How Nigeria can run a successful national carrier
This is the concluding part of the interview the chief executive officer (CEO) of Ethiopian Airlines, Mr. Tewolde Gebremariam granted to The Guardian in Addis Ababa recently. The first part was published last week. In this piece, Gebremariam maintained that Nigeria deserves a national carrier as a big aviation market, the largest economy in Africa and a big player in the continent. He therefore offered suggesttions on how the country can get it right this time around and run it as a successful business. He spoke to IBE UWALEKE. Excerpts:
Do you think Nigeria deserves a national carrier? If you do, what do you think can be done to make it a success?
A very good question. Does Nigeria need a national carrier? The answer is yes. Although Nigerian people are getting services from everywhere in Europe, from Africa, the Middle East. But for strategic reasons, it needs a national carrier because a national carrier is a national carrier. A national carrier serves the people in good and bad times. What kind of national carrier could be subjected to debate because you have different model. In terms of cooperation and partnership, this is my personal belief; I would say it has to be with an African carrier or an African country because we have similarity of objectives, similarity of purpose and similarity of direction.
Globalisation is coming to Africa in a big way. So, whether we like it or not, we have to join the forces. Globalisation is coming and will come in a big way and we will participate in that process. We always say that the 21st century is an African century, so Africa is going to grow, Africa is going to develop and Africa is going to attract huge FDI. But the question remains that Africa should participate and get the benefits of the fruits of development and the only way to do that is to make sure that in all sectors we have our own home grown companies in all sectors of the economy. Likewise, in the aviation sector, we should have our own home grown carriers who will employ Africans. When an international airline flies to Lagos or Abuja, how many Nigerians do they employ? Ten, 15 but a national carrier in Africa is going to employ thousands of Nigerians in maintenance, catering, in cargo, in airport, in academy and so on. We have to make sure that Africans get the benefits of the fruits for Africa and make sure the job remains in Africa, whether it is in Ethiopia or in Nigeria, we can always find amicable solution.
Coming to your second question of whether Ethiopian Airlines will be ready to partner with Nigeria on a national carrier. Ofcourse yes. Let me take you few years back. Before we started ASKY Airlines, our first choice was Nigeria. There was no question because Nigeria is a giant. It is a huge country in West Africa; we could not go anywhere else except Nigeria. The condition was not right and we could not succeed. We had to go to a relatively smaller country, Togo and we have ASKY. But it is not too late, we can do it and we are ready and we are interested.
If international airlines fly to all major points in Nigeria, will that not be a denial of market access to domestic airlines?
Nigeria is a huge country with huge land mass and the most populous country in Africa. Let me ask you this question, is the domestic market well serviced? The answer is no. Whether international airlines fly to Enugu, Abuja, Kano or Lagos, will it make a difference for a domestic market which is under served? The other question is that at the end of the day, passengers’ convenience in terms of time saving and in terms of cost should be the concern. We all serve the customers and if the customer’s preference is to fly directly from Kano to the rest of the world, why should they be forced to go through Abuja? The same with Enugu. Before we started Enugu, you can ask your passengers how difficult it was for the passengers to drive from Enugu to Lagos. This has helped tremendously and saved hardship for the passengers. The question is, was there enough service between Lagos and Enugu? The answer is no. I think this question that has been raised would be more valid if the domestic market in Nigeria is well served in terms of connectivity, pricing, in terms of good customer service, in terms of convenience of transfer. If it takes a passenger to connect through international airport in Abuja or Kano and it cost much additional so much money, what it means is that there is an additional price of about $200. But today, the customer is flying from Enugu, Kano to Guangzhou like the same price from Abuja . Is it not an advantage for the custome? It is all working for the customer. I think customer convenience has to take priority.
What are the challenges inhibiting aviation growth in Africa?
Africa has the most challenging aviation market in the world. It starts fuel taxes. The whole world today knows that crude oil price has come down. Not good for countries that export oil like Nigeria. Not also good for the airlines. The reduction in oil price has not translated in the reduction of price of Jet-A1 fuel in Africa for two reasons. One, there is always tax on Jet fuel levied by African government. Second, in Africa, what goes up does not come down in terms of pricing.
I was cheking my figures the other day, I found out that more thal half of African countries have not reduced the price of oil or jet fuel. We are still paying the same amount of money we were paying when the oil price was high. We are paying $5 for a gallon of jet fuel in South Sudan, while we are paying $2 for a gallon of jet fuel in Washington. Loook at the difference. This is a huge challenge.
Why do we have this challenge? It is because aviation is treated as a luxury in Africa. But it supposed to be an essential public service. If there was no flight from Lagos to Addis Ababa, how else would you have come. So this is an essential public service for African brothers and sisters to visit one another either for tourism, business, investment or any other transaction. But unfortunately, aviation industry is considered as a sector for the rich man. This is not the case.
As result of this mentality, the tax budden imposed on aviation is very high. When you add up all the tax elements or cost chain in Aviation, you find out that aviation is taxed more heavily than alcohol beverages and tobacco. This a daunting challenge for African airlines.
The second one is airports infrastructure. They are very developed. Navigational services and airports facilities in Africa are very, very underdeveloped.
The other one is incoherent aviation policy by African countries.
You have one of the best MROs (maintain, repair and overhaul) facilities in Africa. How beneficial is your MRO to your airline and other airlines.
We do a good number of third party maintenance. In the last few years because our own fleet was growing very fast, our MRO becomes concentrated within due to increasing demand by our own fleet. But there are other airlines who are using our facilities from the continent.
In terms of whether it is beneficial to us. Yes it is, not only to our airline, but to other African carriers who choose to maintain their aircraft with our facilities. It is cheaper to do it here than in Europe and America.