopping competition from Nigerian airlines. All that is changing anyway. I thank the Federal Government and the President for being supportive of indigenous investments. In fact, it was even the Nigerian government that submitted our names to the Indian government. The Indian government has given its nod now. There are just a few things remaining and we will start soon. South Africa has given us permit to start coming. We will start flying to Johannesburg on July 2. India too, we will start towards the end of July or beginning of August. Of course, we have the United States, the United Kingdom and others. They are surmountable. We also have applied to those countries. The processes are ongoing. These are the reasons why we have to acquire more aircraft.
What benefits do you think the Single African Air Transport Market agreement that has been ratified by 28 countries, will bring to Nigeria?
The Single Africa Air Travel Market is a fraud against Nigeria. I say so because it has not created a level-playing field for everyone. The idea behind SAATM is noble. However, in the practical sense, it is a fraud against this country. Nigeria has the population and the majority of the Nigerian population are mobile. So, these countries are just making a feast out of Nigeria while at the same time making it difficult for Nigerian airlines to come into their countries. Has anybody ever bothered to know why some Nigerian airlines are no longer doing the West Coast or African regional flights? It is because the charges there are exorbitant and discriminatory; charges that their own airlines are not paying. Air Peace has lost over N1.2bn in one year doing West Coast. But we have decided that we will never pull out. However, if it continues, we may have to go to court to stop some African airlines from coming to Nigeria, unless they create a level-playing field for everyone. They wait for you and use their ground-handling companies to give you spurious charges; the overflying charges are high. You pay for the passengers you bring in and the passengers you take out. In Nigeria, we don’t give them the same problem. We give them red carpet here. Some of them ‘night-stop’ here in Nigeria. You dare not do that in their country. The charges alone are very exorbitant.
International routes have become a slippery ground where most Nigerian airlines have met their untimely death. What specific measures have you put in place to ensure you succeed as you begin intercontinental routes?
As an airline, we have done almost everything we need to do. In fact, we have done everything possible that any airline out there may not have actually done. If airlines from the Western world are expected to do 70 per cent compliance, the Nigerian airline is expected to do 200 per cent compliance. That is the problem we face. You get to their country and they ramp-check you unnecessarily; they try to find faults. So, most Nigerian airlines have not been able to survive because of international aero politics. I call on the Nigerian government to help us play in the international aero politics. If any country unnecessarily harasses any Nigerian carrier, our government should mete out the same harassment to their own airlines. Unless this is done, they will continue to kill Nigerian airlines on the international scene. We are prepared for international routes. Air Peace is IOSA-certified. We are a member of IATA. We have done everything under the sun any airline could do to begin international routes. We have very beautiful equipment, and our cockpit crew are one of the most proficient in the world. I bet you, they are going to give it to us. It is international aero politics. They are trying to protect their own airlines. Nigerian route is one of the most lucrative routes in the world; so, foreign carriers don’t want that competition. They don’t want another airline from Nigeria to do direct flights to their country; that might erode what they have been enjoying over time. Between Johannesburg and London is nine hours; while Abuja to London is about five hours. Go and find out what they pay as charges. We pay higher than those flying from Johannesburg. Why is it so? The same thing applies to other destinations; not just London. We have to change their dynamics. Nigerians have been short-changed over time without them knowing it. Now that we want to go to Dubai, an airline from the Gulf region has started offering some mouth-watering incentives to the Nigerian passengers. They are even offering hotels for economy passengers. When airlines are using state subsidies to compete, that is an unfair competition. I plead with the Federal Government to caution some of these carriers. If Nigerian carriers are run out, it is unfair because we are the ones providing jobs to thousands of Nigerians. If they continue to do this, the thousands of Nigerians depending on Air Peace for their livelihood will be thrown out to the streets. We don’t know how many of them will join Boko Haram or militancy. We don’t know how many of them will become kidnappers or armed robbers. The Nigerian people, not just the government, should see beyond these incentives. What they normally do is that they run down Nigerian airlines by using state subsidies. They will recover it millions times over once the Nigeria airline closes shop. Nigerians should be wary of this and for once be patriotic. Every penny you pay to Air Peace will go to create another job. Look at some of these foreign airlines, flying to Nigeria for many years; some of them have flown for 60 years. How many people have they employed? Air Peace has been flying for over four years and we have created over 12,000 job opportunities indirectly. We have created about 3,000 direct jobs. And for every Nigerian you employ, you are taking care of at least eight people. So, we must support our own. It is about the well-being of our country. How about capital flight? I am not against foreign airlines coming into our country but I’m against unfair competition and bad international aero politics. I am against anything that will affect our economy badly as a country.
We should also restrict the multiple designations the government is giving the foreign carriers. Nigerian airlines will never grow if we continue to open every international airport or city to foreign airlines. There should be conscientious efforts to make our own airlines come up. One airline is about to start from Port Harcourt. A gulf carrier is doing one flight from Abuja, two flights from Lagos and the same airline is about to start a third one because Air Peace is coming to the Gulf route. If it happens, I will go to court. Our government needs to protect us, otherwise, Nigerians will continue to cry that we don’t have good or strong airlines in this country. They cannot be strong under this environment. We need to change things. We need to protect our own. And I believe our government is going to do that.
What other things do you think Nigerian government must do to protect and promote indigenous carriers?
Another thing is fuel. I don’t know how we can do it but I believe that if we start the production of aviation fuel in Nigeria, it will go a long way in helping Nigerian carriers. Secondly is the lack of maintenance facility in Nigeria. Lack of this is affecting Nigerian airlines and there is a lot of capital flight in this area. For example, this year alone, Air Peace has nine aircraft that will become due for C-checks. Each time we take an aircraft abroad for C-checks, we don’t spend less than $2.5m because we clean out everything. So with those nine planes, we should be talking about $30m. If those checks are to be done in the country and those funds spent within, imagine the number of jobs it will create. But then, it is not the duty of government to build a Maintenance Repairs and Overhaul facility. All we need is for the government to provide the enabling environment for private investors to build an MRO. If credible investors come forward to look for land at the airport, they should be given so that they can build the MRO.
Another thing is finance. It is very difficult for most Nigerian airlines to access loans from banks. I can say it is not difficult for Air Peace. Our bank has been doing marvellously well in that end.
What are the general problems responsible for the untimely death of many Nigerian airlines in the past, aside from the ones you have enumerated?
There are many problems bedevilling Nigerian carriers. One of them is poor airport infrastructure. Most of the airports don’t have facilities for night flights. For you to succeed in aviation, airplanes must be flying for 18 hours every day. In Nigeria, we do only about seven hours of flying daily. We start operations about 7am and by 6pm, most of the airports are closed for the day. So, you are limited in flying. Meanwhile, insurance, staff salaries and other things are static.
Another thing is the high cost of aviation fuel. If I buy aviation fuel in the morning for N250 per litre, by evening, it may have gone up. Aviation fuel is more expensive in Nigeria than most countries that don’t even produce fuel. Normally all over the world, aviation fuel is about 40 per cent of your cost of operations. In Nigeria, it is about 70 per cent.
The third one is the cost of maintenance. If I’m ferrying my aircraft to the USA for maintenance, the cost of ferrying alone is about $200,000; this is spent on fuel and over flyer charges. Whereas in the USA, they just go to the next compound which might be another maintenance facility. The cost of maintenance is too much for the airlines to bear. When you procure spare parts and the consignment arrives, the Customs try to seize it. Now they are improving. The Customs have started realising that Aircraft on Ground situations must be tackled quickly.
Another problem is multiple charges. On the ticket you buy, there may be about 37 charges. If the ticket you buy is N23,000, at the end of the day, what comes to the airline is about N9,000 or N10,000. It is from there you do your maintenance, insurance among others. The issue of multiple taxation and charges should be looked into as well.
Fraudulent practice in Nigeria is a problem too. Recently, they attacked our system and we lost over N2bn. One of the law enforcement agencies in the country is helping us to recover monies stolen from the system by some unscrupulous agents and sometimes staff.
Another thing is the inability to lease aircraft. Lack of access to leased planes. It is like Nigerians airlines have been blacklisted. All over the world, it is difficult to succeed in this business without the ability to lease aircraft. Even all these big, names including Emirates, lease planes. Most of their planes are leased. But Nigerian airlines cannot lease planes because of so many factors. One is the bad antecedent of Nigerian airlines whereby they lease planes and they were unable to pay their lease rentals. Some don’t even surrender the planes when the lessors come for the planes. Overtime, these things have rubbished us. Again, the international community has stigmatised this country as being unsafe. So, it is not just because Nigerian airlines cannot pay. Nigeria has been stigmatised as being unsafe; so they are afraid. They say a lot of things. Recently, we lost about 10 aircraft at the last-minute. We could not get them on lease. They say, “Oh Air Peace is a good airline, we trust the integrity of Air Peace. However, our risk department has flagged it as a Nigerian company. Therefore, the board has declined approval.” Last-minute cancellation just because we are from Nigeria! If you want to buy, no problem, but to lease, they don’t want to lease to you. They would cite different things like being politically unstable, rule of law and all sorts of things. They cite them as reasons for not affording you lease. These are the challenges Nigerian airlines are facing. But we thank God that in Air Peace, our bank has been able to trust us because without that, we would not have been able to acquire the number of aircraft in our fleet. But at the same time, we pat ourselves in the back for having shown a lot of integrity in our financial management and discharge of our obligations to our lenders. If they gave us the first loan and we failed in our obligations, they would not have given us the second one.
Do you subscribe to mergers and acquisitions in the airline industry?
Airlines are not banks. Airline scheduled commercial operation is not banking. You don’t force mergers. This is not banking; we are not using depositors’ funds. These are not banks where people come to deposit money. This is private business. It is either you succeed or fail. It is like asking all the supermarkets in Nigeria to become one. In the first place, I don’t support mergers of airlines. It is unnecessary. Airlines merge on their own free will. You don’t force merger; that is draconian. And it does not even solve any problem. Air Peace pays salaries from 25th. We don’t pay beyond 30th. We make sure our salary payment never spills over to the next month. We make sure our staff do not need to carry placards. We are proactive in staff welfare. We have medical insurance that covers the husband, wife and four children. This is not “malaria” coverage only. Ours includes surgery and childbirth. We do all these and we still give bonuses, promote and increase salaries. Our salary increase is not every four years or whatever. We can wake up and say we feel the economy is somehow and we tweak our salaries a little bit. We are pro-staff. Do you now merge with somebody who is owing 10 months salaries and who does not see that other people deserve good life? No, I won’t merge. Instead of merging, I will shut down. And by the way, merger is not the recipe. If you don’t have the capacity to run an airline, you don’t have the capacity. What we should be talking about is that let government create enabling environment for airlines to thrive.
How can that enabling environment be created?
First and foremost, government needs to stop multiple destinations to foreign carriers. A situation where an airline will go to Port Harcourt, and from Port Harcourt go to Abuja before going back to its (originating) country should stop. That is doing local flights within the country. Those foreign airlines should codeshare or interline with local carriers. Don’t tell me Nigeria is a signatory to Fifth Freedom of the Air. Every country does but they still protect their airlines. They don’t follow strictly all those things they signed. When we go to the West Coast and other regions, they stifle us. They will give you permit to come in but they will create other avenues that will make it impossible or difficult for you to fly into their country. So merger is not the issue. I’m not going to merge with someone who does not have the same vision or philosophy as me. Instead of forceful merger, if you are an airline and you see that you have problems, approach another airline and collaborate. The thought of merger should not exist at all in the airline industry.
Assuming I am doing well, are you going to force me to merge and carry another person’s burden? You only merge if you feel you cannot go it all alone. If you can go it all alone, why merge? You cannot merge with the person with one aircraft, even if the person with one aircraft has his market. Don’t force him to merge. All over the world, there are two-aircraft airlines. What they do is to choose a particular city and be flying there. That is all. Chisco, Ifesinachi, GUO, God is Good, etc are all big transporters. Most of them cover all over Nigeria. You do not say they must merge with those who are covering only Onitsha-Owerri. There are people who have two vehicles and they are not going to use them to traverse the whole country. You cut your coat according to your clothe.
How can Nigerian airports become some of the best in the world?
Our airports are nothing to write home about but President Muhammadu Buhari is trying to change all that. They have been doing a lot of things. There is still room for improvement. I believe that over time, things will improve.