Chairman/Chief Executive Officer of Air Peace Limited, Allen Onyema, believes banks should lower interest rates for airlines. He spoke to KELVIN OSA OKUNBOR, explaining his interest in running an airline, a hugely capital-intensive business, which many have fled from.
Commercial banks should lower their interest rates to single digits to enable indigenous aviation firms to access more funds to buy aircraft and run airlines.
This, according to the Chairman and Chief Executive Officer of Air Peace, Allen Onyema, is how indigenous aviation firms can grow.
Onyema said the reduction has become imperative because airlines require more time to repay their loans, because of low returns on investment .
He urged the Central Bank of Nigeria (CBN) to put commercial banks in a strong position to finance high capital intensive airline projects.
Speaking in Lagos at the weekend on plans by the carrier to begin operations, Onyema said Air Peace is patterned along the model of South West Airlines in the United States.
He accused the Federal Airports Authority of Nigeria ( FAAN ) of with holding land to intending airlines interested in building aircraft maintenance hangar in some airports nationwide.
Onyeama said, rather than allocate land to serious operators, FAAN has been allocating land to people who are not ready to develop them for aviation development .
He said: ”The new minister should direct FAAN to allocate land to committed investors in the aviation sector to enable them set up aircraft maintenance facility. That will assist the development of the sector.
“If FAAN is skeptical about our capacity to utilise the land, they should ask for our feasibility and bankable evidence on how we intend to develop the facility. We have banks that can finance the projects .
“The new minister should talk to FAAN to release land and we are ready to give evidence of finance. I do not think it is good for airlines to be carrying out aircraft maintenance at the ramp. It is not enough. Even the Air Force facility is not enough. There are airlines that want to have their own hangar.”
The airline, he said, would run a ‘ lean ‘ operation to remain profitable.
He denied insinuations on the ownership of Air Peace.
Onyema said: ” These insinuations are unfounded. Neither President Goodluck Jonathan or members of his cabinet or my friend, Kingsley Kuku, has anything to do with the funding of Air Peace. The insinuation in the public domain is unfortunate and misleading. It is being peddled by people who either have political scores to settle or operators who are afraid of our entrance into the aviation sector .
“ I get very angry when people throw up such insinuations that even Mr Timi Alaibe or anybody they know is my friend that is in or was in government is giving me funds to run an airline.
“They even throw up names I have never met before. They even mentioned the name of the President’s wife, Mrs Patience Jonathan .
“I have never met her . I have also never met President Jonathan in person. I am very sure people doing all these are doing it for political undertones . I am sure too that some competitors are scared of Air Peace, so they could do anything to bring me down .
“We are prepared for those who are poised to malign our reputation in print or any permanent form. Very soon, they will make my day in court.”
He said Air Peace has taken delivery of five aircraft, as part of efforts to acquire the Air Operators Certificate( AOC) from the Nigerian Civil Aviation Authority (NCAA).
Onyema said soon Air Peace would take delivery of additional two aircraft to bring its fleet to seven to enable it serve both primary and secondary airports.
He urged the Federal Government to install air field lighting facilities at all airports to ensure 24- hours operations.
The Air Peace boss said his company has trained over 40 pilots, who were sent to the CAE Academy in the United Kingdom for further training to enhance their flight proficiency .
He said the aviation industry needs more investment and canvassed cooperation among domestic carriers to make them stronger and more competitive .
Onyema said Air Peace would sign interline and codeshare agreements with competent carriers to give passengers the best.
He said many domestic carriers have failed because the owners lack sound business practices and integrity, affirming that commercial banks would only be comfortable giving money to business people who they do could trust.
He said previous attempts by government to package intervention for domestic carriers have been abused, as the funds were misapplied .
On the problem of aviation fuel, Onyema said many independent fuel markets were reluctant to sell fuel to domestic operators because of indebtedness.
He canvassed the cash-based transaction model for purchase of aviation fuel, such that the marketers would not run info cash flow problems.
He said rather than pulling down one another local carriers should forge a common front to attract more people to travel by air.
He said there are not enough airlines in Nigeria to cater for the over 170 million people, out of which a paltry five per cent travel by air .
He urged Minister of Aviation Osita Chidoka to consult widely with airline operators and other stakeholders on the fundamental areas requiring attention.
He said if Chidoka does not consult widely, he may not be able to address the myriad of challenges affecting the sector .
Onyema said Air Peace would continue to invest in indigenous professionals, including pilots and aircraft engineers, who if well motivated could outshine their counterparts from any part of the world.
On high operating charges by aviation authorities , Onyema said:” Government and the people of Nigeria should start asking questions: why do Nigerian airlines go extinct? Airlines go into extinction very easily in Nigeria. And there are so many factors. Above all, the current administration should be commended for giving the airports a facelift .
“Credit must also go to government for the waiver on import duties and charges it granted domestic airlines for their aircraft and spare parts .
“That has assisted airlines to save huge sums of money,that would now be deployed into maintenance of their aircraft.
“But, a lot more could be done by government to assist domestic operators .
“Government should not only support start up airlines, but the existing carriers because airport and air navigation charges are too many. Five per cent to this agency five per cent to the other. The bulk of the revenue accruing from ticket sales goes back to aviation agencies as payment for charges.
“Under this kind of arrangement, no airline can break even, let alone run profitably or recover their operating costs. If the airlines cannot recover their costs, that means they are incurring losses and ultimately they close shop. The negative of an airline closing up is that there will be job losers, which gives rise to insecurity.
“I am calling on President Goodluck Jonathan to direct aviation agencies to reduce airport and other air navigation charges for domestic carriers to enable them keep their business afloat .
“The current administration has done well for aviation, but government should remove the double and high airport charges that have become prohibitive.
“If an airline is paying out over ten to fifteen per cent of its revenue as airport charges, where will the operator get money for aircraft insurance and maintenance , aviation fuel and other issues it must attend to? Where will the airline now get money to pay its overhead costs? So, the prohibitive charges should be far away, they belong to the past.”
Onyema bemoaned negative practices in the industry where operators engage in de- marketing to pull down would be competitors.
He said :” I have discovered that there is so much enmity among operators in the airline industry . There is a lot of devilish competition among airlines. A lot of people are scared when they see a new entrant coming into the sector. That should not be the case. The more airlines we have the better it is to serve the entire industry .
“Imagine Nigeria, a country of over 170 million people, should have as many airlines as possible. Less than five per cent of this population travel by air.
“This is not good enough, because the awareness has not being created . With more airlines on board, if the competition is healthy , we should encourage more people to fly so that everybody have a hand on the pie.
“What airlines are doing now is trying to cut corners , running competitors down and other forms of de -marketing , and engaging in pulling down syndrome is devilish. It does not help any operator, because what comes round goes round.
“ In Air Peace, what we want to bring to the industry is peace and love. We started that already . I have always been excited anytime I see a new operator coming on stream.
“I was happy and congratulated AZMAN Air, when they started operations , even Discovery Air, I was happy when they started . I am not happy to see any airline go down. We need to support one another . Air Peace is open for partnership, for any constructive advice that would help the airline to do well.
“ Domestic airlines should cooperate , nothing wrong in doing codeshare, cooperate with one another. That is the way to go.
“If your airplane has a problem, you can ask another airline to help fly your passengers. The bane of airline growth in Nigeria is the devilish competition among operators .”
Speaking further on how banks could assist domestic, operators, Onyema said :” If airlines are properly run, they could become money spinning businesses , and the banks would be in a good position to gain from that through huge cash inflow that would be generated .
“The truth of the matter is that integrity is in short supply in Nigerian business environment. That is the main reason why many Nigerian banks are skeptical to give out money to fund aviation projects, because they see it as turbulent .
“The banks should look inwards and see how they could protect themselves . In the case of my airline, I sign off my planes as collateral with others collateral as guarantee if I am unable to pay back the money I took from the bank.
“Before any bank could give money to any airline airline operator, he has to look at the background of the person deeply .
“Where is he coming from? Can we trust him? The banks that gave Air Peace considered all these seriously. The bank gave me a moratorium . The banks can extend this to other airlines to restore confidence. The problem with Nigerian airline operators is they borrow money and run away . They divert the money .
“Banks should come in to assist Nigerian airline operators, after they have carefully studied them that they have integrity to pay back the money given. Assurance that the money would not be diverted into any other venture is very important. The banks should lower their interest rates. At the same time, we also have to consider rate at which the banks are getting their deposit.
“In this respect, the Central Bank of Nigeria has a role to play . This implies that the Central Bank of Nigeria must lower their with holding deposit with the commercial banks to enable them achieve the interest rate to benefitting airlines.”
On the module to be used by the airline , he said: ” We are bringing a whole world of difference with Air Peace . One of the driving modules for Air Peace will be safety . This is a key ingredient fir running a successful airline anywhere in the world.
“One of the motivating factors that pushed me into investing in aviation in Nigeria is to change the face of air travel , with priority on safety, which has become imperative in view of the spate of air crashes that occurred many years ago .
“Going further, we are going to model Air Peace after the operational model used by South West Airlines in the United States. We want to do something unique in air travel . We want to fly from Warri to Port Harcourt , from Abuja to the smaller airports . We are using very strong Boeing jets , to see flight from Benin to Port Hsrcourt, Kebbi to Abuja . The whole idea is to bring peace to the country . In Air Peace , we are not driven by profit, but to create jobs for Nigerians by ensuring qualified indigenous professionals are engaged .
“That is what we want to do. Air Peace wants to open up the entire country’s air link by going beyond the traditional point of flying from Lagos to Abuja, Port Harcourt and a few other routes.
“We want to have a good operations that would be profitable, we would not cut corners, we would get it right, we do not want to cut lives. We intend to run an airline that passengers would feel safe and secured and have peace. We intend to run a ‘ lean ‘ operation that would be profitable .
“South West Airlines in America that we are copying their model is very profitable . We are planning to bring in a new style of doing the business.
“We hear that aviation business is very turbulent , but with a lean operation, we would survive and open up the entire country to bring in peace and link up all the airports.”
