‘Banks are encroaching into travel agencies business’

Travel agencies in Nigeria are grappling with a myriad of challenges not limited to zero commission from foreign carriers and infiltration into the business by deposit money banks (MDBs).  President, National Association of Nigerian Travel Agencies (NANTA), Alhaji Aminu Agoha,  spoke to KELVIN OSA OKUNBOR, on a wide range of issues affecting the industry.

How disturbing is the threat of commercial banks selling airline tickets to the general public to the business of travel agencies?

The threat is real. Banks in Nigeria have become “jack of all trades” and are gradually and consistently encroaching on all businesses including specialized areas such as ours. Banks are not licensed to act as Airline agents.  Travel agents undergo a rigorous accreditation process before they are allowed to sell airline tickets. Why are airlines colluding with banks to sell tickets by offering banks commission and offering agents none?  Recently, the general public has been inundated with adverts by Banks in this country making ridiculous offers to the general public for the purchase of air tickets from such banks.

In practical terms how much are travelling agencies losing to this unprofessional practice?

Some travel agencies have folded up while others are downsizing. This is certainly bad for our economy especially now that the government is looking for ways to create jobs for its citizenry.

Are there plans to engage the Central Bank of Nigeria to address this infraction?

Yes, we have written a letter to the CBN and have sort audience with the Governor of  the Central Bank to discuss this issue.

 The issue of fare disparity is assuming frightening dimensions. Passengers prefer to travel through Ghana and other countries than directly through Nigeria, how could this be addressed?

We have tried to address this issue at various forums. In April 2012, I made a presentation on behalf of the Association to the then Senate Committee on aviation and detailed all the sharp practices employed by some international airlines operating in Nigeria. We have also called a press conference to alert the government and people of Nigeria about this issue and it is my hope that the incoming administration will take a critical look and engage professionals to map out strategies that will check the trend. We should not be taken advantage of, just because our people love to travel.

Has NANTA drawn the attention of NCAA to this infraction?  What has been the response?

Yes, efforts were made to address the issue during the tenure of Mr Harold Demuren who red red a riot act to all the airlines, but there has been no follow up after his departure from the NCAA. We have also recently written to them on the need to call a stakeholder’s meeting to urgently find a way of curbing this trend.

The refusal of airlines to join the BSP is hindering travel agency business in Nigeria; precisely how bad is this scenario?

Airlines that have not joined the BSP scheme are the ones losing out because we are unable to sell their tickets efficiently and effectively. Lately, we have also been calling on the necessary authorities to compel foreign airlines to partner with Local airlines through the interline facility, rather than give the foreignairlines multiple landing rights into the country. This can only be possible if our local airlines join the BSP scheme.

What is the market share of the entire travel agencies in Nigeria ?

This is estimated at about 79 per cent  as pronounced by the Airlines at the end of 2014.

Most Nigerians do not know the difference could you please expatiate between travel agencies and travel management companies?

A travel agency is a private retailer or public service that provides travel and tourism related services to the public on behalf of suppliers such as airlines, car rentals, cruise lines, hotels, railways, and package tours. A travel management company is a business travel agent that manages an organisation’sbusiness travel requirements. In addition to making reservations, a travel management company will help an organization gain control and visibility of their annual expenditure on travel. The major difference between the two lie in the fact that while the travel agency works for the general public, travel management companies work for organizations.

Why is Nigeria the preferred destination by many foreign carriers?

In my opinion, it is mostlybecause the Open Skies agreement is skewed in their favour. Also the market in Nigeria is huge and there are no strict regulations. Fares originating from Nigeria are very high and the returns are highly favourable to them. In addition to these, they are able to remit almost 100 per cent  of their earnings to their home countries. This lax operating environment makes it a very attractive terrain for them to operate.

Multiple entry points for foreign carriers is killing the domestic airline sector, what should government do to redress this problem?

Rather than give multiple landing rights to foreign airlines, they should be encouraged to code share with our local operators.  This would enhance growth for our local operators, provide jobs for Nigerians and keep some of our money in Nigeria. Nigeria’s bilateral air services agreement (BASA) is lopsided. Where BASA is not reciprocal, adequate royalty should be paid by airlines from those countries.

Consolidation plans for travel agencies could enhance market share and efficiency, what is your take on this proposal?

NANTA  is providing support for agencies that are thinking in this direction. We recently organized aseminar on consolidation where we invited experts from South Africa to shed light on the South Africanmodel and share their experiences with our members.

How will government develop a master plan for tourism development in Nigeria?

All stakeholders in the travel and tourism sector should be involved in the development of a tourism master plan.

What are the challenges confronting travel agencies ?

Although NANTA now enjoys a good relationship with some of the Airlines; most of them are still operating in direct competition with Travel Agencies and all efforts to get them to relocate their  sales offices  to the Airport as is the practice all over the world has proved abortive. While about 6,120 Nigerians work to generate 75 per cent  of the market, only about 250 are employed by the Airlines.  Therefore closing all the operational offices of the airlines will enable Travel Agencies to sell more and employ more Nigerians.Airlines make available on their website, fares which are much cheaper than those available on the Agency booking platforms. This is unfair competition and the practice is running a lot of agencies out of business. We have documented evidence about this practice from Emirates airlines and KLM.

How are you handling  competion by banks?

This growing trend portrays a dangerous situation whereby the banks have abandoned their core business of providing financial services to the public and are delving into a business venture that they are not legally licensed to perform.

 What about non  compliance with procedures by some airlines?

With the implementation of the Billing Settlement Plan (BSP) in Nigeria it was expected that ALL Airlines would operate on the BSP Platform as is done worldwide. Seven years after full implementation however, some Airlines have refused to join the BSP thereby distorting the market.  We wish that all Airlines operating in Nigeria be compelled to conform to the system that has been fully embraced by the Nigerian Market. Similarly, some Airlines have also not joined the BSP; rather, Airlines’ management has continued to subject Travel Agencies to buying tickets on a cash-and-carry basis from their offices. Furthermore, some airline’s ticketing offices are run by non indigenous companies who earn between 12 per cent  and 20  per cent  commission on ticket sales, yet deny Travel Agents their entitled commission.  We wish that all airlines are compelled to conform to the BSP in the Nigerian Market.

 What about air fares disparity ?

We do not understand the great disparity in fares between what the airlines offer to the Nigerian market and what they offer elsewhere in the world. The disparity in fares is alarming and we wonder why Nigeria should be singled out for this rip-off. We see no reason why a flight ticket from Accra, Ghana to Europe or USA on some airlines would be cheaper than from Lagos to the same destinations on the same airline.

For instance, a first class ticket to Las Vegas from Lagos is 1.8 million naira more than a first class ticket to the same destination from Accra! Nigerian travelers are now developing Ghanaian economy. Their travel agencies are making huge sales from the Nigerian travelers while most of our Nigerian agencies are folding up. From our records, travel agencies posted $1, 306, 304,373.00 sales revenue for the year ended December, 2014. There is an increased influx of foreign airlines into the Nigerian Market. Ordinarily, this should depict great revenue potential for Nigerian Travel agents. This is however not the case.

These airlines are coming to Nigeria to rip us off. First of all, their base fares (NUCs) are higher than what prevails for the same flight time for journeys originating from elsewhere in the world. Even when they offer promotional fares, the added taxes charged are so huge. The new trend is for airlines operating in Nigeria to offer lower NUC’s which reduces the amount of commission agents receive and to charge exorbitant taxes. Taxes, now amount to more than 50 per cent  of the total ticket fares. While the total industry sales figure is $2.0bn for the year ended December, 2014.  The sales by Travel Agents represent 75 per cent  of the total sales; while the balance of 25 per cent  was made through direct sales by airlines and the Internet.

What about unfair  taxes ?

After the September 2001, bombing of the Twin Towers in America  a new tax was introduced by airlines to offset the added cost of security.  Aviation fuel was also introduced worldwide due the unprecedented cost of fuel arising from the unending war in the Middle East. These taxes are charged twice for tickets originating from Nigeria and now constitute a major component of the total fare. It is worthy of note that most of these taxes are not Nigerian taxes and are remitted to the home countries of the airlines to the detriment of our economy.

These are sharp practices and we at NANTA have resolved to protect the  public, our loyal customers, by contesting any further introduction of any tax by any airline under any guise whatsoever. We will support the present government in its quest to rid our country of dubious and corrupt practices that result in capital flight.

What is the growth plan for travel agencies in Nigeria?

Simply put mergers and consolidation is the way forward. Also In line with current global trends, weare diversifying our payment options to include the use of credit cards. Discussions are at an advanced stage with IATA as we believe this will increase our market. Technology distribution is also key as more and more products have become available for us to sell. We are also keying into the use of social media.

Stakeholder to examine future of business aviation in Africa

Players in the business and charter aviation sub sector will meet next year in Lagos under the aegis of Nigerian Business Aviation Conference (NBAC), to examine opportunities and challenges of the sub sector in the face of new regulations rolled out by the Nigerian Civil Aviation Authority ( NCAA).

The convener of the conference , Segun Demuren stated in Lagos that the conference will also look at how to connect Nigeria’s major cities by charter jets to accelerate business for high net worth players in the oil and gas and related sectors. Demuren, who is chief executive officer of Evergreen Aviation Nigeria ( EAN), an aviation logistics firm said the conference intends to focus on the increasingly complex nature of charter business.

The third Nigerian Business Aviation Conference, NBAC 2016 is scheduled to  hold  March  24- 26 , 2016 in Lagos, Nigeria.

The objective of the conference, he said is to raise awareness on the growing industry and to provide a forum for all stakeholders to exchange views. He said over 200 international and African delegates across the broad spectrum of business aviation attended last year’s conference including  operators, financiers, lawyers, regulatory bodies and industry leaders.

Demuren said : “We were extremely pleased with the success of last year’s event and realised that a two day event, which reflects a more expansive programme thoroughly debating the increasingly complex nature of the business, is necessary. Nigeria is one of the largest business aviation users in Africa which is why the conference is important to all those that are operating or looking to operate in the region.

“It is anticipated key themes will include Nigerian Business Aviation’s new regulations and how they affect operations; links between fixed wing and rotary wing aircraft in the energy market; the future of business aviation in Nigeria and the importance of maintaining connections between major cities including Abuja, Lagos and Port Harcourt.

“These and other topics will combine to underpin the overall conference theme which will focus on how to create a better understanding of the value of business aviation in Nigeria, its’ importance as an economic driver for the region, and its contribution to developing international business.”