Airline Mortality: Aviation Experts Task Operators On Mergers

BEVERLY HILLS, January 25, (THEWILL) – Stakeholders in the nation’s aviation industry have advised domestic airlines to merge into one mega carrier to beat the 10-year ceiling for closure and function smoothly.

THEWILL can authoritatively report that except for Aero Contractors, that was initially managed by a British technical partner, hardly is there one Nigeria domestic airline that has had up to a 10-year lifespan.

It becomes even more worrisome in a COVID-19 era when safety measures are adding to the costs of operations.

Consequently, a lot of measures to deal with COVID-19 risks will expectedly slow down turnaround times and will also cut aircraft utilisation.

Despite these challenges of high mortality coupled with other operational factors, domestic airlines, over the years, have not found the need to merge due to reasons that experts attribute to personal ego.

Speaking on the need for local airlines to merge, former Commandant, Murtala Muhammed International Airport (MMIA), Group Captain John Ojikutu (Rtd.) noted that the refusal to merge is primarily caused by; personal ego coupled with the fact that there are some loopholes in the government policies.

Capt Ojikutu said that apart from individual egos, lack of proper definition of government policy on private airline operators has made them reckless in the management of their earnings and their debts especially to the government services providers.

According to Ojikutu, a review of government policy should restrict operations in the domestic routes for a minimum of four years and with good economic or commercial audit reports of another four years, before private airlines can be approved for regional routes.

Explaining further, Ojikutu, an aviation security expert said “further progression into continental routes should also be considered only with clean economic or commercial audits of another four years for approval into intercontinental routes.

For any of them to enjoy government financial intervention or be designated as a flag carrier, they must sell a minimum 40 per cent of their shares to the public, quoted on the Nigerian Stock Exchange (NSE) and showing always good annual financial returns to the shareholders”.

“If the policy is so well defined, they would find no option but to merge to operate the continental and the intercontinental routes. With the international passenger traffic in Nigeria, none of the Nigeria private airlines can compete effectively with the foreign airlines on the international routes without code sharing. Some of them may be claiming success in the International Air Transport Association (IATA) and The IATA Operational Safety Audit (IOSA) programme, but how many of those on international routes has the IATA/BSP?.

In his own view, President, Sabre Network West Africa, Dr Gbenga Olowo noted that indigenous airlines have been advised times without number, to try and merge into a bigger airline.

Dr Olowo who hoped that the merger options would be adopted by both the new and old airlines said “looking at the New Year, we are mostly going to have three airlines. They look like they are coming, we don’t know how realistic that is but they appear serious. Is it going to be a plus for the industry or a minus considering COVID-19 that has shrunk the market adversely”?

Olowo, who is also the president of Aviation Round Table (ART) stated that they will continue to sensitive airline operators ton he need fuse into one mega carrier.

Explaining further, the aviation expert added “we should never stop progress. There is the old, the new and the now and the future. That is the challenge of now. Looking at the sector, our airlines are not too strong. We have said it enough that they should merge.

“I hope the sense in merger will come to play with the new ones; otherwise they will continue to parasite one another and at the end of the day, none of them may survive in another ten years given all the constraints on ground now COVID-19 challenges and all that”.

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“I hope we just don’t have airlines on paper, we want real airlines. We have been talking that we don’t want airlines with two aircraft. We want airlines with 30 aircraft and it is doable. We have been talking about it again and again. Me alone syndrome in Nigeria has been the challenge and this me alone, die alone will not help the sector. We need machinery that will bring these airlines together. That would make the country proud of two, three strong airlines in the manner of speaking”.

Corroborating Olowo’s position, secretary-general of Association of Nigerian Aviation Professionals (ANAP), Comrade Abdurasaq Saidu streesed the damage personal ego has made to the concept of merger, adding that some indigenous airlines also have foreign interests and therefore, cannot take unilateral decisions when it comes to merger.

Saidu, however, believes strongly that it is only merger that can bring out the airlines from the present challenges most of them are facing.

He said “Airlines cannot merge because they all want to answer CEOs. But if they can merge, it will save them a lot of economic losses, including saving fuel, better corporate governance, larger fleet and even route utilization within and outside the country”.

Given the dynamic economic conditions of the aviation industry and gradual deregulation of the international markets, mergers are therefore considered to be an efficient response to deregulation.

Deregulation of the airline industry has also led to the rise of low-cost airlines.

Besides, the airline industry is a cyclical industry and mergers take place basically for financial survival and to reduce overcapacity.