Experts canvass airlines mergers to survive recession

Experts canvass airlines mergers to survive recession


At a time the Nigerian economy is battling recession, which has led to the sack of over 2 million people in 2016 alone, according to the National Bureau of Statistics, there are strong indications that the embattled aviation sector may plunge further into financial crisis as more airlines are expected to shut down operations.
According to aviation experts, most of the operators are only managing to keep their heads above water having been battling with several challenges.
Aside from the economic recession, the experts noted, in separate interviews with The Point, that many of the airlines were suffering from some administrative flaws made in the past.

Many aviation experts blamed owners of the airlines for the crisis, arguing that most of the managements were incompetent as they had failed to take discerning and proactive measures towards tackling the economic recession.
A renowned aviation expert, Captain Dele Ore, asserted that the state of the airlines in the country was such that it leads to their closure, given the fact that the economy in general is challenged.
The former chief pilot and director of flight operations of the defunct Nigeria Airways said, “It is understandable that it is expensive to run an airline, especially with the scarcity of aviation fuel, popularly called Jet-A1.
Most of them have also been downsizing. But I must say it is unwise that the management could not introduce measures to beat the meltdown. Most of them employed expatriates for jobs that can be done by Nigerians and still retained them after the recession. It is clever to reduce expenses in order to remain in business as recession persists.
“They can never survive with the presence of expatriates in the sector. What you need to maintain an expatriate is enough to maintain about six Nigerians. When I was in Nigeria Airways, we ensured about 80 per cent of the technical aspect were Nigerians. Out of 32 aircrafts, 24 of them were manned by Nigerians. We ought to be assembling aircrafts in Ikeja, Lagos, if local engineers are employed by airlines,” he said.
According to the former president of the Aviation Round Table, the best way to manage the crisis is for the operators to merge or face total collapse. “They are better off if they can merge. If they insist on going alone, they would collapse one after the other, especially if recession persists. We can make do with three airlines that would offer quality service and not eight ailing operators. Anything short of that, we are just wasting our time and resources,” he explained.
Another expert, Mr. Babatunde Osho, faulted the airlines for not learning from predicaments of their predecessors. He blamed the sorry state of domestic carriers on huge debts and an increasingly unfair labour practice in the aviation sector. “Some of the airlines are managed like one-man business and if care is not taken, what happened to Aero Contractors would repeat itself in Arik, Dana, First Nation and Air Peace, among others,” he said.

Some of the workers of Arik and First Nation, who spoke with The Point, attributed the dwindling fortunes of the sector to fraud and lack of corporate governance on the part of the management of the airlines.
They insisted that some airline operators were corrupt. In the case of Aero Contractors, which suspended its operators recently, a top source in the company alleged that the management paid a sum of N30 million to one Chief Mika, who they claim is an investor in the company, from Rivers State every quarter and that contributed to the collapse of the company.
“It is so bad that four out of seven planes of the airline that were flown abroad for ‘D Check’ maintenance have not returned because the company cannot afford to pay for the repairs and it was not that it was not making money,” he told The Point.
Like the workers, the National Union of Air Transport Employees, alleged that that the management structure of the airline contradicted the Nigerian Civil Aviation Authority law that all staff must be properly remunerated.untitled The Acting General Secretary, NUATE, Olayinka Abioye, disclosed that some supervisors in the airlines earned more than managers in the same organisation, while some workers that were due for promotion have not been promoted for seven years.
He added that after several efforts to engage the management in dialogue, some of the members of the union have been victimised and frustrated out of the organisation.
Abioye described the case of Arik Airline, which has the largest fleet of aircraft in Nigeria, as the most pathetic. Aside from owing staff, including pilots, some months’ salaries, the Comrade alleged that the management deducted tax and pension fund from its workers and failed to remit them to appropriate agencies. “We have sent a warning letter to Arik that if half of the outstanding salaries are not paid by the middle of September, we would not hesitate to embark on an indefinite strike. We have written several letters to the government for its intervention in the irresponsible behaviour and we are still waiting for its response,” he added. Arik and Aero Contractors are not the only airlines that have scores to settle with the union. There are also allegations of victimisation of workers, lack of welfare packages and casualisation levelled against the management of Medview, Air Peace and First Nation airlines by the union.

However, the acting General Manager, Public Affairs, Nigerian Civil Aviation Authority, Mr. Sam Adurogboye, described the on-going crisis as a temporary development that would soon pass away. According to him, Aero’s suspension of operation would be resolved as soon as possible.
“If some of the airlines are finding it difficult to operate, it might just be that they are trying to meet-up with expected requirements. I don’t see any airline closing down now or later. All we do in NCAA is to ensure that airlines comply with standard, whether aircraft are air worthy and when it comes to the airlines sourcing for funds, we give them advice where necessary,” he explained.