By Collins Oladehinde Ehimiaghe
The recent funeral ceremony of the Anyenes held on 13 July at their family compound in Ndiowu, Orumba North council of Anambra State was packed full of mourners including former a VP, Dr Alex Ekueme and Speaker of the National assembly Aminu Tambuwal, who could not restrain their emotions as they wailed uncontrollably through the event.
It’s difficult not to be overwhelmed with grief at the burial of a lovely family of six including husband and wife plus four children who came all the way from the United States to attend the wedding of a relative but met an untimely death with no fewer than 157 others who lost their lives in the disastrous crash of an airliner conveying them to Lagos from Abuja. Although the last air disaster is now fading in our memory due to the prevalence of many other terrible occurrences in the country, we must however never forget the victims of this very peculiar kind of tragedy. As we continue to pray for the repose of the souls of the victims of the recent crash of DANA flight 0992 in Iju near Lagos on Sunday 3rd of June 2012, we must equally begin to contemplate the reason behind the frequent air disasters that have come to be very much associated with our country in the recent past. Perhaps we can spare some thoughts as we mourn even in our state of utter grief, heavy depression and deepest anger, to consider how our skies can be made safe once more for the present and future generations of Nigerians.
The tragedy of our so called aviation industry can easily be understood if we pause to take proper stock of how the sector is been run in Nigeria. Apparently, we should all share in whatever blame we choose to apportion to those that are directly involved in managing the sector because our national template for operating the aviation sector is a disaster bound to happen. While it may be convenient and political correct to blame and heap insult on those in politics and government for everything, the facts however remains that we are responsible for our lives and destinies and so, important decisions bothering on the quality of life shouldn't be left in the hands of others unless we are more than satisfied that they are most likely to act in our best interest. The management and practices of the aviation industry in Nigeria appears not to have been in best interest of anybody.
The standard of operation in the aviation industry in the country leaves a lot to be desired specifically in terms of safety. Like all other previous air crashes in Nigeria, available information on events and proceedings leading up to every disaster indicate that we have been living in denial all along and will continue to do so if far reaching changes are not instituted in the aviation sector towards the requirements for safer skies.
The main causes of air crashes in Nigeria can easily be attributed to three separate but related deficiencies of the industry:
1. The use of very old aircrafts.
2. Inadequate technical competencies in the industry.
3. Incompetent government regulators.
These observed deficiencies weren’t deliberately imposed by anybody but are actually expected going by the way the sector is programmed to operate. Where is the capital to acquire new and modern airplanes? Where and in what conditions are the technical support facilities, training institutions and competent local manpower in the sector? Who are the government regulators and what are their pedigrees including experience in modern aviation regulatory practices? Viability of raising capital to fund aircraft purchase is suspect while industrial technical support is only available through poorly funded and ill equipped government parastatals. Experienced manpower like in most other sectors of the economy has since taken flight to the Middle East and other regions of the world where remuneration is very good. In its current crumbling state, our aviation sector is designed to fail; little wonders why planes fall from the skies routinely in Nigeria!
It is even miraculous that we experience less crashes than should naturally occur base on our faulty style for managing the aviation sector. The only correct assumption in this sector is that Nigeria is the largest market for air travel in the sub region while all others are very wrong. The requirement and extent of government participation are inadequate just as the capability and capacity of private sector involvement are insufficiently defined in harnessing the potentially huge aviation market in Nigeria. Air travel is fundamental to growth and development of any economy and so it remains the responsibility of government to ensure its total development in the country. We must amend our way of managing the aviation sector if crashes are to be eliminated or reduced to acceptable minimum consistent with industry standard worldwide. More importantly, and towards suggesting alternative approach to managing the sector, we must first identify the real issue affecting the sustainability of the industry in Nigeria.
The fundamental concern here and main problem of the sector is funding. Our inability to come to terms with this fact can be attributed to either ignorance or our inordinate belief and mentality that a favorable result can be achieved even if we choose to do the wrong thing. Air disasters are not selective of victims; politicians, government officials including regulators, owners and operators of airlines, VIPs, ordinary folks, children and many others are easily killed in their prime whenever disasters occur as shown by the tragic DANA crash. Inadequate funding must therefore be a highly misunderstood problem by the authorities or a flaw of statute since no government official will knowingly put his own life in jeopardy. Funding is a huge problem in our aviation sector because there isn't any deliberate attempt to consider appropriate financial template for the industry; airlines and other equally important sub sectors in the aviation industry are run like any other private business in Nigeria where significant profit is the first and main consideration. This is very wrong because safety should be of paramount importance in running the aviation industry even if it entails little financial margins with low returns on investment. Funding of the aviation sector especially airlines can’t be left solely to the dictates of individuals and an underdeveloped and poorly capitalized financial sector found in Nigeria. Extraordinary measures are therefore urgently required for the resolution of this debilitating problem of the aviation sector.
Clearly there is pressing need for government to reconsider the options available for funding the aviation sector if we are to avoid the next air disaster in Nigeria. Worldwide, governments in developed and developing countries pass on huge subsidies to their aviation sector; ours shouldn't be different if we expect similar safety standards obtainable in these countries. That is why we have consistently argued that government should subsidize transportation instead of wasting subsidy on fuel. Fuel cost though a significant cost in operating any transport equipment, it however remains far less important when compared to the initial huge cost of purchasing the equipment and operating it safely over its life time. If equipment can’t be acquired brand new as manufactured in its original form, then it makes no sense to set money aside to subsidies the fuel required to run it when purchased old, well used and in degraded condition.
Furthermore, If the aim of cheap fuel is low and affordable transport fares, then Nigerians are obtaining the benefit by getting cheap price at the petrol pumps but are unknowingly paying a far greater price in the value of human lives lost when we fly onboard old and rickety planes with limited technical support from the ground or ride in dilapidated vehicles plying on death traps called roads. We don’t need government Subsidy Reinvestment (SURE) programme but we need to be sure that all is well within our transport sector and government can act timely to prevent disasters in future.
The huge amount budgeted and spent yearly on fuel subsidy can be transferred to the transport sector to fund infrastructure, equipment and training. This is how it’s done in the developed and smarter societies; we need not reinvent the wheel, it has already being introduced and is running fine elsewhere. The US government funds all federal highway construction and mass transit systems annually with more than $600 bn obtained by taxing the consumption of petroleum products across America: in Nigeria, government subsidizes fuel with about $20 bn but we lack federal highways and all available mass transit systems are in shambles. The aviation industry is the most important mass transportation sector in a country; the development, manufacture and acquisition of aircrafts including the running of the aviation sector are well subsidized by governments that understand the importance of air travel to their national economy. The age of awareness has since passed but the government of Nigeria can do more by becoming aware of good practices involved in running the aviation sector.
Our government must understand the critical importance of air travels and act accordingly. The Federal Government can start by creating an Aviation Sector Assistance Fund (ASAF) worth about $3bn for the industry. Modalities for accessing this loan and aid package can be worked out by; government, capable players in aviation sector together with their sponsoring financial institutions. This fund is more than sufficient for the acquisition of about 20 brand new units of mid range wide body aircrafts desirable for operation by local airlines in Nigeria. Furthermore the fund is capable of financing a modern maintenance air hanger in addition to training and retaining the necessary skilled manpower for both operators and government regulators towards ensuring sustainable safer skies. Inadequate financial capacity is the main threat to air travel in Nigeria and government have a great role to play in ensuring the continuity of a safer aviation sector for the overall growth and development of the country.
The proposed ASAF should not be confused with the current intervention fund for the industry approved by the CBN about two years ago. The N300bn Power and Airline Intervention Fund (PAIF) was set up through the Bank Of Industry (BOI) to assist companies involved in power projects and operators of airlines in the country. With respect to the air industry, the available fund is to fast track the development of the aviation sector by improving the terms of credit to airlines. It is mainly for the refinancing of existing loans and leases of airlines in addition to making available advances to augment working capital requirements of the operators. Essentially, PAIF was set up to address the financial distress observed in the aviation sector after the collapse of some financial institutions following the conduct of the last stress test and financial audit on banks by the CBN in 2009. PAIF is basically to tackle operating cost and reduce other financial burdens of airlines while ASAF is aimed at focusing on funding for the structural cost of creating and sustaining a solid foundation for the aviation sector in Nigeria.
Furthermore, ASAF will provide adequately for the fairly good financial base and safety margin for airline operations recommended by the Air Marshall Paul Dike’s Task Force on air safety in Nigeria. The report of the committee, set up shortly after the disastrous crash of Sosoliso Airline in Port Harcourt in 2006 in which all 126 passengers including 61 secondary school children lost their lives, was very far reaching especially on the manpower and technical requirement of the aviation sector but fell short on the financial aspect essential for a sustainable safer skies. Professional and competent manpower recommended by the committee can only be cultivated and retained in the industry if funding is available for training and remunerations are competitive with international standards while modern technical infrastructure is dependent on financial capability. The National Aviation Development Fund (NADF) and the Nigerian Airline Support Fund (NASF) also recommended for establishment by the committee including the Airline Development Levy (ADL) to fund both funds are all good ideas but the administration of two funds by different bodies with different boards will increase inefficiency and corruption while the source and size of the levy appears completely inadequate to cater for the huge financial burden currently besetting the aviation sector. Both NADF and NASF can be effectively managed as departments under ASAF just as the $3bn funding for ASAF will be more than adequate to finance the aviation sector when compared to the $205m expected to be realized yearly from ADL. Proper implementation of the Air Marshall’s committee excellent recommendations for safer skies will certainly require the consideration of a mega fund like ASAF.
For ASAF to be successful and ensure safety and the financial stability of the aviation sector as envisaged, government must work hard at eliminating corruption and abuses in the administration of the fund. This is a key requirement and safeguard towards preventing this financial incentive from going the way of similar government subsidy and intervention funds currently embroiled in controversies. Benefiting companies must show that they deserve assistance and are capable of managing the loan while care must be taken to ensure that disbursement of fund is direct to original equipment manufacturers. High level of corporate and managerial integrity can easily be achieved by advancing credit to only airlines and other aviation sector companies listed on the Nigerian Stock Exchange. Orders and payment for aircrafts and equipment should be restricted to international brands after an open and competitive tender process for effective and transparent administration of the fund. Local aviation companies should be restricted to accepting and operating the aircrafts and other equipment safely and professionally in addition to timely repayment of loan from proceeds of operation. The quest for safer skies in Nigeria is beyond making cheap money available to the aviation sector through ASAF; it requires serious managerial competencies among operators and the financing authority designated by the federal government for the purpose of the fund.
The aim of the proposed ASAF is clearly to support safer and sustainable air travels in the country by encouraging private sector participation in all the key aspects of the industry. With over N480bn as financial support from government, quoted companies can now provide important services hitherto left to government due to high capital requirement for startup cost. Equipment procurement, infrastructures and training of competent manpower can be carried out by private concerns in line with internationally recognized standards. Grants and very low interest loans with generous terms will facilitate long term planning currently absent in the aviation industry. Strategic management and technical partnerships with experienced foreign airliners can be considered only when funds are available for new and internationally certified aircraft fleet. Cheaper fund will widen operation margins of airlines and reduce unsafe cost cutting measures previously employed to save cost in order to break even and return profit to operators. The aviation business is known not to be very profitable but government involvement through financial incentives enables a fair return on investment and this is the only way to encourage decent private sector participation in the industry.
We must be prepared to fund the aviation sector properly if we truly desire safer skies in Nigeria. The time is now before the next planes drops from the skies and fresh rounds of mourning and bewailing start all over in the country. The Federal Government must act fast and wisely too in its quest to restore the fortunes of our aviation sector and make our skies safe once more for all Nigerians and visitors who arrives through airports into the country for business or pleasure. An Aviation Sector Assistance Fund is clearly a smart way to safer skies in Nigeria.
May the souls of all the departed continue to rest in peace. Amen
Collins Oladehinde Ehimiaghe
14 July 2012.
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