Decline in passengers’ turnover killing domestic airlines — Ilegbodu

The Chief Executive Officer (CEO) of Arik Air, Captain Roy Ilegbodu in this interview with KAYODE TOKEDE says domestic airlines are struggling for survival as passenger turn out continue to decrease in the face of the rising rate of foreign exchange. Excerpts:

Has the federal government given N5billion palliative to stabilize the airlines sector?

What we got was not enough as we certainly could have done with a lot more. The impact of the pandemic has been quite significant as you follow news from all around the world.

The government has come massively in support of airlines but expected a bit more from the 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, it is better than nothing. I think that it helped in its little way aiding us to surmount some of the challenges we face.

We still face significant challenges going forward. We are still grappling with them. We have challenges of foreign exchange—that is one big the issue.

The exchange rates have virtually gone up significantly approximately 40 per cent since COVID struck. You realize 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 must be maintained daily and you can’t compromise the maintenance of aircraft.

For instance, the tyres on an airplane, some people don’t realize how much we change those tyres.

For example, the way you use your car tyres till they burst is different from aircraft. You have to change them regularly whether they look old or not. So, you see that happening on daily basis because of some of the rotables. It’s quite significant for us to face all these, coupled with the exchange rate.

So, we do need more help from the government. As much as the government can give, we will appreciate it, especially if that can be resolved (Foreign exchange)—that major aspect.

Passengers are not travelling as much as before. We’ve seen that however, some airlines may not notice that now because the capacity has also dwindled.

What I mean by that is that the airlines have suffered so much that the fleet sizes have gone down. Therefore, normally 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 and so it gives everyone hope.

I do expect that in the next a couple of months there will be a lot more movement and things will start to come back to normal.

How much do you buy 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 the dollar/ naira exchange rate. If we say Forex has gone up about 40per cent, then it is safe to say prices of jet fuel have gone up too about 40 per cent.

How much can Arik save on aviation fuel, if it doesn’t have to land on Runway 18R and taxi to the domestic terminal?

There would be significant sums saved, I can’t even begin to quantify. It is a huge drain not just on Arik but all the other operators that have to 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, the cycle starts when they start the engine and you are running 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, it is one cycle.

For instance, when the engine is brand new, you say it has 20,000 cycles of life and so you fly 1000 cycles every year, which means that you expect those engines to run for 20 years at 20,000, it goes to zero you cannot use those engines until it goes back to shop for overhaul and those materials that are time-related are replaced, those costs for us are much. So that trip for us from the international airport, 10 minutes sometimes more across the runway, it’s something we calculate daily anytime after six you know that is an additional cost for the airline.

What is delaying operators from reaching out to FAAN  about the runway lights?

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 concerning funding. I think the entire industry is in a situation where significant sums of money need to be injected into the system to assist. The US airlines even do not fly at full capacity, the government has supported them with funding, that is important, to make the government aware that an airline itself to a nation is not necessarily about an airline, most airlines will not be profitable, apart from 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 the ground, ground handling and all that is profitable because the airline exists, that overall contribution to the GDP of any country is very critical, that is why the 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 services providers, SAHCOL, NAHCO, airports facilities, MM2, forget about the staff, that effect of the entire system is very important. So those nations that realize 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 built one of the biggest hotels in Africa as an airline, they have taken over the terminal fully, you can see what they are doing, they are 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. Until the government becomes aware that someone can say, this is what the airlines contribute to the economy, until that is clear, that is when they will see why you need to keep the airlines alive.