Nigeria loses over N200 billion yearly to air pacts
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Unfavourable Bilateral Air Service Agreements (BASAs) that allow foreign airlines access into the local market is costing the Nigerian economy and her ailing aviation sub-sector billions of naira yearly.
The loss, in excess of over N200 billion, follows the perennial inability of the nation’s flag carriers to reciprocate and compete with their international partners on the BASA routes. Consequently, the local air travel market, second largest in Africa, keeps losing while its foreign counterparts and their home countries are the better for it.
The Guardian’s investigation reveals that the imbalance is even worse off in the deals between Nigeria and her neighbours. Sadly, while the nation’s flag carriers are denied entry, the reverse remains the case with flights from these countries, moving from one airport to another.
Indeed, the situation consistently depletes the foreign exchange reserves in favour of other economies. With a large population, a comparative advantage at that, the industry has kept losing potential revenue that ordinarily should have boosted its paltry 0.4 per cent contribution to the nation’s Gross Domestic Product (GDP).
BASA, otherwise called Air Transport Agreement (ATA), is an understanding between two nations to allow international commercial air transport services with their territories. It dates back to the Chicago Convention of 1944.
BASAs cover the basic framework under which airlines are granted bilateral rights to fly two countries. The frequency, designated airlines of the signatories, origin, intermediate points as well as traffic rights, type of aircraft and tax issues are normally covered by Memoranda of Understanding (MoUs).
Figures from the Nigerian Civil Aviation Authority (NCAA) confirm that there are at least 90 of such agreements as at December 2016.
Nigeria’s notable partners include United States, United Kingdom (UK), France, Germany, Saudi Arabia, United Arab Emirates (UAE) Qatar, South Africa and Ethiopia.
Others are Netherlands, Italy, Egypt, Morocco, Turkey, Togo, Ghana, Liberia, Brazil, Cote d’Ivoire as well as new entrants – Seychelles and Bahamas – among others.
Besides U.S., UK, South Africa and Ghana where Nigerian carriers like Arik, Air Peace and Med-View significantly reciprocate with flights operations, returning the same business gesture in others countries has been very difficult, if not impossible.
These airlines fly multiple routes and frequencies in Nigeria without any reciprocation. Lufthanza flies from Port Harcourt, Abuja and back to Munich, Germany. Air France does Abuja, Port Harcourt and back to Abuja before heading for Paris. Yet, the airline undertakes another leg from Lagos to Paris.
Turkish Airline has about four destinations in Nigeria. Ethiopian Airlines flies to all international airports, and has just added Enugu. Asky also does multiple frequencies to Abuja and Lagos daily. Emirates, Qatar and Etihad do more than 28 frequencies weekly.
Delta does about 10 frequencies too weekly. As at the last check, only Saudi airlines can now airlift Nigerian pilgrims to Saudi Arabia for Hajj operations.
In total, there are over 40,000 flights operated by foreign airlines yearly in Nigeria. The apex regulatory body, Nigerian Civil Aviation Authority (NCAA), estimates an average five million passenger traffic on international routes every year.
Another has it that two-thirds of about N400 billion revenues made yearly on ticket sales in the country are from international operations. Therefore, with Nigeria unable to reciprocate, almost all N260 billion in ticketing, goes to foreign airlines, leaving the nation with virtually nothing.
The Chairman of the Airline Operators of Nigeria (AON), Captain Nogie Meggison, faulted the figures from the NCAA, noting that the foreign airlines repatriate over $2 billion (N610 billion) yearly as proceeds from tickets.
He contended that the pacts have always been designed in such a way to favour the foreign carriers at the detriment of the indigenous operators.
The imbalance, it was further learnt, may not be unconnected with the alleged lack of transparency and failure to allow actual operators (airlines) to negotiate an agreement that favours both sides.
“The last sets of agreements were good example, where the minister just came out to announce that we have signed a BASA with another nine countries. It is civil servants that are signing with real businessmen in other countries. By the time they bring it to airlines, nobody wants to take it,” a Chief Operating Officer (COO) of an airline said.
The Part XI, Section 37(1) of the CAA 2006 Law empowers the NCAA “to perform air transportation, licensing functions in the manner which is considered best to ensure that Nigerian registered airlines compete as effectively as possible with other airlines, providing air transport services on international routes.”
The section, however, provides that in performing the role, the regulator “shall have regards to the minister’s advice with respect to the likely outcome of negotiations with government of any other country for the purpose of securing any right required for the operation of an airline in Nigeria of any air transport services outside Nigeria.”
NCAA’s spokesperson, Sam Adurogboye, said the apex regulator was alive to these statutory responsibilities, dismissing as untrue insinuations that the agreements were unfavourable, shady and against national interest.
Adurogboye reiterated that BASA agreements are equally witnessed by the ministries of Justice, Foreign Affairs, Aviation and designated airlines.
He added: “BASA will always want the airlines that will reciprocate to be present. They have always been there right from the beginning. Some of the agreements dated back to the days of Nigerian Airways. So, if the new airlines like Air Peace and Med-View are complaining, then one can understand why.
“We have always designated airlines to reciprocate, but they will not go. Besides the fact that they have to meet safety requirements before they are allowed to reciprocate, do they really have the capacity to compete? If a foreign airline brings 777 or A380, how do you hope to compete using a 737?
“That is why people are calling for a national carrier. These people (airlines) are just okay with one-man Nigeria Limited, so they are limited and cannot compete. There is nothing in the BASA that favours one country over another.”
The Chief Executive Officer (CEO) of Air Peace, Allen Onyema, refuted the claims that local airlines are not strong enough to compete on some of the routes, but pointed out quickly that some African nations still engage in bad politics of market protection by stealth.
Onyema revealed that government recently granted his airline the right to operate on the west coast, including Ghana and other countries in Central Africa, coupled with six international routes – China, U.S., U.K., India, Dubai and South Africa.
While expressing joy at the move, he noted that most African countries had not allowed them to reciprocate while their airlines keep feeding fat on Nigeria.
He observed: “African countries are trying to stop us, especially when they think you are a competition. We have right to fly to Cote d’Ivoire since two years, but they are not even answering our mails because they want to protect Air Cote D’Ivoire. Senegal has not even come here in two years to assess our facility. When we threatened to take a legal action to stop them from coming to Nigeria, they opened the door, but gave us one ground handling service at the cost of $4000 per trip! So how are you going to make it?
“We are ready to go to all the African countries and we have the equipment to represent this country proudly. If Togo does not allow Air Peace to come into their country by May 21, I will go to court to stop Asky. Enough is enough.”
Onyema went on: “These African nations set up themselves with Nigeria in mind. Everything is geared towards ‘let’s go an ravage Nigeria’. So, the earlier we start supporting our own, the better. These people take more from Nigeria and give little in return. Yet at any slight discomfort, they blackmail this country. Foreign airlines are fair weather friends. They gain billions out of this country in foreign exchange. So, why should we always give them a red carpet reception at the detriment of ours?”
The Secretary General of the Aviation Round Table (ART), Group Captain John Ojikutu (rtd), maintained that the situation continues to rub off on the economy and local airlines because “we have no known policy for the growth of Nigerian airlines.”
He queried: “How can our airlines develop capacity when any foreign airline can fly to all four or five of our international airports? How can our airlines develop capacity when the exclusive market on our domestic and regional routes is left open to foreign airlines? Which law allows only Saudi airlines to airlift nationals of other countries for Hajj?
“Would British allow Arik or Medview to fly to Gatwick and Heathrow the way the BA flies to Lagos and Abuja? Or would the U.S. allow Nigerian airlines to have multiple destinations the way Delta Air flies to Abuja and Lagos.
“Worse still, which African country would allow a Nigerian airline to gallivant in her country the way Ethiopian airline is gallivanting to all of Nigeria’s five international airports? We need to call government’s attention to this lopsidedness, else there is no room for capacity development for the domestic airlines.”
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