Why consolidation can’t work in the aviation sector
Kayode Odukoya, CEO, Bellview Airline
•Kayode Odukoya
Photo: Sun News Publishing
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Mr Kayode Odukoya, the Chief Executive Officer of Bellview Airlines is not happy with the way the Federal Government is treating the domestic airlines especially in the areas of designation, flight frequencies and other concessions.
The Bellview boss argues that the lucrative routes are reserved for the foreign airlines when there are capable local airlines that can handle that. He sees it as robbing the indigenous airlines to pay their foreign counterparts.
As a panacea, he is therefore clamouring for a level playing field for all airlines operating in the country.
First and foremost, the issue of airlines owing the government does not go down well with him because according to him, “most of the claims of Federal Airports Authority of Nigeria (FAAN) are bogus. They’re not reconciling figures. Most of these claims are usually blackmail because airlines are actually paying. We in Bellview are paying almost N50 million every month in charges” he says.
He spoke recently on the airline’s performance in the industry, its expansion efforts, recapitalization and more.
Designation
We are the leading carrier that brought about designation in Nigeria in practical terms.
We did this through our Bellview-Sierra Leone that is flying into 14 countries. We are flying into Abuja, Ghana, Conakry, Monrovia, Libreville, Monrovia, Freetown etc. No Nigerian carrier has had that kind of experience we do have. Immediately after the designation, Bellview was designated to fly to both Freetown and Bombay. We’re operating six flights per week into Freetown. We have six aircraft. We just got two new Boeing 767 for the Lagos-Bombay route. If the government had designated us on the London route, we would have been able to sell London ticket for 400 dollars. The aircraft can fly non-stop into London, New York, Johannesburg, Bombay, China etc because it’s a 14 hour non stop aircraft. The same with Ethiopian airline.
Challenges
To consistently remain in business is challenge on its own. Painfully we do not operate on the same level playing field with the foreign airlines. It’s even pathetic that foreign airlines are increasing their frequencies everyday and here are we Nigerians, we’re not given the fair opportunity. It’s a bit surprising to trade your frequency for royalty. Rather you should be trading your requency for jobs, infrastructure, for retaining your capital and for strengthening your country.
We’re asking government for opportunities. We’re flying 24 flights daily. Bellview has demonstrated without any doubt that we have the capacity and the international community as a lot of confidence in us. This is the first time that a domestic airline again has delivered two B727 flown by Nigerians, not a wet lease.
I urge you people (press) to support and clamour for a level playing field. The government gives us the level playing field and allows carriers to come in so that Nigerians can derive the benefit of democracy. We’ve gotten part of it because we don’t think any route should be reserved. Everybody should be given the opportunity.
Airlines merger/consolidation
Yes. The African Airlines Association (AFRAA) is clamouring for airlines merger to make the aviation industry stronger. But I’ve always said that when you talk of consolidation, it’s a pure blackmail. There is no consolidation in South Africa, Kenya and co. They are designating. Consolidation evolves as a result of market forces not by coercion. Why can’t they ask the newspapers houses to merge? You don’t force people to come together or merge. You don’t put a gun in somebody’s head to make merger effective. If a business is successful, people will merge and pull resources together and achieve what we call economies of scale. There is no where in the world where you put consolidation ahead of designation or liberalization. How much consolidation has taken place in Africa. It’s still an evolving process. That is not a justification to bring Virgin into Nigeria.
Recapitalization
Bellview made a recapitalization of N1 billion to meet the demands of the industry. That’s a lot of money. We want to keep delivering good services.
Disciplining debtor airlines
The Minister of Aviation, Mallam Isa Yuguda has declared to go hard on erring airlines that cut corners and those who owe the parastatals. That is not the point. Most of the claims of FAAN are bogus. They are not reconciling figures. If you say I owe you money, we have to agree on terms of the debt. Most of the claims are blackmail. We pay N50 million every month to FAAN and NCAA on charges. So it’s not a situation where one party rushes to the press to say airline a or b is owing. You have to hear the other party’s side. Is Virgin not owing in its country? Major carriers owe millions of dollars. The aircrafts they bring here are leased. They don’t belong to them. They’re wet leased. A wet lease is illegal. Under our regulation, you cannot start an operation with a wet lease. You can see that the Virgin Nigeria aircraft is on wet lease but if I go and bring a wet lease, you’ll tell me I can’t come. So what standard are you then preaching. The rules must be the same. They are driving us to the wall. It’s easier to bring a wet lease for B727 aircraft but because it’ll be against our regulation, we had to bring a dry lease.
I actually salute the minister for his efforts in sanitizing and standardizing the industry. You can continue to sanitize the industry and at the same time give good ones an opportunity to grow.
Virgin Nigeria plying domestic routes
The whole essence of bringing Virgin Nigeria into operation was to address the issue of capital flight. It was to come and operate against British Airways, Virgin Atlantic, Lufthansa, Alitalia, South Africa Airways, Emirates etc. and not to come and fly Lagos-Abuja. We’re already retaining our capital. Nigerians want a flag carrier. Nigerians are not complaining about flying Lagos-Abuja. There are about 30 flights going there. You can pick or choose where you want to sit. The reason why government floated a flag carrier is for the airline to be going where we have a disadvantage. It’s breach of memorandum of understanding. It’s slap on our face it shouldn’t be allowed. We are not holding these people to a level playing field.
There is no point asking Virgin to come and meet us in our market and yet we can’t go and meet them in their market. Where they are coming from is liberalized market. What is happening here cannot happen in the United Kingdom.
Management style
I believe in professionalism and it’s in the Bellview family. For our new operation, we trained five sets of crew. We have the infrastructure. We’re a member of the International Air Transport Association (IATA) clearing house. That’s part of professionalism.
2nd June 2005
