Arik Re-Strategises Amid Challenges

By Wole Shadare

Nigeria’s flag carrier then, Arik was a model to many airlines in the country. The airline burst unto the country’s aviation scene. Never had Nigeria witnessed entrant of a new airline with brand new airplanes like what Arik did by purchasing the newest airplanes comprising wide-body A340, A330, B737NextGen and smaller state-of-the art aircraft.

The airline was a reference point as it competed with recognized global airlines in terms of fleet and quickly spread its wings outside the shores of Nigeria to London Heathrow, Johannesburg, Dubai, New York. It quickly dominated West Coast and became the dominant airline in Nigeria taking over 60 per cent of the domestic market.

Less than ten years into its operations, the cookies began to crumble. The carrier had been racked by financial and operational difficulties attributed to its bad corporate governance and weak operational practices. The airline maintained an unreliable schedule, consistently failed to bring in passengers’ luggage, and has been unable to pay staff salaries. Its debts were skyrocketing with no hope of meeting its obligations Sensing the difficulty the carrier faced at the period, the Assets Management Corporation of Nigeria (AMCON) in exercise of its powers under the AMCON Act 2010 (as amended) placed Arik Air in Receivership in February 2017 following the gross failure of the company to honor its debt obligations.

At the time of intervention, staff pension were not being paid, vendors including fuel suppliers, spares suppliers, leasing companies, aviation agencies and staff salaries, among others were being owed. Customer service was at its lowest ebb; On-Time Performance (OTP) oscillated between 20 and 25 per cent, flight cancellations and delays were the order of the day, staff morale was abysmally low.

But a lot has changed. Yes, the carrier is still faced with some challenges. But it was able to face most of the challenges headlong to stabilize an airline that was at the brink of failure or at best, extinction. Investigation by New Telegraph into the operations of the carrier shows that unlike in the past, statutory pension payment has been regular, salaries have been regular, except during the Covid-19 period which negatively impacted the business, thus salaries were cut, and are now being regularly reviewed upward based on revenue.

Customer service has improved, with Arik being the second of the leading domestic airlines achieving the highest OTP over the last two years. Vendors are being paid regularly while other trade creditors are being engaged with favorable disposition, staff morale has remarkably improved, aviation agencies are being paid on current bills, maintenance and leases are prioritized.

The airline had made appreciable progress until COVID-19 pandemic slowed down airlines and aviation business globally. Arik is not immune to the impact of the coronavirus which depleted airlines’ revenue including that of Arik. With air travel nearly shut down by the coronavirus, the airlines are now bleeding money and have dropped more schedules from their network. Passenger traffic is down about 40 percent and half of the industry’s 70 airplanes are parked at airports.

Yet, devastating as the downturn has been, the future is even more bleak. With much of the world closed for business, with available vaccine in sight, it may be months, if not years, before airlines operate as many flights as they did before the crisis. The determination of Nigerian carriers to recover from the COVID-19 outbreak that grounded flights for more than five months was herculean. The over one-week suspension of flight services by domestic airlines due to #Endsars protests and attendant violence that rocked most parts of the country set the carriers’ back further.

Not done with so many disruptions to airlines’ disruption, the unions penultimate week caused another heavy blow to the carrier and caused it huge pain over labour related matter. While the unions may have taken the action to protect workers’ interest, many carpeted the unions for failing to explore all avenue to resolve the matter rather than causing a shutdown of Arik’s operations for two days at a time airlines are seriously bleeding.

Former Commandant, Murtala Muhammed Airport, Lagos and aviation security consultant, Grp. Capt. John Ojikutu (Rtd) faulted the unions’ approach to issue, describing their action as ‘lawless’ and ‘callous’, stressing that there are better ways to resolve crisis without closing down airlines’ businesses. The Receiver Manager of Arik Air, Kamilu Omokide admitted the impact of COVID-19 pandemic to global airlines, noting that Arik is not an exception.

His words: “Every airline is facing challenges of depleted revenues and higher operating costs. Our case is made worse by the scarcity of foreign exchange and the devaluation of the Naira. Hundreds of thousands of jobs had been lost the world over as airlines re-strategise and restructure to face the challenges of the business.”

He disclosed that the Arik management had been faithful to the staff since inception of the Receivership with prompt payment of salaries, increase of salaries and regular payment of pensions. “What is the use if AMCON decides to liquidate the airline? The staff unions need to support the airline at this critical time for the mutual benefits of both parties, and stop making unreasonable demands. This incessant disruption is unhelpful to the airline and our highly esteemed customers.” Our challenge is to ensure we strengthen the airline, secure jobs and staff welfare which is given priority in every AMCON exit strategy”, he added.

  • Mr Shadare, a celebrated aviation journalist first published this article in New Telegraph newspaper

Related posts

Leave a Comment