Allen Onyema is the Chairman of Air Peace. In an interview during a panel session at the 29th LAAC Conference held in Lagos recently, he spoke about performance of Nigerian airlines compared to other African carriers and explained implications of implementing the new tax law, if it is not reviewed.
Looking at Nigerian airlines and their financial performance and delivery to their stakeholders; can you sincerely say that their financial performance and delivery to their stakeholders is good enough?
Yes. The truth is, it could be better. When you talk about deliverables to the stakeholders, you have to look at the amount of investment and then, whatever you are getting back, is it commensurate with the amount you have invested? If you invest $100 million in aviation, maybe at the end of the day you are expecting three percent or five percent profit; If you take $100 million to agriculture or to importation, you may get up to 70 percent profit at the end of the day.
So it is not as if you do not make profit at all, but what is the margin of this profit? Again, the airline is going to have a tax death. We pay a lot of charges. And I keep on saying it, and I will say it as a member of Airline Operators of Nigeria (AON). The five percent we pay for ticket fares to the NCAA is affecting the airlines.
Because you don’t make a five percent gain. And they will tell you, that money does not belong to you. It is the money you’re collecting from passengers, on behalf of us. No. It is already limiting your ability to charge for the tickets. You can collect it directly from the passenger, so that whatever we collect from passengers will belong to us. So, I am not saying that we should not pay anything to the government, but it has to be cost-recovery. Even the ICAO principle is about cost recovery. What we are doing here today is a matter of legislation. The five percent has been legislated.
What is your assessment of the new tax law?
In the current tax reforms, I don’t know who put it there, that we have to go back to the regime of paying custom duties for imported aircraft, custom duties for imported spare parts, VAT of 7.5 percent for imported aircraft, and even ticket fares. The airline would die within 48 hours. But I am happy that Festus Keyamo, the Minister of Aviation, has taken it up because if it is ever implemented from January next year, airlines would die. They would just die. It has never been done anywhere before. Never.
Do you think Nigerian airlines are doing well compared to other African airlines?
We have to give it to the Nigerian airlines. I don’t care whose horse is gored. Nigerian airlines, I mean, the environment in which we operate, you have to give it to these people. We do not appreciate our own. AWA started about almost 15 or 17 years ago. One of the smallest airlines in Nigeria is bigger than AWA. And you cannot tell me that they are doing well for themselves. But you can’t compare them and make them look good against Nigerian airlines.
AWA has a fleet of about six aircraft and that is E145; the smallest airline in Nigeria bigger than AWA. We are always seeing the good in others; we are not seeing the good in us. For your information, when we were flying to Dubai, Air Peace had a partnership with Air Arabia. We have a partnership with Emirates. Emirates signed up Air Peace. We need to, in this country, continue to appreciate our owner and the efforts of Nigerian airlines. Even the airlines in this country that have gone down, find out why they went down. It is not totally the fault of their owners. These owners succeeded in other businesses. Why is it that whenever you invest in airline business in Nigeria, the next thing you are grounded in, meanwhile, the owners have succeeded in other businesses?
What is your take on the national carrier?
Let us call a spade a spade. I have heard all this talk about the national flag carrier. It is a moribund idea all over the world. Government has no business doing business. It will fail like a pack of cards. We can’t continue to do this to ourselves. And people are listening and thinking that it is the truth. No. Air Peace is far bigger than some national carriers in Africa, far bigger. Do you know what it took Air Peace to be going to London after seven years? You are fighting both internal conspiracies. You are fighting foreign conspiracy. My country is stigmatized. What we should continue doing is to elevate our own. And we are carrying the burden of the entire industry. Because if we fail, the industry will continue to fail. They should succeed because we know what they go through. It is not true that we don’t cooperate with each other.
Is the spring alliance among Nigerian airlines still effective?
We have our own spring alliance amongst ourselves. If I have a problem, I can call Overland and take my passengers. It is happening. I don’t have to say it out loud. It is happening. The problem is that sometimes when you call the other airline; they may have a full aircraft. And we help each other. We do it. We have our own alliance. But I find it not so good. It is not a good feeling for me. For us to pick on middle airlines out there and place them over and above Nigerian airlines that are doing everything possible to serve this nation.
