Bilateral air services agreements ought to correct balance of trade and generate sufficient national income for the countries involved. In Nigeria, the earnings from the over 78 air services agreements it signed with many countries is as good as the paper on which they were written because of non-utilisation of some of the agreements and inadequate reciprocity. Experts in the sector are seeking a review of the agreements to enhance the lot of domestic airlines, Aviation Correspondent KELVIN OSA OKUNBOR writes.
If what value is the 78 bilateral air services agreements Nigeria signed with many countries, if only 21 of the agreements are utilised?
With only five of the agreements reciprocated, what better reasons will experts not advance as sufficient for the review of such skewed agreements? The need for answers to these questions explains why experts in the aviation sector are calling for a review of bilateral services and other multi-lateral agreements Nigeria signed with some countries.
Under the agreements, about 27 foreign carriers operate in the country. Currently, only Arik Air and Aero Airlines fly into other countries. While Aero flies into West African coast, Arik Air operates in the West, Central and South African routes in addition to its intercontinental routes, including London Heathrow and New York in the United States. Arik is yet to secure traffic rights to many of the intercontinental routes it has been designated by the Federal Government.
But many foreign airlines fly into Nigeria with some enjoying multiple entry points into the country as covered in the bilateral services agreement the countries signed with the Federal Government.
This ugly development is shortchanging indigenous carriers as well as the country with foreign airlines remitting over $5 billion out of Nigeria on ticket sales yearly. Apart from multiple entry points into Nigeria, some foreign carriers have two daily flights out of the Lagos Airport. Emirates Airline, for instance, operate two daily flights out of the Lagos Airport to Dubai. Ethiopian Airlines operates into three Nigerian cities, including Lagos, Abuja and Enugu, amid plans to expand into Kano very soon. Yet, no Nigerian carrier has traffic rights to fly into Ethiopia. Turkish Airlines operate into Lagos and Kano; British Airways operate into Lagos and Abuja airports enjoying multiple entry rights into Nigeria. No Nigerian carrier flies into two points in the United Kingdom. Air France and Lufthansa Airlines fly into Lagos and Port Harcourt airports. No Nigerian carrier has traffic rights into France and Germany. While British Airways and Virgin Atlantic Airways operate into Nigeria, only Arik Air operates flights into the United Kingdom, thereby raising fresh concerns over the policy of dual designation covered in the air agreements between the two countries.
The failure of Nigerian carriers to reciprocate some of the bilateral air services agreements is due largely to lack of capacity, as indigenous carriers cannot match any of the foreign carriers on routes when the agreements are either utilised or reciprocated .
The President of Sabre Travel Network, Mr Gbenga Olowo said foreign airlines remit over $5,556 billion out of Nigeria yearly from ticket sales on account of lopsided bilateral air services agreements, which confers competitive advantage on foreign airlines. He said until the Federal Government designate at least three domestic airlines as flag carriers, foreign airlines will continue to remit more money to their respective countries. He faulted the air services agreements the government signed with others, which grant them unrestricted access into the country’s market without sufficient reciprocity by indigenous carriers.
Olowo explained that Nigeria entered into three layers of air services agreements, which include bilateral, multi lateral and open skies’agreement, which creates a window for foreign carriers to come into Nigeria from multiple points. Such multiple points entry by foreign carriers has further helped to erode the operational capacity of the domestic airlines. He said the objective of the balance of trade had not been achieved.
He said out of the 48,433 seats available in international weekly flights out of four airports in Lagos, Abuja, Port Harcourt and Kano, Arik Air controls a mere 3889. He said the influence of the 27 foreign airlines flying into Nigeria has to be checkmated as they remit over $ 5.556 billion yearly from ticket sales.
He said: “Nigeria has not been able to reciprocate traffic rights to most of the partnering countries. This has resulted in huge negative balance of trade against Nigeria. This has also brought about capital flight. It has also put strong pressure on the naira by further weakening the exchange rate. This aids unemployment as Nigerian airlines growth remains stunted.”
He further asked: “Should the foreign airlines strictly operate frequencies as stipulated on the BASA?”
The answer, he said, is negative because Nigerian airlines have no capacity to reciprocate. “Should the extra frequencies be removed through seasonal schedule changes? The answer is negative due to demand and political factors. Should the government continue to earn the so called royalties on bilateral agreements? The answer is negative. One might be tempted looking at some previous earnings which I will like to describe as pot of porridge in exchange for the birthright. Commercial agreement negotiation is airlines call and not that of government,” he added.
Olowo said all hope was not lost if the government would do what is right. He said: “The government should immediately establish at least three scheduled flag carriers with capacity to reciprocate all BASA routes.
“The three airlines to be designated must be given National Carrier Status. They must participate in BASA negotiations and Commercial agreements. This will give birth to quality service delivery and healthy collaboration and competition. Each of the three flag carriers operating an Air Operators ‘ Certificate ( AOC) .The airlines should increase its aircraft fleet within three years to 50 starting with a minimum of 30 and increasing by 10 yearly. All the about five- aircraft scheduled airlines should be encouraged to join the pool either as lessors. This will bring about harmonisation of resources, minimise competition, boost ample down time for maintenance without disrupting schedule and improved safety.”
He added: “Single point entry of choice in Nigeria will be mandatory with immediate effect. This will stimulate domestic traffic and hub creation.
“The Fly the Flag act must be established, where all travels on government funds must be made on a flag carrier.
“This will be an indirect way of market protection for Nigerian flag carriers and subsequently retain the wealth at home.”
“Rather than royalty earnings, Nigerian Flag Carrier(s) must conclude blocked seat agreement (BSA) and (Code Share Agreement CSA) with reciprocal airlines to whose destination they cannot fly immediately. This will give better earnings than royalty and grow the airline.
“Deliberate effort by the government on airline cost is a task that must be done for their competitive advantage. The way out is for the government to give guarantees on insurance and or aircraft lease, reduce landing and parking fees, remove multiple taxes, delete value added tax on domestic travel.
“There should be single digit cost of funds and cut on fuel price.
“Direct sales from foreign airlines offices should be outlawed. All sales must be routed through IATA licensed Travel Agents who are in the down stream sector of aviation industry.”
Sequel to the lopsidedness of bilateral air services agreements, the House of Representatives last November canvassed a review of treaties and agreements, which it observed are skewed against the interest of Nigeria.
Chairman, House Committee on Treaties and Agreements, Hon. Yacoob Bush-Alebiosu, said the House has called on the Ministry of Aviation and its parastatals to audit all BASAs between Nigeria and other countries. The audit, according to the law maker, is to streamline and domesticate the agreements where necessary, in collaboration with the Committee on Treaties and Agreement.
The House of Representatives has mandated the Committees on Treaties and Agreements, and Aviation, to review and appraise all BASAs. The committees are expected to find out the benefits of these agreements to Nigeria.
Bush-Alebiosu said: “BASA is a bilateral agreement signed between two nations to allow international commercial air transport services between their territories.He explained that BASA ought to be founded on the principle of reciprocity.
“It is a deal that enabled a country’s airlines to enjoy equal leverage in terms of flight operations in countries with which their home country has an air agreement. “The BASA seem to have been more of a curse to the growth of our aviation sector. The concept of reciprocity and mutual benefits as enshrined in a working BASA is not the case with Nigeria. “The profile of Nigeria’s aviation sector has continued to nose-dive in the midst of these arrays of BASA agreements.”
He expressed concern that the underlying tenet and principle behind agreement of this magnitude was equality of flights and accruable benefits between airlines of signatory countries.
Meanwhile, some indigenous airlines, including Arik Air and Medview Airlines designated on intercontinental routes are working hard to reciprocate the bilateral air services agreement Nigeria signed with others.
While, Arik Air flies into London, Heathrow Airport, New York, Johannesburg, South Africa, it is working hard to secure traffic rights into São Paulo in Brazil, Addis Ababa, in Ethiopia, Jeddah , Dubai , and other routes which are covered in the agreement. Medview Airlines is planning to resume flights into Jeddah, Dubai, Accra and Singapore covered in the agreements.
Also, the President of Aviation Round Table, Captain Dele Ore, said until the agreements were reviewed, Nigeria remains short-changed in the deal.
On the BASA deals, Ore, who is a former Director of Operations of Nigeria Airways, submitted that Nigeria has been at the losing end since its inception. His words: “As far as BASA is concerned, we’ve been running fully at a deficit. This deficit as enshrined in the negotiations ensure we receive some kind of royalty, especially where Nigeria Airways couldn’t fly to.
“It is pertinent to state here that the losses are enormous when you sign a BASA deal and you do not reciprocate it. Reciprocity is something you must strive to live up to. Worst case scenario, you could get another carrier that can operate that route on your behalf and spell out how the proceeds will be shared. If not, you’ll lose all round. These, I must say we have lost over the years. And we also allow some countries to claim what we call grandfathers’ right over us as being our colonial masters.”
Ore, however, disclosed that recently, the issue of BASA came up with the United Kingdom and Nigerian government for renegotiation, and that as far as he was concerned, “the negotiation is long overdue because you can see that the terms of the original BASA was not being adhered to”.
He added: “With that lopsided arrangement and disrespect to agreements, it became, instead of single airline, a multiple designation. We are having multiple entry, no longer my own capital to your own main gate.
“Foreign airlines are coming in to Port-Harcourt, Abuja, Lagos and all that. So, for this to be properly addressed, it requires renegotiation and it also requires very knowledgeable people to be on the government delegation, so that we are not short-changed. ”
An aviation analyst, Mr Chris Aligbe, said: “The BASA, as the name implies, is the agreement and the legal basis for the establishment and operation of air transportation services between any two countries.
“It regulates the operations of scheduled air services of the designated carriers between and beyond either territory. Nigeria has over 60 BASAs.
“The main denominator in BASA discussions is reciprocity. Before it is signed, the contracting countries are convinced that the deal is done with every sense of equity such that no party feels cheated out of the deal.
“In the event where one party cannot reciprocate, it collects royalties from its ‘performing’ partner and when the other party indicates interest to reciprocate, it is expected it gets equal treatment from its partner.
“That is why countries signing BASA deals assemble a crack team of aviation experts with vast experience in route designation/evaluation, market analysis, aviation politics/law, at the negotiating table. BASA deals clearly stipulate the type of aircraft to be used for the service, the frequencies, and, of course, the destination. ”
He noted that in spite of the Bilateral Air Services Agreement (BASA) which gave various countries equal right to entertain same flight frequencies, Nigeria inadvisedly signed the Open Skies Agreement with the United States ,creating room for multiple entries and dual designations which the foreign airlines are taking advantage of.
Also speaking, an Aviation Consultant and Chief Executive Officer of PDT Consulting, Mr Taiwo Adenekan, explained that countries should try as much as possible to protect their domestic carriers from bigger foreign airlines who easily capitalize on various air treaties to prey on them.
He expressed disappointment at the government’s generosity in granting both extra frequencies and entry points to foreign airlines at the detriment of domestic carriers.
‘We have multiple entries in this country. Ticket sales alone last year ran into billions of Naira .
We have BASA with some countries and now they have what is called commercial agreement, which is worse off. British Airways for example comes into this country 14 times in a week (from Lagos and Abuja). The country is losing because the airlines are not investing in this country in terms of offices, in terms of staff or anything. All the airlines are doing is they cart away those money back to their countries. ”
So multiple entries gives more money to the foreign airlines at the detriment of the domestic airlines.
However, with multiple entries becoming the order of the day, domestic operators have lost that juicy market to the European carriers that become stronger while Nigeria registered airlines become weaker.
Aviation analysts have argued that the country is worse off if she does not protect her market.”
According to Olumide Ohunayo of Zenith Travels, aside the huge capital flight, the foreign airlines are no longer too keen on interlining with Nigerian carriers because the attraction is usually the feeding and de-feeding mechanism whereby the local airlines feed the international airlines with passenger from a hub like MMIA and also help them distribute the passengers the fly in from overseas in Nigeria.
But in our own case, we don’t have it because we have opened all the entries and the airlines are coming in. ”
Also speaking, the spokesman of aviation agencies, Mr Yakubu Dati said government has begun steps to address the lopsidedness in the bilateral services agreement with other countries with its proposed national carrier.
Dati said the emergence of a national carrier would help Nigeria to reciprocate its air services agreements .
He said :” The rationale for a national carrier are compelling in itself. Bilateral air transportation agreements including several BASA and ‘Open Skies’ policy agreement inspired by the US government favours national carriers and offers countries with well developed and efficiently managed international airlines, including a national carrier a lucrative source of revenue.
The absence of a Nigerian national carrier since 2007 has resulted in the designation of one or two privately-owned Nigerian airlines as ‘national carriers’ for the purpose of taking advantage of BASA and other international aviation agreements and policies.
Experience has shown however that, the existing airline despite their spirited efforts have not been able to meet the yearnings of Nigerians .
Some of the easily noticeable shortfalls of these airlines include arbitrary increases in ticket fares, arbitrary cancellation of scheduled flights, poor in-flight service quality, inefficiency, lack of funds, old aircraft requiring more periodic maintenance; dearth of technical expertise and cash flow problems, lack of regular maintenance of aircraft; labour issues, and management problems.
That is not to say that these problems are peculiar to private airlines. But aviation is a capital-intensive business and also a strategic sector of great national importance.
If for any reason, a private airline which was serving as a national carrier goes under the Federal government would lose a lot of revenue from operating its lucrative international routes which are covered by various bilateral agreements.
When such happens the government would be left with two choices either pump in money to the private airline to resuscitate it, or set up its own airline to fill the vacuum. It is mainly for these reasons, various national governments have been involved in aviation for decades.”
