COVID-19: Airlines Are Facing Economic Challenges All Over The World—NCAA DG

Capt. Musa Nuhu, DG, NCAA

 

Captain Musa Nuhu is Director General, Nigerian Civil Aviation Authority (NCAA). In this interview with aviation Correspondents at a Gateway Forum, where Thetravelport.com.ng was present, he speaks on the authority’s autonomy, airlines’ financial health status, impact of Covid-19 on the sector and Government’s plans, among others.

Exerpts:

 

Perception about NCAA’s Autonomy

Yes, NCAA has autonomy in terms of regulations but NCAA cannot totally remove itself from the ministry of aviation. The ministry is responsible for policy development for the industry and we implement those policies through our regulations. So we must have a line of communication and consultations with the ministry and also if you look at the organizational structure of NCAA, we have the Minister, the board and then the DG, so we cannot totally isolate ourselves from the ministry but l can assure you in terms of implementing regulations and otherwise, NCAA is the only body that is doing that and we are doing that without sort of interference with the ministry. There are some regulations that without the political support of the ministry, it will be very difficult to implement those regulations. In the past, when aircraft are grounded, big men went over above the ministry, they even went to the Villa and they have those decisions taken by NCAA reverse, but this time around, it is not so, we implement our regulations irrespective of who is involved and the support of the minister, the political support has made our life easier within our regulations. So anybody that want us to divorce completely from the ministry is not being realistic, it is the ministry of aviation. Aviation goes beyond NCAA, we have other public service providers like FAAN, NAMA, NIMET, AIB, NCAT, then the private sector, airline operators, ground handlers all under the ministry, we regulate them, so there are some connection between us and the ministry, you cannot say because we are independent in implementing regulations, we mustn’t have some relationship with the ministry. It happens everywhere in the world. In the US, the FAA has some connection with the department of transportation. What is important is for the regulatory body to be able to do it statutory responsibility of effective oversight of the system without interference and that we are doing.

Economic health of airlines

This is not only happening  in Nigeria, it is a global thing in the airline industry, the profit margin is very minimal, if you make five percent profit margin in the business, you are considered to have done excellently well, but however, with the Covid-19 and the difficulties, airlines financial positions are not the best, it is a global phenomenon and there are so many other issues that affect the financial health of airlines that is neither in the control of the ministry of aviation nor in the control of the civil aviation regulatory body. For instance, the provision of foreign exchange, it doesn’t come from us. If a country’s foreign earning goes down, the central bank prioritizes, and you can understand due to the lack of maintenance organisations in Nigeria, pilot recurrent training institutions in Nigeria they have to go outside to do these and that entails a lot of foreign currencies, so it is not easy. Also is Jet A1, that is a major factor that airlines have been having difficulties with, sometime we see it induce scarcity and escalatory price, so there are factors that affect the health of the airlines that are not in our direct control. The ministry has tried, it went to the central bank when this government came on board, Nigeria owed foreign airlines about 600 million dollars in arrears, the minister through consultations was able to get that off our back and all the foreign airlines were paid. We visited the NNPC to see what kind of arrangement can be made for the production of Jet A1 and in addition, interest rate, when airlines go borrowing at a very high interest rate which we know is very high in Nigeria. If my profit margin is 5%, explain to me if l take a loan at 20%, how I can break even and pay them and make profit. These are the micro and macro factors that affect the health of the airlines. We try through our economic regulations, to do the financial audits of the airlines and advise them where we see areas of economic difficulties and see how they can be tackled. One of the thing we are doing is we want to really strengthen the function of the economic regulation through more training of the staff of the directorate. As you are aware, we are having some restructuring going on, it is to reposition the regulatory body to able to carry out its responsibilities in a more effective and efficient manner.

Oransoye report on merging agencies 

I read the report in the papers the same way you did, nobody has informed of any merger, l have asked from the ministry there have been no confirmation, I understand this is an old report done over ten years ago, somebody just sit down and brought it out, I am not aware of any merger between NCAA and any agency and I cannot comment on what seem to me an unofficial matter, and by the way, in the US, FAA is the regulatory body and it runs the air traffic services which is the equivalent of NAMA, so it depends on how you run it. I am not saying we are going to do it here because I don’t have anything official but there is this misunderstanding that there is something like that, no Sir. FAA has a specific structure design in their own case to ensure that there is no conflict of interest. I am not aware of any merger in Nigeria because I have not been given any document officially.

Ill treatment of Nigerian airlines abroad

The advice I will give the airlines is that if you are going to another country to negotiate your services, you should involve the regulatory body, the ministry of aviation and also your embassy in that country. If you as a private organisation you go and negotiate with a government entity that is trying to protect its own airlines, you are going to run into difficulties, but you involve ministry of aviation officials, NCAA officials and embassy officials, the country knows that if they make things difficult for our airlines, we will apply the same reciprocitory measures to their airlines, so it make a big difference. A lot of airlines go and do the deal themselves. They should involve us, carry us along, brief us, we are here to help our airlines grow both domestically, regionally and internationally. I hear them talking about aeropolitics, yes, an airline from Nigeria want to go compete with an airline of another country on their route, of course they will make it difficult for you but when you carry NCAA officials along, it makes a difference, if you put unreasonable demands on my airlines, I will apply the same to your airlines coming into my country, so it is to their benefits for everybody to come out with good terms for all the airlines. When airlines are going to foereign countries to negotiate, inform us so that we will sit down with you, guide you, send representative there with you to negotiate with these foreign countries. If the foreign countries have airlines coming to Nigeria and they give unfair charges to our airlines, we will apply the same reciprocal charges to their own coming into Nigeria too. When we have BASA, there should be fairness in both sides, if there are challenges, they should inform us but if they are going for the first time, they involve us so that we sit down, strategize and send people there to negotiate.

How Covid 19 affected plans for the industry

The meeting I had after my hand over from the acting DG, the discussion I had was Covid 19, by then it was not yet declared a pandemic but we could see the trend coming, so we started putting measures in place. Firstly, how we are going to run the NCAA as an organisation and business continuity plans in place, how our staff will be working with the development to ensure that whatever happen, we will have people that will be running the organisation regardless of the covid challenge, we ensure we have somebody who will step in, we prepared to reduce the workforce coming, a lot of them will stay at home and we have what we determine is enough that will run the organisation, that was even before the government came out with the directives, we were already working on that. Basically at that time, it was the issue of survival, whatever plans has to be put in place, because whatever plans you have, if you don’t survive, your plan are of no use. First of all, we have to survive, ensure the organisation survives, and to put measures for the industry to survive, it certainly delayed our plans but now with the successful resumption of domestic flights and we have not had a significant spike and contamination cases, so all the plans have been delayed but we have successfully resumed the domestic operations, perhaps one or two minor hitches there, nothing significant, and I know you will all agree with me so far so good and the response from the public complying with the protocols have been excellent. We started the international flight operations, with time we are going to increase the number of flight coming in as things stabilize, we identified hitches that were rectified and we hope things will get much better going forward. So part of the plans we had is repositioning the regulatory body to be a bit more resilience and a body that is flexible to react to changing situation and part of the restructuring we have had is part of this process and in the coming months, we will see the organisation in a good position to deal with challenges and the emerging challenges. As you are all aware, the Covid 19 has changed the global industry, the rapid changes in technology is also changing the industry, not only aviation but also the ways businesses are conducted, so we have to reposition ourselves to fit into that so that we can really effectively conduct our regulatory responsibilities.

Barred countries and negotiation

I as the DG of NCAA, I am not aware of any approach by any of these foreign countries, they might have done it, it is possible. I am just speculating, they could have contacted ministry of foreign affairs and they might also contact PTF, I am not aware of any but I have heard a lot of complains but no country has approached us for this.

Scrapping of Consumer Protection at NCAA

I think there is a misunderstanding. Consumer protection has not been scrapped, it was just downgraded from a full directorate to a unit under the directorate of air transport regulation which is what it used to be. Consumer protection exists in full with all the function it has, we still have consumer protection, it has never been scrapped. If you go to the airport, you still see the staff from the unit carrying out their job without any reduction in their scope.

The impounded aircraft in Dubai

It is not a Nigerian aircraft; it is a US registered aircraft that was brought to Nigeria to operate under the AOC of Nigeria. We have started investigation and forwarded the documentations from our investigation to the authority in Dubai and the US FAA. They asked for additional information which we have given them and I think I saw an email today from Dubai, communicating with the US where the aircraft is registered. We have done our own part and our report has been submitted and we are going to take action against those who have violated our regulations. That is all I can say for now.

NCAA status after merger and reduction of directorates

Infact that is the whole idea of the reduction of the directorate to make it a more resilient, more flexible and a much more effective organisation in the conduct of its oversight responsibility of the industry, and also we have to take cognizance of the changes in the global world aviation industry both caused by the corona virus and the rapidly changing technologies.

Progress on the platform to receive quick responses from passengers

There have been significant progress on the platform; my understanding is that whatever issues are on the platform would have been resolved yesterday or this morning. Once I get the report from PTF, notices will go to the airlines to their passengers on the need to use the platform.

How domestic airlines can best run their business

Each airline has it own business model, so running an airline has a number of issues that can impact the running of the airline and one of these is corporate governance, separation of ownership from the day to day management of the airline business, for a lot of airlines in Nigeria, that is a very bold line because there is no definite guidelines separating the owners of the airline from it management. Over the years it has contributed to the difficulties and challenges a lot of airlines have. Once the civil aviation act is passed by the national assembly and we have a new mandate, we intend to look at that regulations also maybe with the cooperate affairs commission we will sit down and see how we can apply some of these corporate governance issues in our regulations strictly and resolve some of these difficulties we have been facing and one of the things we are going to do is that the directorate of air transport regulations will be empowerrd and also enhance their skills and knowledge to really study the business models and plans of airlines and see how effective they can be and we can have a more positive regulatory function, we are doing it now but I believe we need to build more capacity in that department.

Issues between airlines and staff

The challenge of financial health of airlines is not peculiar to Nigeria. It is a global thing. Even the airlines that have received billions of dollars of subsidies from their nations government and they are still laying off hundreds and thousands of workers. The entire travel and tourism industry has been greatly impacted by the covid 19 in a negative way. Airlines have had to sack people in order to save cost, even the major airlines. British Airways is reported to have plans to lay off a third of it workforce, that is about 10 to 12 thousand people, Lufthansa is going to ground all its entire A830 fleet and its 747 fleet, that is a significant number of redundancy, emirate has laid off people, likewise Etihad and in the US the same scenario plays out. Let us not make it a Nigeria thing but rather see it as a global challenge. I know the policy of the government through the minister of aviation is working to see if some kind of palliatives can be given to the airlines. On the issue of relationship between management and the unions, on Monday Arik Air had issues with members of unions who barricaded them, we had some fruitful discussion yesterday we had some kind of mediation between the receiver manager of the airline and the unions, we all agreed that they are going back to sit and discuss again, every will take each other concerns into considerations and the union members have to understand the very precarious financial situation of arik and other airlines. The minister has also had meetings with various airlines and the unions trying to settle similar challenges. We are working hard to see how we can maintain industrial harmony while resolving these challenges.

Telecom companies and Height clearance with NCAA

Height clearance is a regulatory function of the NCAA which is in our regulations that has been signed and passed by the government, we are dealing with all the communication companies, we are in contacts and deliberations with them, some of them have made part payment and we are working toward getting the remaining payment. Part of our statutory responsibility is to identify obstruction within and around the airports, in the past there are all kind of erected masts constituting obstructions all around and we directed them to come to us to obtain a height clearance certificate, we are not using it to rake in money, it is based on cost recovery. These masts have constituted a lot of safety hazards for us, we are trying to do a better job to prevent accident by these oversight. Currently, we are building a database called the Electronic terrain and obstacle data base, if we can implement it and go live, that will enable, with the help of the federal government, helicopter to fly at night, we are trying to capture all the obstruction that is out there because everybody flies.

Your experience at ICAO and Dr Aliu’s influence on you

It was a rare privilege to be nominated and to serve on the ICAO council as Nigerian representative for about 3 and a half years from 2016 to end of last year, it was an amazing experience, I don’t know how I can explain it. ICAO council which is the governing council constitutes 36 member state which are elected every two years. Nigeria has been on that council nonstop since 2016, members come from different background, some have been ministers in their countries, retired generals, career ambassador and DGs and you have people like me who are technocrat from the industry. Generally Nigeria has always been represented by people from NCAA. You ‘ve got to meet and discuss with people from all corners of the world and you see, for the same problem, everybody has his own solution and ideas; we had our disagreement and agreed on issues. On the council, we have 8 members from Africa, we have the Afrigroup where we sit down to strategise to protect and promote the interest of the Africa continent. Before I left, I was the coordinator of that group. We were able to achieve a lot for the benefit of Africa. Dr. Aliu was the representative of Nigeria for about 8 years from where he was elected president of ICAO, he was also a director in NCAA when he was sent to represent Nigeria in the council of ICAO, I was blessed to have something like that having gotten into the council with little knowledge of the working of the council. Once in a while ,when I have issue, I went to him and he will refer me to document to go look at. He had a good influence on me and I appreciate it and I was lucky to have a Nigerian as the president of a global organisation like ICAO, it is not easy. Also at the other end, everybody was expecting me to perform like Dr Aliu, you find people like him once in a lifetime, there is no way I can fill his shoes, they are too big for me.

Airlines and palliatives

What I can guarantee you is that anybody can apply, it is their right, whether they are functioning or not, but the issue of palliatives is a policy of the federal government being driven by the minister of aviation and they have their guidelines and one of it is that you must be a functioning and performing airline before you get any palliative, that is all I can say, if you don’t have an AOC, the AON I believe also have their guidelines, they are also part of the input and know who and who will get these palliatives from the guidelines. I don’t expect them to put airlines that are not functioning into that list. I can guarantee you from the government side, if you are not functioning, forget it, you can try your luck , it doesn’t mean you are going to get it.

NCAA and AIB functions 

I don’t know about the loggerheads between the AIB and the NCAA, there must be some misunderstanding of misinformation. If you have been following the trend, a couple of weeks ago we met with AIB we sat down, we spoke, we had a committee that had been in existing between the two agencies, we reignite the committee, the commissioner and I met and spoke on common ground of interest and collaborations. We pledged to work together. AIB is in charge of accident investigation. Its responsibilities are clearly defined. NCAA is the regulator, if there is an accident, they are an independent body saddle with doing the investigations, in our cases even in the US, at the end of the investigations, and the regulator might have been found negligent or to be a contributory factor for an inaction or nonaction, that is why we have an independent investigator, in the US you have the NTSB which many times has indicted FAA in accidents, so that is why we have this separations so AIB can do it investigations and make recommendations and when they do, our committees sits down implement them, we might review them, the report is submitted to the minister and NCAA implements.

Airlines and Cape Town convention
It is for us to work with the airlines in Nigeria who lease aircraft and if there is any disagreement we try to intervene and resolve the issues without having serious negative consequences on the Nigerian aviation market. Of recent, there was an airline in Northern Ireland that has issues with an operator in Nigeria over leased engines, we stepped in, intervene and we were able to resolve it and the engines were returned to the leasor. Honestly that singular act I got a lot of positive responses from the international community, people are more relaxed to do business with Nigerian airlines knowing that if there equipment got stock in Nigeria; they are able to get their equipment back with the help of the regulatory body. If we are doing this for a longtime, it is going to make it easier for Nigerian operators to lease equipment, be it aircraft, engine or whatever, it also comes at a competitive global rate rather than add a premium because Nigeria is considered a high risk market. These are part of the things we are doing.

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