BASA: Why Nigeria should be cautious of UAE’s predatory tactics — Travel analyst

General Secretary of the Aviation Safety Roundtable Initiative, ASRTI/ART, Mr Olumide Ohunayo, in this interview, discusses Nigeria’s Bilateral Air Service Agreement, BASA, with the United Arab Emirates, UAE.
Among others, the travel analyst also identifies reasons Nigerian airlines might be uninterested in operating to the UAE even though the Minister of Aviation and Aerospace Development, Mr Festus Keyamo, said he had cleared potential hurdles.

Background:
We need to be cautious as appropriate blocks are being laid. The UAE has, like every other partner, shown to be a predator whenever the reciprocity clause is to be activated. Recall that it took a letter from the Federal Government written to the UAE before Nigeria could get slots for Air Peace in Dubai. All the while, they squeezed Air Peace into Sharjah, giving them an uncomfortable terminal and arrival time. And only for the UAE  to later make attempts to squeeze them completely out of Sharjah by tightening the noose and further breaching the BASA between both countries. But when the former Minister of Aviation, Hadi Sirika, put his foot down, the slot that was never available at the Dubai airport became available. It shows that if we put our act together – from the moment we designate our carrier which is  also our flag carrier on the designated route – activate the needed communication by requisite government agencies and ministries with their counterparts as well as review the clauses and wordings in our agreements, we will be able to get  positive commercial deals and appreciated responses from our counterparts. I believe that it was  lessons of the past and his legal acumen that the present minister has used in navigating this aeropolitics to ensure that  Emirates’ return into the country aligns with President Bola Tinubu’s renewed hope. Reciprocity has always been part of all the bilateral and multilateral air service agreements. It is historical, not just invented or inserted. For the minister to say he has cleared all hurdles in the agreement shows he must have done something about the slots which was once a problem. Like I said, there was no slot available in the past. However, unlike the former minister who had to put his foot down after the deed had been done, the current minister has said before restarting operations let us have a deal which is: if you get into Lagos, I will get into Dubai, meaning they must find the slots.

Stringent visa
It is absolutely within the right of the UAE government to fix a visa policy to protect its citizens and assets before tourism. That said, the stringent visa measures in place have made it very difficult for any airline to do point-to-point flight. And that is probably why there is no Nigerian airline interested at the moment. So, you must have a partner to take your passengers beyond Dubai or any other airport in the UAE  to have a decent balance sheet. The visa policies in place now are so stringent for visiting Dubai, and that will not encourage travel just the way the South African route has now been practically abandoned by Nigerian airlines. The visa policy favours Emirates because of the hub and spoke policy in place for international flights which they have used significantly to compete and dominate. Unfortunately, we cannot compete. We need to improve the airport infrastructure and investment in our airlines to develop a hub here before dreaming of competing.

Air Peace and Heathrow
This reminds me of a recent development where the minister wrote to the British authority concerning slots into Heathrow, and the annoying thing was that 80 per cent of those who condemned the minister were Nigerians, not the British. Why do we cry more than the bereaved? In the school of slots, there is also that school of aeropolitical arm-twisting. It is for us to know how to play our own game. It is for us to know how to reciprocate since retaliation is undiplomatic. When it comes to the London route; like we are discussing Dubai now, Nigerians are more aggressive. They are more concerned about the foreign carriers than the domestic airlines. The minister, who is a lawyer, has seen the agreements, leading him to act. Since the arrow has been shot, I will rather take a wait and see attitude as it is now left for the arrow to meet the target.

Impacts of Emirates flight suspension
Emirates had 21 flights a week into Nigeria – 14 into Lagos and seven into Abuja – in one week. That was a large chunk of international seats. Their withdrawal from international routes contributed to the high fares on international flights. Their flight suspension reduced competition, and the few foreign carriers left capitalised on it. One of those airlines that benefitted was Qatar Airways and airlines from Egypt and Morocco. They all used that opportunity to jack up their fares with increased frequencies. Emirates’ pull out really affected the industry. There was  loss of revenue in the aviation eco-chain. Everybody suffered a hit – from the government agencies, travel agents, to the airport taxis, to the service providers – even the catering  providers. Everybody felt the pain of their departure.

Benefits of Emirates’ return and potential codeshare deal
Let me state that government cannot force commercial agreements, but grant approvals provided the agreements are mutually  beneficial to all parties and it is not predatory. The jubilation elicited by Emirates over its promise to codeshare and cooperate with our airlines is welcomed, but it is not novel. 10 years ago, Emirates went beyond by signing an agreement with Arik. Yet, the benefits were not noticeable. Emirates should step up based on the procedures I highlighted earlier. Again, it takes two to tango. Also, our airlines should not expect the cooperation to be legislated or forced. It should come naturally based on corporate ethics, systems and processes that must align because derailment could lead to  lawsuits and loss of customers. The good thing is Emirates is here now. The capacity they have brought back will help reduce the fares. I recently had to book a flight ticket from Abuja to Sydney in Australia, and Emirates gave me the best fare. Despite being in dollars, it was cheaper than those in Naira. The more the competition, the merrier and better experience for passengers. What I want to see Emirates do beyond just operating these flights is investing in our airlines or our airports or any other part of our aviation ecosystem. What we presently lack is that big investment from external institutions or individuals and that is something on which we should work.

Ado about stranglehold

The foreign airlines did not strangle us, we strangled ourselves because we refused to plan. And when we tried to plan, it was left halfway. I think it is only Nigeria that can get itself out of the struggle, not the foreign airlines. We cannot start big, we just need to build slowly. I like the baby steps taken by Ibom Air and Overland. As we begin to grow, let us encourage competition, domestic consolidation, then we will begin to look at international cooperation and investment partnership for the international routes. That way, we will be able to grow organically and participate. We have the market, the knowledge, but it is time to begin to look at what other successful countries are doing to deepen aviation. That is the partnership, the commercial agreements that make these multiple airlines begin to come together in the form of consolidation, alliances, code share among others to create a big and strong airline.

AMCON, Arik and Aero
As of today, I do not see why the Asset Management Corporation of Nigeria, AMCON, should still be managing Arik  and Aero as two different entities. These two airlines ought to be brought together and put  in the market, or even hand them over to an organisation pending when issues related to court and ownership are settled so that these airlines can continue to operate and grow while all the liabilities are being resolved.

The need to cooperate to challenge
As of today, Air Peace is flying on the London route. We are supposed to have about two  to three airlines on that route. However, we still have some other routes that don’t have Nigerian airlines, so we should start looking for airlines with which we can cooperate to enable us to challenge the big carriers. I like what Air Peace is doing now with the Norwegian airlines. I want to see what they can do for them beyond London. Again, people who have been criticising Air Peace for requesting a slot at Heathrow should allow Air Peace to breathe. They have  a professional team and have their business plan. If Heathrow is what they want, then it has to be respected. Let us build partnerships slowly with some brands and investors that will help the airlines. This also brings me to the practice direction which is to protect these assets from judicial encumbrances. With the practice direction recently signed, airlines can have access to more aircraft, more dry leases and when you are getting dry leases, you are bringing more employment, lower fees for the leasing, your insurance also reduces and that helps to expand the aircraft capacity.





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