The Chief Executive Officer of Arik Air, Capt. Roy Ilegbodu in this interview, explains on a number of issues including the alleged controversial discussion surrounding Arik, which is one of the airlines under the receivership of the Asset Management Corporation of Nigeria (AMCON) and the plan by to start a new airline called NG Eagle.
Operational Challenges And COVID-19
The impact of the coronavirus (COVID-19) pandemic has been quite significant with the business of managing aviation globally and in Nigeria. As you follow news from all around the world you see that it is the same situation everywhere. Government has come massively in support of airlines; so, we did expect a bit more from government.
However, that said we also understand that government itself faces significant challenges from all other sectors of the economy. Therefore, we do not think of ourselves as unique. So, we appreciate the little we got as palliative; something little is better than nothing. So, I think that helped in its own little way aiding us to surmount some of the challenges we faced during the peak of the pandemic and are still facing till date.
We still face significant challenges going forward; we are still grappling with them. We have challenges of foreign exchange; that is one big issue. The exchange rates have virtually gone up significantly, approximately 40 per cent since COVID-19 struck. You realise that our industry itself is quite tied to the supply from outside Nigeria. To support an aircraft with spare parts you need all sorts coming in.
So, significant sums of monies are spent on maintenance; the airplane on a daily basis must be maintained. You can’t compromise maintenance of aircraft. The tyres on an airplane, some people don’t realise how much we change those tyres. You have to change them regularly whether they look old or not. So, you see that happening on daily basis because some of the rotables. It is quite significant for us to face all this and now coupled with the exchange rate. So, we do need more help from government. As much as government can give, we will appreciate, especially if that can be resolved (foreign exchange).
Passenger Traffic Post-COVID-19
Passengers are not really travelling as much as before; some airlines may not notice that now. Capacity has also dwindled. What I mean by that the airlines have suffered so much that the fleet sizes have gone down. Therefore, you do not notice that passenger numbers have dwindled as airlines start to recover. It will become apparent that people are no longer travelling as much as they used to do pre-COVID. But the good news is that the vaccines are here; so, it gives everyone hope, I do expect that in the next couple of months there will be a lot more movement and things will start to come back to normal.
Relationship Between The Proposed NG Eagle And Arik Air
Well, in reality there is no connection between the two. That said, you are aware that NG Eagle is solely owned by AMCON and of course you know that Arik Air itself is in receivership and the receivership was instituted by AMCON, which is based on the fact that Arik owes significant sums of money to AMCON. So, if you can infer from there that’s the relationship.
Arik Air Aircraft In NG Eagle Livery
I can boldly say that those airplanes in our industry we call it recovery. So, they have been recovered. If a company owes and it cannot pay, those airplanes were actually mortgaged to AMCON and it is very clear that at some point they’d take their assets and that is what was done. So, the fact that they carried the name and logo of Arik doesn’t mean they belong to Arik; the owners have taken their property. Of course the opportunity was given Arik to pay. I don’t think that happened; so, I think it’s pretty straight forward. Those are mortgaged assets, and the owners of the assets have every right to take their assets.
Price Of Aviation Fuel
Well, I can’t give you that information accurately here but suffice it to say that aviation fuel is tied to the exchange rate. Our aviation fuel is imported; so, anything that is imported is affected by enumerations in dollar/ naira exchange rate. If we say forex has gone up about 40 per cent then it is safe to say prices of jet fuel have gone up too y about 40 per cent.
Savings on aviation fuel if Arik Air doesn’t have to land on Runway 18R and taxi to the domestic terminal. There would be significant sums of savings; I can’t even begin to quantify. It is a huge drain on not just Arik but all the other operators that do night operations. That can be resolved by installing the runway lights at the local runway, but yes huge sums of money can be saved. Yes, an airplane cycle starts when you start the engine and you are burning fuel, the wear and tear on the engine. So, for every cycle, it doesn’t matter if that cycle is from here to Benin or from here to London or from here to the US. It is one cycle. So, it costs money, and that cost is the same whether it is London or Dubai; it is one cycle.
For instance, the engine when it is brand new, you say it has 20,000 cycles of life and so you fly 1, 000 cycles every year. That means that you expect those engines to run for 20 years; at 20 it goes to zero you cannot use those engines until they go back to shop for overhaul and those materials that are time related are replaced, those cost for us are much. So that trip for us from the international airport, 10 minutes sometimes more across runway, it’s something we calculate daily any time after 6pm. You know that is additional cost for the airline.
Engaging FAAN To Fix Runway Lights At Local Airport
We continue to engage FAAN; anything that brings savings to an airline we will likely pursue vigorously. But we also note that FAAN themselves face challenges in respect to funding. I think the entire industry is in a situation were significant sums of money need to be injected into the system to assist.
The US airlines even not flying at full capacity, government has supported them with funding. That is important to make government aware that an airline itself to a nation is not necessarily about an airline, most airlines will not be profitable apart the so- called Low Cost carriers but when you take the entire network of services they provide as a portfolio, hotel chains, other support services on ground, ground handling and all that that are profitable because the airline exist, that overall contribution to the GDP of any country is very critical.
That is why government should have its eyes when looking at an airline. How does the airline contribute to the economy? These vaccines for COVID, I’m sure they all came by air. So many things, you can’t quantify them, just take so many service providers, SAHCOL, NAHCO, airports facilities, MM2, forget about the staff, that effect of the entire system is very important. So those nations that realise that take advantage to make sure that the airlines exist. It keeps the economy going, tourism all sorts.
If you go to Ethiopia, the country is centred around aviation; they build one of the biggest hotels in Africa as an airline, they’ve taken over the terminal fully, you can see what they are doing, they are actually taking care of cargo transportation in and out of their country. They have a huge network; they may not necessarily have a robust domestic network like us here, but I think their global network is quite interesting.