Arrival Of More Aircraft Won’t Lead To Crash In Airfares
Prof. Obiora Okonkwo, Chairman, United Nigeria Airlines (UNA) in this interview with OLUSEGUN KOIKI, speaks on the plan of the airline to grow its fleet, its partnership with Cronos Airlines on Maintenance, Repair and Overhaul (MRO) facilities, codeshare arrangement and why airfares will not crash even with the availability of more aircraft. Excerpts:
Sir, United Nigeria Airlines, recently signed two Memorandum of Understandings (MoU) on Maintenance, Repair and Overhaul (MRO) facility and codeshare with Cronos Airlines, can you elaborate more on the cost of these agreements?
The Maintenance, Repair and Overhaul (MRO) facility is a multi-million-dollar project we are having with Cronos Airlines; we should not only be talking about how much is in the investment, but we should also look at how much we will be saving the nation down the line. For a normal C-check, the least outside Nigeria is about $500,000. That is if there is no major issue to the aircraft. And you know that some of these checks are done either on cycles or calendar, but here in Nigeria, the local operators are caught more on cycles than calendar because we operate high cycles based on the short distances we fly. For instance, if you take off from Lagos and fly 16 hours to China, it is one cycle, if you take off from Abuja and fly 40 minutes to Anambra, it’s one cycle. We don’t live in a country where we have to fly six hours.
For an average aircraft in Nigeria to breakeven, you must do about six to eight sectors daily, if it flies daily without Aircraft On Ground (AOG). If you multiply that six to eight hours sector, the highest you can clear on a particular C-check, maybe 3,000 hours or 24 months. This comes very quickly.
Sometimes, you may even have the money, but you don’t have the slot; sometimes, you have to queue up. If you look at Nigeria, you will discover that you have more aircraft on the ground than the ones you have in operations flying.
How soon will the MRO project come on stream and which of the states will the facility be located?
The signing of the MoU with Cronos Aviation has kickstarted the deal; every other thing would be added to it. Remember that our base is in Enugu State and it would have been our desire to site the MRO there. Enugu doesn’t provide all the commercial benefits, but we must still have a base. As of today, there is a serious intention from the government of Enugu State for us to site the MRO there and for the state to partner with us, but you know sometimes, it is also important for you to back up your intentions with action.
Right now, we have alternatives and options, which we are reviewing and would kick it up in the next few weeks. There are options; very viable options, but we won’t let the cat out of the bag yet. Also, the MRO facility, we want to ensure that it is not only certified by the Nigeria Civil Aviation Authority (NCAA), but also has the Federal Aviation Administration’s (FAA) certification.
Mr. Festus Keyamo, the Minister of Aviation and Aerospace Development is talking much about having an MRO that is privately driven, is this your plan dovetailing into the plan of the government?
MRO is a private sector initiative and we work along with the policy thrust of the government. This is what we have had in the pipeline, part of our business plans from the outset, but we couldn’t have started it earlier than now because of the turbulence in the industry. We are happy that we have a minister now who is working hard and coming up with the right policies for the sector. The minister is there, the ministry is there and the agencies are there to give us organisational support.
How many aircraft are you bringing in to beef up your current fleet?
We have a plan to have about six aircraft in the category of Embraer 190 between now and the second quarter of 2025. Hopefully, in a very short time, we are going to have a second E-190 aircraft; in the first quarter, we are going to have two and the second quarter of 2025, additional two aircraft would be added to our fleet, making it six aircraft in all. As we speak, we are already training our cabin crew for the E-190 brand.
The engineering team that is on ground, has already signed to start training our line engineers. Our cabin crew have completed a greater part of their training abroad. Some of them have returned to the country.
The acquisition of the six E-190 aircraft, are they leased or outright acquisition?
It is a combination of both; we have some that we are purchasing, some are damp leasing, but actually, what we have now is a damp lease. Again, 90 per cent of aircraft flying even with the big operators are under lease because it does not pay you to have a huge amount of exposure on your finances. For instance, you don’t just go and invest $100 million to $200 million on acquisition of aircraft, which would take you like 20 years to recoup. Nobody wants to carry it. Even big companies or operators have an arm of leasing companies.
So, for us as operators, we just want to have an aircraft to operate so you have access to aircraft and other equipment. Also, some operators outsource their maintenance agreement; they don’t have it in-house any longer. Why this damp lease looks like a very good business to us is that if you have different fleets of these aircraft that are coming into Nigeria for the first time, you don’t have the manpower to develop them.
So, for us to transform them up to that point, we have all it takes; cabin crew, cockpit and engineering to be able to do that. For us, what we have now is a very viable option.
With more aircraft coming in, how soon will you commence your regional operations?
This is a part of our strategy to expand our regional and sub-regional operations. Our collaboration with Cronos Airlines would also support our international flights that are in the pipeline. We will go beyond just flying in and outside Nigeria, we will also bring in passengers from the region to our hub to make Nigerian aviation a hub. So, this is part of the plan.
With additional aircraft coming in, do you see the cost of air tickets coming down from its present rates?
I don’t think so. This is so because some of these costs are benchmarked against the naira and then, the cost of aviation fuel. The lower the value of naira, the higher the cost of aviation fuel and the higher the cost of our operations in naira.
You should bother less on whatever you are paying now because whatever you are paying now is not what you should be paying. For instance, in Malabo, a 30 minutes flight, the minimum base ticket is about $150 and I’ve always said that if you are going to buy your ticket and you pay at less than $150, then, somebody else is subsidising your ticket. What is calculated in aviation is per cycle, irrespective of the length of the flight. Everything about aircraft is about taking off and landing. The hope is that you will no longer have to wait for weeks to get a ticket to travel, the aircraft are now available in the market.
As airline operators, we are not getting any soft loan from the government nor do we have a special window for foreign exchange. Some of these transactions that we are finalising now, when we started negotiations, dollars were at N1,600. So, all the financials and computation were taken on that basis, but now, it’s over N1,700 to a dollar, but in some other climes, you could still have the same currency rate for over a year. This will afford you to plan.
The prayers of air travellers should be that there should be more airlines in business to service them. It should be less of how much you are paying for the cost of the ticket because if you are paying for the cost of a ticket, it should be a minimum of $150.
When you finish paying in naira, every other thing you pay as an airline is in dollars. The only thing we pay in naira is just the in-flight services like water, food and others. This is inconsequential to our costs. Even for ground handlers, the rate they offer to you is dollarised.
Apart from these six E-190 aircraft, do you have additional aircraft coming in for the yuletide season?
We have a couple of widebody aircraft coming in, in the next few days, starting from last Sunday. All these are to ensure that we reduce the pains of air travellers during the yuletide season. We want to ensure that there are no hiccups in the whole travelling
