The Nation Newspaper

Category: Aviation

  • Insurance firms fleecing airlines on premiums, say operators

    Domestic  airline operators are groaning under what they call the yoke of high insurance premium.

    The Nation learnt that they pay higher premiums than their foreign counterparts.

    They are said to be paying almost five times higher rates than foreign operators.

    It was learnt that the National Insurance Commission (NAICOM) said the practice amounted to undercutting the operators.

    But the development has fuelled talks that local brokers lack the financial muscle to underwrite aviation risks.

    To have a cut in the business, indigenous brokers have resorted to re-insuring airline liabilities  and passengers,  and  third party liabilities with major underwriters, such as Allianz Aviation Insurance, Aerospace Insurance and Lloyds of London.

    Insurance cover is a mandatory requirement by the Nigerian Civil Aviation Authority (NCAA) for airlines, which are required to insure their aircraft, passengers and third party liabilities.

    Domestic operators have kicked over the “exploitative” premiums, calling on the government to prevail on NAICOM to call insurance companies to order.

    But NAICOM spokesperson Rasak Salami said the airlines cannot prove the allegation.

    In a short message service ( SMS), he said: “Both  NAICOM and NCAA have investigated this allegation in the past. There is no fact to substantiate it. We have asked the airline operators of Nigeria to provide evidence but they have not.”

    The Executive Chairman of Airline Operators of Nigeria                    (AON), Captain Nogie Meggison, says indigenous airlines pay the highest insurance premiums in the world. He urged Aviation Minister Chief Osita Chidoka to look into the matter, stressing that with such high premiums, the future of domestic aviation appears bleak .

    Last year, the Nigerian Civil Aviation Authority ( NCAA) initiated meetings on how to achieve lower insurance premiums. Part of the initiative was a push for the consolidation of insurance companies to enable them underwrite aircraft risks.

    It was gathered that an aircraft valued at $10 million with crew and third party liabilities in Europe, the US, Britain or Barbados attracts a premium of between $80,000 and             $100,000 per annum, as against the   $300,000  to $600,000 charged by Nigerian brokers yearly.

    Experts are worried that with the attainment of Category One Safety Rating by the United States Federal Aviation Administration (USFAA), Nigeria  ought to be considered a low risk country.

    It was learnt that NAICOM is concerned about brokers who collect huge premiums, but remit to their overseas underwriters the globally prescribed rates.

    Major insurance companies are said to be pushing for enhanced capitalisation to enable them undertake aircraft risks.

    If the move succeeds, the profiteering from airlines may continue unabated.

    “The source, who pleaded for anonymity, said: “These people are not underwriters, they cannot underwrite an accident in this industry, they don’t have the capacity as they are just brokers. All they do is collect so much money over five to 10 times of the internationally known cost and re-insure with Lloyds and others.

    “These middlemen are making business tough. We reject this in its totality. We need immediate change, so we can remove the impediment and get insured anywhere else that would be cheaper for us.”

    An operator has questioned the nature of risks some of the brokers are bandying to justify their “exorbitant” charges, arguing that the rates are untenable, since Nigeria is  Category One certified.

    “What kind of risks are you talking about? Nigeria is Category One. Therefore, a low risk country, and one of the advantages of being Category One is reduced insurance premiums. So, since we are low-risk to the international community, why should  our own country operators fleece us?” he queried.

    The operator argued that if the premiums are reduced, even foreigners will insure here “so there should be no border limit to insurance as there are none elsewhere in aviation,” he said, adding that since it is an international business, it is out of place for them to insist on Nigerian  operators insuring only in Nigeria.

    “They should leave the airlines alone to their choice as their counterparts the world over. It should be a matter of choice and not compulsion as is being practised today, especially as the use of local insurance brokers is not competitive,” he said.

    He said operators should have the option either to use a local or foreign broker, insisting that these rights should be freely exercised by the operators. He urged NCAA to maintain neutrality  in the matter.

    Another operator also called on the government to compel  NAICOM to caution insurance companies to desist from this “embarrassing and unholy exploitation”.

    He enjoined all operators to stand firm against what he termed “this shameless exploitation.”

    “You cannot force a man to buy your goods because he is your neighbour, when your goods sell at a far higher price than on the next street,” he said.

  • Arik Air to develop Cotonou Airport as regional hub

    Arik Air plans to develop the Cotonou International Airport into a regional hub to feed its passenger traffic for West Africa, its Deputy Managing Director, Captain Ado Sanusi, has said.

    Sanusi said the Cotonou Airport is considered as a hub by Arik Air because Lome Airport is being developed by another airline.

    Sanusi, Arik Air Senior Vice President, Operations, told The Nation that the airline has carried out feasibility studies on the viability of the Cotonou Airport. The airline is also extending its  operations into Abidjan to offer passengers reliable air-link between Anglophone and Francophone countries.

    His words: “We have done a good study on the route and found out that there is a good market between Lagos and Abidjan. We also discovered that there is the potentiality of transit passengers that will be going to our long haul destinations via Lagos.

    “This also will make Lagos the natural hub we are trying to build. Passengers going to Dubai, London, or JFK can come to Lagos via Abidjan. We have seen it coming and we are going to capitalise on it.

    “We are not flying through Lome Airport  for strategic reasons. Besides, we want to build Cotonou as another hub because Lome is being developed by one of our competitors and so we want to do the same thing with Cotonou.

    “Abidjan is a preferred destination for Nigerian businessmen and women. Arik Air’s foray into this commercial city will make life a lot easier for our guests who have been yearning for flight connection between Nigeria and Cote d’Ivoire. This service will further underline Arik Air’s position as West Africa’s premier airline,” he stated, adding that the reason for opening the route is because of the economic potentials citizens of the two countries stand to gain through the air link.

    Also, Nigerian Ambassador to Cote d’Ivoire Mrs. Ifeoma Akabogu-Chinwuba said at the Felix Houphouet Boigny International Airport, that the service provided by Arik Air would  boost the bilateral relationship between Nigeria and Cote d’Ivoire in many ways, including trade and business transactions.

    Her words: “There are so many benefits the two countries can gain by this direct air link by Arik Air. For instance, there are over three million Nigerians living in Cote d’Ivoire and they all have families. There are indeed a lot of bilateral activities between the two countries, particularly, economic and commercial activities, mainly from Nigeria to Cote d’Ivoire.

    “Many Nigerians have made so much investment in Cote d’Ivoire. They have hotels, schools and banks such as UBA, GTB and Diamond. All are Nigerian-established banks. We also have churches owned by Nigerians, as well as oil and gas companies belonging to Nigerians,” she said.

    Mrs. Akabogu-Chinwuba praised Arik Air for providing direct service to millions of Nigerians in Cote d’Ivoire who have been itching for such opportunity to transact their businesses using an airline belonging to Nigeria.

  • Expert warns on adoption of single African sky

    An expert  and former President, National Cabin Crew Association of Nigeria, Olumide Ohunayo, has warned against the endorsement of  the proposal by African Transport Ministers to  adopt a  single continental sky policy.

    He said the adoption of such a proposal could have adverse effects on  the growth of Nigeria’s  aviation  as it would result in opening the nation’s routes to all manner of carriers without  bilateral restrictions.

    Ohunayo argued that the proposal would put Nigeria in a weak position on issues bordering on  how to utilise her routes, which are the most lucrative in Africa. He added that such a deal would open the aviation business to foreign carriers, thus, compromising entry restrictions.

    The African Union Commission last week proposed the establishment of a single African air transport market by 2017. The proposal has received the support of African Ministers of Transport.

    Ohunayo argued that Nigeria signed Open Skies agreement with the United States  since  2000 , but till date, the government has not taken advantage of the agreement, saying the agreement remains lopsided because there are not enough Nigerian carriers to utilise the window offered by the agreement .

    While many American carriers fly directly into Nigeria, only Arik Air operates flight to the United States.

    Citing the demerits of the Open Skies agreement, Ohunayo   warned that the Africa single sky proposal championed by Ethiopian Airlines, will not do Nigeria any good, as it would only allow Ethiopian Airlines to fly from the Murtala Muhammed Airport (MMA), Lagos and the Nnamdi Azikwe Airport (NAA), Abuja to Europe and other parts of the world.

    He said: “We signed Open Skies with the US and had a five year head- start which we frittered away till this moment because the decision was hasty with no carrier(s) to capitalise on it. The African single sky being proposed is a baby of Ethiopia Airlines (ET)  and the target is to operate to Europe, Far East and America from Lagos and Abuja. It’s a subtle cabotage that will make us the usual sitting giant.”

    He said  claim by Ethiopian Airlines that Nigeria is not favourable to invest in, is not tenable, wondering why the same airline has the highest frequencies into Nigeria of all the foreign airlines operating into the country.

    Ohunayo lamented that instead of investing in Nigeria, it prefers to partner with other African countries.

    “Ethiopian Airlines  claimed the conditions are not ripe to invest in Nigeria, but the same conditions have given them the highest frequencies and points into the country. Rather, they have chosen to invest and partner other African countries such as Togo, Rwanda, Malawi, Congo and Zambia,” he said.

    The caveat in liberalisation, he pointed out is collaboration and that those airlines that are benefiting from the single sky policy are not solely owned by government or person, though protected by their respective governments.

    The Aviation Analyst hinted that if Ethiopian Airlines wants a single sky policy, ownership structure must be diluted, and that it should offload a certain percentage to countries that contribute to their total payload rather than grandstand.

  • Experts applaud policy on indigenous pilots, differ on implementation

    Government’s directive that airlines flying within and into Nigeria should engage indigenous pilots has received kudos from operators. They however differ on its implementation, reports, Kelvin Osa-Okunbor

    The directive, last week, by the Minister of Aviation,  Osita Chidoka,  that  airlines flying within and into Nigeria should  engage  indigenous pilots may have brought some relief to the growing number of unemployed Nigerian pilots. But while this directive has also received the nod of airline operators, they have expressed concerns on how the directive will be implemented.

     

    Experience

     

    One reason aviation experts have adduced for the implementation diffculty is hinged on the concerns over the quality of training acquired by some of the unemployed local pilots. Besides, some of these pilots  are said not to have the requisite flying hours to handle commercial aircraft used by most of the operating airlines. From investigations, airlines are favourably disposed to hiring pilots that have between 1,000 and 1,500 flight-hours experience for obvious reasons of safety of passengers and also their aircraft. For a young pilot that has just graduated from the training school either locally or internationally, he would have only acquired between  250 and 500 flight-hours. Hence, a reason why foreign pilots dominate the cockpit of domestic airlines.

    Yet, operators  also expressed concern that the most of the unemployed pilots are not rated on the type of aircraft in their fleet.

     

    Technicalities as a barrier

    Some experts have attributed the high number of foreign pilots to the conditions attached to acquisition of aircraft, especially those carrying foreign registration and those acquired on wet-lease basis.

    Under the  wet – lease arrangement, the aircraft  carries the registration of the aircraft owner, usually foreign based. Also, under this arrangement, the aircraft ownere provides the aircraft crew, especially pilots, and is responsible for the maintenance of the aircraft. This explains why there is a preponderance of  expatriate pilots from Eastern Europe and Asia.

     

    Government intervention

     

    According to statistics,  over 65 per cent of pilots flying in Nigeria are foreigners, even as over 327 unemployed pilots are said to have  registered with the Nigerian Civil Aviation Authority ( NCAA) for possible job placement. This includes the over 100 graduates pilots from the Nigerian College of Aviation Technology (NCAT), in Zaria, Kaduna State.

    Experts are of the opinion that given the salaries paid expatriate pilots, if 300 young Nigerian pilots are engaged through the implementation of the policy, this could save as much as $96million annually for the payment of salaries and other expenses on foreign pilots.

    The NCAA, industry sources hinted, is working with the Ministry of Aviation and the Presidential Adviser on Aviation Matters on the timeline for implementing the policy.

    A list  of young unemployed pilots it was learnt, is being complied by the NCAA for negotiation with both foreign and domestic as well as private/chartered operators.

    This is aside the 66 pilots trained under the Presidential Amnesty Programme for youths from the Niger Delta region.

    Apart from that, the 327 young pilots registered by the Nigerian Professionals Pilots Association( NPP), another   100 young pilots  sponsored by the Kano State Government are on the verge of completing their training at the Jordanian Aviation Academy. Scores are also undergoing pilots’ training under the sponsorship of the Kaduna State Government      NCAT.

    Airline operators say it costs huge sum to employ foreign pilots because of their experience, type rating on aircraft, accommodation, security and other bills, including six return tickets annually.

    While some airline operators describe the policy as good for the development of local content, others say  government should exercise caution  in its implementation because most of the indigenous pilots do not have the requisite flying experience to command flights.

    Some experts have complained over huge capital flight out of the country on account of the invasion of foreign pilots of the Nigerian airspace.

     

    Support

     

    Despite the huge cost of expatriate pilots to airlines, operators remain  divided over the implementation of the policy which is due for implementation on July 1, 2015.

    However, support for the policy has come from the Chairman of Air Peace,  Chief Allen Onyema, who described it as a move that would create jobs for Nigerians. He is convinced that the engagement of Nigerian pilots by airlines would reduce the huge cost spent by airlines on foreign crew as well as develop local capacity.

    He however said there  could be exception to the rule, because not all Nigerian pilots are rated in some aircraft type flown by foreign pilots.

    He said airlines that have mostly Nigerian pilots would save huge sums of money, as airlines would not be required to provide them accommodation, security, telephone bills  and return tickets six times in a year  as they provide for foreign pilots .

    Onyema said experience has shown that the quality of training of pilots is a strong criteria that many operators consider when they are engaging crew members.

    Onyema said as much as airline owners would like to assist in the development of local capacity by engaging Nigerian pilots, no aircraft owner would spend as much as $50 million to buy an aircraft and give it to an inexperienced pilot to fly.

    “I am totally in support of the directive by government for airline owners to engage Nigerian pilots in their cockpit. This is one policy of government that would create jobs for our teeming unemployed pilots.

    “This is good because no economy can develop by dependence on foreign input , including foreign crew on board our aircraft.

    “We need to start developing out people. When you create job for a Nigerian pilot by extension, you have created opportunity for the industry to grow. It is a good policy, however we must also make sure that there are qualified pilots.

    “For instance, in Air Peace, we have some DORNIER Jets in our fleet, if you go round the whole country  and you cannot find any pilot rated on how to fly such an aircraft, in that kind of situation, you do not expect an airline to abide by the government directive. In our inability to find a Nigerian pilots, we will get a foreign pilot. As airline operators, we know government means well, but for every rule, there is an exception.”

    He explained that when government issued the directive,  he knew there would be some exceptions to the rule “it is not a blanket directive, it is a policy geared towards promoting job creation in the country.

    Onyema said the directive is gradually being implemented in Air Peace, saying any where we find  qualified Nigerian pilots, “we employ them,” but quicly added that you don’t expect any airline to employ a Nigerian rookie pilot to become a captain in its fleet just because you want to comply with the directive on engagement of local pilots. But, if nobody gives  young pilots the opportunity to be tested  they would not attain the required flying hours.

    But, employing younger pilots comes with additional responsibility. This is because these pilots  bang your airplanes on the  runway during landing. Anytime, these young pilots land the aircraft, they bang it on the runway very hard and you will see the difference. This hard landing has effects on the aircraft , its wear and tear when you take the aircraft for major maintenance repairs  like the C- check. Such hard landings tells a lot on the aircraft. These are  the issues. If you employ a foreign pilot you pay him about $18,000 per month , accommodation, security , proved six return tickets.  They work for six months, six weeks in and six weeks out. You provide the vehicles, Internet facilities, six return tickets in one year. He works for only six months and you are paying for one year salaries. That is why we must support this policy of government.

    Similarly, the executive chairman of Airline Operators of Nigeria ( AON), Captain Nogie Meggison described the policy as the best for the industry because it would create an opportunity for over 327 Nigerian young pilots to be engaged by both foreign and local airlines.

    Meggison said such policy is already in place in other countries, which he listed to include: Brazil, India, China and Egypt.

    He said the policy would be cheaper for Nigerian airlines, which spend huge sums on foreign pilots.

    He said: “It is only logical and mutually benefitting and makes more sense when any airline operating and taking off from the country creates avenues to create jobs for the people. It is not a novel idea that Nigeria is standing alone to say that any cockpit operator or anybody flying in Nigeria is expected to take Nigerians in the cockpit. This will create jobs and take people off the streets.”

    Also, the Managing Director of Medview Airlines, Alhaji Muneer Bankole, also described the policy as a good development for the aviation industry. He commended government for the directive to airlines to engage Nigeria trained pilots adding that human capacity development is key to the growth and sustenance of aviation. He said domestic carriers will continue to engage Nigerian pilots, berating foreign carriers for engaging in capital flight without giving anything back for the development of the nation’s aviation sector.

    He said: “I think it is a good initiative for all airlines to engage Nigerian pilots in their cockpit.

    Government must ensure the implementation of this directive. At Medview  we will definitely engage and train more Nigerian aviation professionals. This is good for the development of the industry.”

  • ‘Excessive charges killing airlines’

    For the second year running, there has been predictions of a robust growth in African airline business by the International Air Transport Association ( IATA).

    IATA has hinged the predicted growth on improved facilities at airports, lower

    navigational charges and sundry factors.

    While some African carriers  including  Ethiopian Airlines, Kenya Airways and South African Airways seem to be driving this prediction, the same cannot be said of Nigerian airlines.

    Nigerian carriers are faced with poor airport and navigational facilities ass well as multiple charges.

    Findings by The Nation has revealed that in the same period, domestic airline business in the country has taken a huge downward slide. Experts and stakeholders in the aviation sector have not ceased to blame some government policies, amidst other factors, as responsible for this malaise.

    The chairman Committee on Aeronautical and Passenger Charges In the aviation sector,  Mr Ahonsi Unuigbe,  reckons that the excessive charges levied on operators in the industry remains a major albatross in having an efficient, effective and profitable airline business locally.  For instance, Unuigbe revealed that the imposition of multiple charges on airlines by aviation agencies and regulators, has constituted a huge yoke on the operational costs of airlines. These excessive charges he listed to arise from payments to ground handling companies , concessionaires and other players in the aviation sector. These, in most cases, are duplications for related  services .

    He said such multiplication of charges is affecting the operations  of many investors in the sector.

    Speaking in an Interview, Unuigbe said such practice could be a huge disincentive to operators are grappling under huge operating costs and other challenges.

    The committee was set up last year by minister of aviation to review all aeronautical and non Aeronautical charges by aviation agencies on passengers and airlines.

    Unuigbe said the committee has come up with its findings to help reshape practices that would increase competitiveness in the aviation industry.

    He said that the imposition of port charges as well as cargo charges by the Federal Airport Authority of Nigeria (FAAN) on the same cargoes enough evidence that  the industry is plague with multiple charges.

    He said : “With respect to passenger ticket charges, the basis of some of these charges, is not known and is quite arbitrary. The committee analysed the basis of computation of passenger tickets for four domestic airlines, namely, Arik, Dana, Medview and First Nation.

    “The analysis shows that an amount ranging from 40 per cent to 65 per cent of the airfare is hidden as fuel surcharge, known as YQ. The computation of this fuel surcharge is unknown to both passengers and Government alike.

    “Equally, this cost element has been omitted by the airlines in the computation of both VAT and Ticket Sales Charge, resulting in significant loss of revenue to the Federal Government,” he said.

    According to him, there is also a prevalence of inaccurate computation of statutory charges and non-remittance of the passenger charges collected by airlines to appropriate aviation authorities.

    “From the tickets analysed, some airline operators deliberately charge as high as nine per cent of Base fare as Ticket Sales Charge as against the statutory five per cent, expected to be remitted to the government through the Nigerian Civil Aviation Authority (NCAA),” he said.

    The Chairman noted that there is  incidence of poor service quality to passengers in the face of non-enforcement of the passenger bill of rights.

    He noted that the passenger bill of rights, as contained in the NCAA Act, clearly entitles passengers to several means of redress, in the event of any infraction, adding that these rights are not known to most passengers nor are they being enforced by NCAA.

    Unuigbe explained that the minimum capitalisation requirement for domestic airlines is N500 million, which at today’s exchange rate, barely covers the cost of effectively operating and maintaining one aircraft.

  • Sanya Airways begins direct freighter service

    SANYA Airways Corporation, a United States of America (USA) registered airline, has announced its readiness to commence a new freighter service from the world’s busiest airport, Atlanta, to Nigeria’s economic capital, Lagos, with a B767-300ER on Aircraft Crew Maintenance Insurance (ACMI) programme from ABX Global.

    The B767 freighter, according to the chief operating officer (COO), of the airline, Segun Adesanya, will initially operate weekly frequency on a continuation leg to Lagos from Liege, in Belgium, and then to Namibia where it will airlift perishables bound to Liege.

    Adesanya claimed the B767 venture would enable the airline to market perishable exports from Southern Africa to Europe, a market he revealed that is now growing rapidly.

    He also stated that the service would provide inbound capacity for Sanya shipment in Europe and USA for onward connectivity to its West African network as well as provide equal opportunity for delivering products that are bought on line abroad by African traders.

    The COO explained that the aircraft loading capability makes it the best to offer payload up to 45 tonnes as well as accept long and oversize pieces thereby making its service a new dimension of business to and from Africa.

    His words: “We are very excited with this new venture that will be cost-effective cargo solutions to freight forwarders, traders, online users for heavy and outsize pieces, energy equipment, time critical cargo and dangerous goods.

    He continued: “Sanya Airways Corporation is able to provide highly competitive pricing, offer block space, backloads and other commercially innovative solutions that are value-added service to our clients.”

    He disclosed that his company’s partner in Nigeria, Broadline Services Limited (BSL), would assist the airline with documentation collection, customs formalities where required, while trucking and warehousing arrangements will be provided by Nahco Aviance.

    Adesanya, a Nigerian, who hails from Ogun State, therefore solicited for an enabling environment, cooperation, understanding and best work ethics while promising to service the international community by making Lagos the main hub in Africa.

  • How liberalisation can boost African aviation, by experts

    How liberalisation can boost African aviation, by experts

    The global shift now is trade liberalisation. Experts say the liberalisation of aviation in Africa holds the key to the development of its economies. They are, however, worried that the non-implementation of continental initiatives, such as the Yamoussoukro Decision, remains a stumbling block,writes Correspondent KELVIN OSA OKUNBOR

    Air transport in Africa is facing alot of challenges . Efforts by some countries to salvage the industry have not yielded the desired results.

    Global bodies such as the International Air Transport Association (IATA), African Union (AU) Commission, Economic Commission for Africa (ECA), and the African Airlines Association (AFRAA), as well as African Civil Aviation Commission (AFCAC) are worried that until African governments liberalise the air transport sector, the much-desired development would continue to be wishful thinking.

    Their worries are not baseless because the absence of an air transport policy that would define how the industry would be positioned is not in place. There has to be policy that would assist the industry to chart the way forward for Africa’s economic development.

    Towards this end, experts on the continent will meet next month in Addis Ababa, the Ethiopian capital to examine how to fast-track an air transport policy for the continent.

    The meeting, under the aegis of the AU Commission, would consider further liberalisation of the air transport sector.

    In particular, experts from 53 African countries will examine the impact of many continental initiatives, including the Safe Skies for Africa and Yamoussoukro Decision and how they could accelerate the development of aviation on the continent.

    The Yamoussoukro Decision,  was signed by 44 African countries in 1999 as a key enabler for air liberalisation.

    It was designed to support economic growth by countries committed to aviation deregulation and the promotion of trans-national competition in regional markets.

    But its implementation has been a huge challenge for many African countries due to market protection policies.

    Last year, the AU Commission called for a single African air transport market, saying it is critical to Agenda 2063.

    Chairperson of the Commission, Dr. Nkosazana Zuma, stated this in a meeting with a delegation of  AFRAA  to discuss the importance of the sector in the socio-economic transformation of the continent.

    She noted that a single continental air transport was vital.

    Dr. Zuma said: “Connecting Africa through aviation and other transport infrastructure is critical to integration, intra-Africa trade, as well as to tourism, economic growth and development more generally.

    “The sector is also an important creator of jobs and critical skills on the continent. The aviation sector is strategic for the implementation of Agenda 2063.”

    According to the AU, the discussions on African open skies have been ongoing in the last two decades, resulting in the adoption of the Yamoussoukro Decision by African Heads of State and Government in 2000.

    Over the last one decade, with sustained economic growth on the continent, the Commission observed that a growing middle class, more tourists and businesses were coming to Africa, adding that the delays have been at Africa’s peril, with loss of market share by the continent’s airlines, from 60 per cent in the early 90s to fewer than 20 per cent at present.

    “The meeting considered what needed to be done to remove the blockages towards the full implementation of the Yamoussoukro Decision on the Liberalisation of Air Transport Markets in Africa and to move towards the creation of a single African aviation market,” she was quoted to have said in a statement.

    AFRAA Secretary-General, Dr. Elija Chingosho, highlighted the importance of the liberalisation of the continent’s air market to its economic prosperity.

    He said: “Air transport should be affordable for everyone, not just be monopolised for the rich and the wealthy. As a continent, we are subsidising the industry for international carriers.”

    Chingosho also commended the timeliness and importance of convening the meeting at a time when African aviation occupied just 20 per cent of market share in Africa.

    Member-states could see their  Gross Domestic Product (GDP) grow by the millions, yearly, and thousands of jobs created with the adaptation of open skies, a liberal market between signatory states allowing airlines unlimited rights to fly.

    The report released last year by the International Air Transport Association (IATA), in partnership with regional associations, AFCAC and AFRAA, outlined the benefits African nations would gain by implementing a liberalised policy. The report backed its position up with the use of 12 key markets as examples. These are Algeria, Angola, Egypt, Ethiopia, Ghana, Kenya, Namibia, Nigeria, Senegal, South Africa, Tunisia and Uganda.

    Air transport plays a crucial role in driving economic and social developments in Africa through enhanced connectivity.

    However, regulations have made it difficult to provide inter-connectivity in the region.

    “Governments should support the growth of the industry by fully liberalising African skies as intended by the Yamoussoukro Decision, and providing other facilitator assistance, such as implementing global standards in safety, security and regulations, reducing high charges, taxes and fees and removing visa requirements for ease of movement across the continent,” said  Chingosho.

    According to the report, if the 12 countries were to adopt an open skies policy, they would create 155,000 extra jobs in the market and grow the combined GDP of $1.3 billion. Five million additional passengers yearly would also fly, the report added.

    Africa agreed to an open skies policy 26 years ago with the signing of the Yamoussoukro Declaration. The lack of implementation saw member-states, under the AU umbrella, come up with the Yamoussoukro Decision, which looked at what its implementation would mean for African economies. It called for the deregulating of air services and opening regional air markets.

    The Secretary-General, African Civil Aviation Commission (AFCAC), Iyabo Sosina, said  by not adopting the Yamoussoukro Decision, African countries were not only stunting growth in the sector but their economies.

    “Liberalisation leads to increased air services, which in turn, facilitates growth in the sectors of the economy by supporting increased trade, attracting new businesses to the region, encouraging investment and enhancing productivity,” she said.

    Director-General, International  Air Transport Association ( IATA), Mr Tony Tyler, said it is essential for African governments to use aviation as a catalyst for economic development.

    He said for such development to be achieved, there is need to promote air liberalisation and enhanced air connectivity.

    Tyler said: “Liberalisation can lead to increased air service levels and lower fares, which in turn stimulates additional traffic volumes, facilitate tourism, trade, investment to other sectors of the economy and bring about enhanced productivity, economic growth and increased employment.

    “Inter-connectivity in Africa is said to be more expensive than travelling to Europe or the Middle East in some instances. This has been attributed to the lack of competition and the cost of operations in the region mainly hampered by price of fuel and taxes.

    “Liberalisation offers efficient, competitive carriers an opportunity to enhance profitability by expanding into new markets, accessing a wider pool of investment and through consolidation.”

    In its July report, IATA said Nigeria and 11 other countries in Africa stood to earn at least $1.3billion as GDP yearly if they implement the Yamoussoukro Decision. It also said the additional services generated by liberalisation between the 12 key markets would provide an extra 155,000 jobs.

    In the report, IATA indicated that Nigeria would have additional 17,400 jobs with $128.2 million GDP while Algeria is expected to generate about 15,300 jobs with revenue potential netting $123.6 million.

    Angola would generate about 15, 300 jobs with over $137.1 million contribution to its GDP while Egypt is expected to generate over 11,300 jobs and $114.2 million contribution to its GDP.

    Ethiopia, according to IATA, is expected to generate over 14,800 jobs and $59.8 million contribution to its GDP; Ghana is expected to generate over 9,500 jobs and $46.8million to its GDP, whereas Kenya is expected to generate about 15,900 jobs and $76.9million GDP.

    Others are Namibia with 10,600 jobs and $94.2million contribution to its GDP yearly; Senegal,  8,000  jobs and $40.5 million GDP; South Africa, 14,500  jobs and $283.9 million to its GDP; Tunisia, 8,100  and $113.7m  contribution to its GDP and Uganda, 18,600  jobs and $77.6 million GDP.

    The Yamoussoukro Decision committed 44 countries to deregulating air services and  opening regional air markets to transnational competition. The implementation of this agreement, however, has been slow, and the benefits have not been realised, thereby causing disquiet among the stakeholders in the industry.

    The Managing Director Overland Airways Capt. Edward Boyo said  the Yamoussoukro Declaration’s implementation had been on the drawing board for some time, but it was being frustrated by two factors: lack of cooperation  and suspicion by some countries.

    He pointed out that when the document was prepared, African countries were divided among themselves.

    Such division, he said has given rise to mutual suspicion.

    He said the original document did not address the issue of ownership and control.

    He said: “Because people were afraid of themselves, they refused to integrate. Some countries were dominant and had larger industries; some countries did not have an industry; they had foreign entities that infiltrated their markets and controlled their markets.

    “Take for instance, we open our skies; the foreign entities begin operations on the approval of government. As they begin to consume the market in Nigeria, that will begin to complicate matters,” he added.

    Capt. Boyo said  the accord had been largely politicised. According to him, the politicians had refused to implement the document for some inexplicable reasons.

    A report on the implementation of the air transport policy by ECA said: “More than any reason, the declarations of intent that African airlines have made regarding cooperation and integration have not been effectively carried out because of their lack of initiative, trust and the financial difficulties most of them are going through. While the studies which have been undertaken could have led to positive results, the cultural and political commitments have not been forthcoming.

    “For lack of convincing studies, the airlines have not been able to take several initiatives to enter into alliances that would have helped them to achieve the objectives of the Declaration.”

    It also attributed it to the economic and political situation of African countries. According to the report: “Since the early 1990s, African states have been experiencing political, economic and social turmoil. Their governments have not had the time they need to concentrate on developing the air transport sector, more specifically, airline cooperation and integration.’’

    ECA said: “Airline directors are still distrustful of each other and hesitate to commit themselves to cooperation and integration arrangements.

    “Furthermore, African airlines continue to operate individually their air services to Europe and Asia while there remains one area of great potential for cooperation and integration that has yet to be exploited.”

  • High insurance premiums slow down aviation

    High insurance premiums slow down aviation

    Airlines are being bogged down by high insurance premiums. Industry players and other stakeholders, including the Nigerian Civil Aviation Authority (NCAA), are having sleepless nights on the matter. At a seminar, experts proffered solution to the problem. KELVIN OSA OKUNBOR reports.

    AirlineS are struggling to remain afloat in the face of some challenges, which include the high cost of operations.

    These are: high insurance premium and prohibitive maintenance of aircraft abroad caused by fluctuations in exchange rate.

    In Nigeria, a high risk country, airlines pay high insurance premiums. But this is not so in countries with less risks.

    The high insurance premium is the reason some airlines cannot pay compensation to families of  accident victims.

    Aviation and insurance experts are worried that this problem could undermine the sector’s growth.

    The Nigerian Civil Aviation Authority (NCAA), it was learnt, is seeking ways to redress the situation.

    The regulatory body is seeking to partner players in the insurance sector to fix the problems.

    Sources said NCAA met with the  National Insurance Commission (NAICOM) to resolve the issue.

    Experts said because of the high risk tag, indigenous airlines pay more insurance premiums than their foreign counterparts.

    They attribute the development to insurance firms’inability to capitalise, adding that their operating demands, including insurance costs, are high.

    Also, the lack of local insurance firms to underwrite large risks, they said, paved the way for foreign insurers and brokers to undertake such activities, leading to loss of foreign earnings through capital flight.

    Besides, the experts pointed out that no  insurer in the country has the resources to underwrite the risks of a major airline.

    The Deputy Chairman, Nigeria Insurers Association (NIA), Mr. Gaius Wiggle, attributed the high cost of aviation insurance to the poor state of airports, poor   landing equipment, age of aircraft and incessant air crashes.

    He said the air safety condition of most aircraft in South Africa and their airspace equipment could not be compared to those in Nigeria, adding: “This places Nigerian aviation industry as a high-risk industry in aviation business.”

    Commissioner for Insurance Mr. Fola Daniel blamed the problem on indigenous firms’ lack of capacity to handle aviation insurance.

    NAICOM, he said, was working to improve the capacity of indigenous insurance firms to enable them control a substantial portion of aviation insurance business.

    He noted that with the capitalisation of the insurance industry and improvements in the aviation sector, there is  hope of an increase in the use of local content in aviation insurance.

    “It may not be prudent to retain 100 per cent risks in the aviation sector because this will negate the principle of spreading the risk. We have relative financial capacity to play in the aviation business in Nigeria.With this relative capacity, we are trying to grow our human capacity because we need to ensure that the two work together for us  to play meaningfully in the aviation business. For instance, a small aircraft that flies in the air space costs millions of dollars. So, our capacity to take up such a risk is growing. I believe that in the foreseeable future, we should be able to retain more.

    “I do not have a vision of the insurance industry that can insure all the aircraft and keep everything here. Even if we can, we need to spread the risks. We cannot say at what per cent we want to grow in the future.

    “The reason is that if you have 10 aircraft, there are some of the aircraft that we can retain their 60 per cent risks because of their value. For instance, if that aircraft costs $30 million, we probably can retain 60 per cent of that. But when you have an aircraft that costs $300 million, you might not be able to retain five per cent.

    “That is why we cannot use a percentage across the line because it is subjective. It is usually considered on case by case basis. Every aircraft is underwritten as one entity. You do not lump them together. Instead, you write them one by one. However, there are some situations where some of the helicopters and small aircraft are insured 100 per cent because we have the absolute capacity,” he said.

    At a seminar by NCAA and the Socio-Economic Rights Initiative (SERI), aviation stakeholders, insurance experts and lawyers agreed that many airliners’ failure to pay premiums to their insurers or underwriters is responsible for families’inability to access the claims stipulated by the International Civil Aviation Organisation (ICAO). ICAO, according to its Montreal Convention, requires airlines to pay at least $100,000 to  the family of a passenger involved in an accident.

    An NCAA representative Mrs Anthonia Vincent, said aviation insurance had become topical because of the failure of carriers to pay compensation to families of victims of air accidents.

    The agency, she said, was worried because the industry would not grow if its operators did not have adequate insurance cover for their operations.

    “As a regulatory body, we are being saddled with frivolous suits due to inadequate enlightenment of the stakeholders and the public on the statutory functions of the authority as it affects aviation insurance,” he said.

    He assured that the agency would introduce carrier liability and insurance arrangements clause in the proposed amendment to the Civil Aviation Act 2006 and the Nigeria Civil Aviation Regulations 2009 and 2012, stressing that such provision would ensure that “our regulatory framework is appropriately adapted to modern aviation and insurance environment”.

    In his paper titled: Dealing with air carrier liability and related matters: Practical perspectives, a lawyer, Dr. Fabian Ajogwu, explained that a carrier’s liability would arise where there is death, injury or where there is a loss of baggage or cargo caused by an accident.

    Ajogwu, a Senior Advocate of Nigeria (SAN),  noted that Nigeria had witnessed several air accidents, where many people had injuries or loss of the belongings. He lamented that such victims spent a long time exploring settlement or waiting for the air carrier’s insurance firm to compensate them.

    He said insurance companies have a role to play in paying the families of aircraft victims. He cautioned against undue bureaucracy and bottlenecks by both the insurance firms and air carriers.

    Besides, he said Nigerians should also be aware of their rights on compensation/damages by an air carrier, adding that due to the limited time, they should not delay in suing the air carrier.

    NAICOM’s Deputy Director Authorisation and Policy, Mr. Leo Akah, identified inadequate expertise to underwrite aviation risks, premium quotes, unfavourable terms, claims of control clause and jurisdictional clause as part of the challenges facing the business of aviation insurance.

    He noted that many insurance firms lack the capacity to underwrite aviation risks, adding that this is why some domestic carriers choose foreign firms to underwrite their insurance risks.

    He said many insurance firms   find it difficult to pay high claims, adding that this has had adverse effects on aviation insurance.

    Akah listed other challenges facing indigenous airlines as the quality of reinsurers, the non-avialability of a pool.

    “The challenges of air carrier insurance in Nigeria are quite enormous. Primary, among them, is the uncooperative attitude of some airline operators. There are also the challenges of confirming the actual boarded passengers with names in the manifest of an aircraft that has crashed, the claims administration system, incomplete documentation by claimants, fraudulent claims, multiple claimants as well as cultural and religious inhibitions.

    “All these challenges could be resolved  if there is better cooperation between the Nigerian Civil Aviation Authority (NCAA) and NAICOM, compliance of airline operators to the NCAA Act, enforcement of the new market conduct guidelines for insurance institutions by NAICOM and strict observance of Section 50 of Insurance Act 2003,” he said.

    Last year, airline owners and the Ministry of Aviation officials criticised the insurers for designating the aviation industry as high risk occasioning huge premium to airlines insuring aircraft locally.

    Chief Executive Officer, Top Brass Aviation, Captain Roland Iyayi, expressed airline operators’ frustration at an event in Lagos.

    He said premium charged on aircraft insurance is higher than what is obtainable in South Africa and other parts of the world.

    Iyayi said while NAICOM is trying to deepen capacity in the industry by domesticating aviation insurance, it shouldn’t be at the expense of the growth of the industry.

  • Etihad Airways gets US clearance

    Air travellers on all Etihad Airways flights to the United States (US) from this week will experience the benefits of arriving in the US having precleared US Customs and Border Protection at the Abu Dhabi Airport.

    The US pre clearance  have  opened for the early flight to New York JFK  and San Francisco flights since last week, and they conveniently connect with inbound services from Mumbai, Delhi and other cities in India and the Indian Subcontinent.

    The new early morning US pre-clearance operation complements the mid-morning one, which caters for Etihad Airways passengers on flights to Chicago, Dallas-Fort Worth, Los Angeles, New York JFK, and Washington, D.C., who proceed through the facility.

    The airlines’ Chief Commercial Officer, Peter Baumgartner, said: “We’re delighted that from this Thursday (last week) all air travellers flying to the United States from Abu Dhabi will enjoy the benefits that US Customs and Immigration preclearance offers.

    “Since its opening in January last year, the US pre-clearance has been extremely popular with air travellers, particularly those from the Indian Sub-continent and Middle East region. More than 325,000 people have passed through the facility, arriving in the United States as domestic passengers.”

    The pre-clearance process provides passengers with the unique opportunity to pass through all required checks including US customs, immigration and security conveniently, while in Abu Dhabi, before they board their flight to the US, enabling them to avoid queues on arrival.

    Another the key benefit of US pre-clearance is that baggage security screening meets United States TSA security standards, allowing air travellers, who connect a US domestic flight, to have their baggage checked through from Abu Dhabi to their final destination.

    US pre-clearance at Abu Dhabi Airport is one of its kind in the Middle East, and the United Arab Emirates’ capital is one of a small group of airports around the world that offer passengers pre-clearance into the US.

    During its first 12 months of operation, the US pre-clearance in Abu Dhabi has improved the passenger experience through the introduction of automated passport control (APC) kiosks and greater numbers of officer processing desks.

    The self-service APC kiosks expedite the US entry process for American, Canadian, and eligible visa waiver programme (VWP) international travellers, by providing an automated process through US pre-clearance’s primary inspection area.

    Meanwhile, Etihad  Airways has been recognised as one of the top- 10 safest airlines in the world.

    The internationally-regarded website www.AirlineRatings.com selected Etihad Airways as one of the safest airlines for this year, out of a list of 449 global airlines monitored, while only 149 of the 449 have the top-seven-star safety ranking.

    The Airline Ratings’ system takes into account a variety of factors related to audits from aviation’s governing bodies,  lead associations,  government audits and the airlines’ own records.

  • How to combat airports security threats, by experts

    To strengthen security at airports, the Federal Government must provide the operational equipment, experts  have said.

    It is by so doing that safety of passengers, aircraft and installations can be guaranteed, they said.

    At a lecture organised by the Aviation Security Department of the Murtala Muhammed Airport (MMA) in Ikeja, Lagos, they said the required equipment include state-of-the-art screening facilities, scanners, operational vehicles, communication gadgets, and close circuit television (CCTv). These equipment, they said, would enable airports security personnel respond to civil aviation threats.

    The Director of Aviation Security, Federal Airports Authority of Nigeria ( FAAN),  Wendel Ogunedo, said security personnel would continue to protect the airports from unauthorised persons.

    The security arm, he said, would perform optimally if the government could recruit at least 1,500 additional personnel to complement the existing ones.

    The step, he said, has become imperative in view of the expansion of more airport terminals which  require more personnel to man them .

    Securing the airports, Ogunedo said, has become more challenging in view of the latest threats to civil aviation.

    He said though the government was responding to the needs of aviation security personnel, a lot still needed to be done.

    Ogunedo specifically canvassed for the installation of CCTV cameras at airports, stressing that their deployment would reduce the burden of airports’ security personnel .

    He advised the government to provide security patrol vehicles at airports, arguing that it would assist aviation security personnel to monitor all land and airside areas of the airports .

    ”There are new threats to aviation and airport security at airports nationwide. Aviation security personnel in FAAN are ready to respond to such threats .

    “But their readiness is hampered by a lot of factors, which have posed   challenges for us. We need close circuit television cameras at all airports to monitor activities around the airports  both on the land and air side .

    “But at the Lagos Airport, there are not enough cameras to monitor the movement of passengers, airport workers and those moving around the airport. If there were enough cameras, it would go a long way to reduce the burden aviation security personnel  go through,” he said.

    He acknowledged the presence of some cameras on the airport road, but was uncertain about how functional they are.

    ”Another challenge the airport security personnel face is inadequate patrol vehicles for monitoring the land and airside areas,” he said, adding that, in 1999,  there were about 14 patrol vehicles at the Lagos Airport.

    He lamented that  only three vehicles are left, which he noted are not enough to carry out effective monitoring of the entire airport. “We think, this is a key area where the government has to intervene,” he stressed.

    There is also the problem of inadequate communication gadgets, such as walkie-talkie, which would enable aviation security personnel communicate across the lines around the airport.

    Ogunedo also canvassed the option of airport security personnel being allowed to carry fire arms at the airport. He said athough the National Assembly has  approved the decision, but it is yet to see the light of day due to the influence of those who do not believe in the capacity of security personnel to deliver.

    “It is for this reasons that we are calling on the Federal Government to recruit at least over 1,500 additional aviation security personnel to make up for the gap in personnel in that area.

    “We need more aviation security personnel, who will be adequately trained to cope with the rate of expansion of airport terminals nationwide,” he said.

    Head of Aviation Security, at the Nigerian Civil Aviation Authority (NCAA), Ademola Oladele, who also spoke at the event, said security personnel at the airport could only tackle the new threats to civil aviation if they are adequately equipped with the right intelligence and technology.

    The regulatory body, he said, has designed new measures to tackle emerging security trends with new regulations, which require that passengers, airlines, crew members, service users and providers comply with the procedures at the airport.

    To achieve enhanced security at the airports, according to him, the NCAA expects all stakeholders to comply with the National Aviation Security Plan.  He said the new measure has already been subscribed to by all operators at the airports.

    Passengers and airlines, he said, are now expected to submit to full-body checks at the airport in response to the latest threats to civil aviation, adding that new conditions have been set at airports for the issuance of On-Duty cards as part of measures to control access into sensitive areas.

    He said all operations at the airport must comply with the standard operating procedures prescribed by global aviation bodies, including the International Civil Aviation Organisation ( ICAO) and the domesticated aviation security plan.

    He said : ”As a result to new threats to civil aviation, all security procedures at airports have been overhauled. There is high level collaboration between the relevant agencies for timely sharing of security intelligence and information,” he said.

    Airlines, ground handling companies, aviation security companies have to be trained regularly to acqaint them with the latest trends and technologies in global aviation.

    He recalled that there was an agitation by FAAN security to carry arms, saying that NCAA was not opposed to that. “For us at the NCAA , it is purely an operational issue, which we do not dabble into. But, our concern is on issues bordering on arrest and prosecution of offenders, which we think should be the duty of the police and not aviation security.

    “We are looking forward to the office of the National Security Adviser to resolve this . But, we are convinced that with the right technology in place and operational facilities manned by highly trained aviation security personnel, there’s no threat to civil aviation that cannot be contained .”

    In his contribution, the Head of Aviation security and Chief  Security Officer of the Lagos International Airport, Col. Carl Onalo ( rtd ), said  government is committed to strengthening security at airports by stepping up efforts to improve safety and security .

    He urged all security agencies to collaborate in their bid to contain all threats to civil aviation at airports, stressing that there is need to reinforce the foundation of aviation security professionals in the fast changing industry.

    ”Today we are set to reinforce the foundation of aviation security. This is because the industry is fast changing. It is, therefore, important that  we step up our game, doing all things necessary to stay ahead of the enemy and ensuring the safety and security of the aircraft, passengers, aviation facilities and installations,” he said.