Recently, the Aviation Round Table (ART) organised its Quarterly Business Breakfast Meeting with the theme: ‘Short lifespan of Nigerian Airlines: The Importance of Corporate Governance ticket. In his remarks at the event, the director of air transport regulation at the Nigerian Civil Aviation Authority (NCAA), Group Capt. Edem Oyo-Ita (rtd) said among other things that good corporate governance is a rare commodity in government and airlines. However, he says NCAA has taken steps to ensure that the days of airlines operating from briefcases are over.
Zero corporate governance in government
The issue of corporate governance should be viewed from two points: internal and external as far as airlines are concerned. What I mean by external corporate governance is how the government or even the Nigerian Civil Aviation Authority (NCAA) administers the industry. What are the policy options for the smooth running of the industry? Are we doing well in that regard? I will sincerely say NO because first of all most of the ministers of aviation we have are not professionals except in this dispensation. A hi-tech industry like aviation needs somebody who can speak the language; we need somebody who understands the basic things about aviation to administer the ministry. So, if we want to start to look at external corporate governance as far as aviation is concerned, the Aviation Round Table (ART) should use their reach to encourage the government to appoint professionals to head the ministry just like the ministry of justice. It will help a lot to achieve this issue of corporate governance. If we have hair dressers, if we have totally political people who do not have any understanding of what is happening in the aviation industry to be minister of aviation, it will be difficult to carry them along; it will be difficult for them to understand what they are doing especially when they go outside (the country) for meetings and conferences. When you have professionals talking, it will be difficult; it has been difficult for Nigeria to make its points.
Ownership syndrome killing corporate governance in airlines
When you talk of corporate governance within the industry–luckily it is a liberalized industry–anybody can run an airline. Bu what we have found over the years is that many of the entrepreneurs or investors do not really care to know or learn about the intricacies of the business. Maybe, they make money somewhere, they just want status symbol or ego or prestige or whatever or to even do money laundering, they now plunge it into airline business.
I had the privilege of trying to manage an airline, DASAB. I was in the management team. Six months into the operation, the owner of the business brought his wife to be the director of finance and administration, brought his cousin to be director of operations over and above somebody who had been a captain with 5,000 hours flight experience. if you have money and you want to establish an airline, I think the best thing to do, if you have the passion, read yourself into it or hire competent hands and give them authority to take decisions. Otherwise the owner of the company will just come and take decisions he doesn’t care whether there are people on board, whether the aircraft is due for maintenance. I have heard of some airlines the moment they go public they go to the counter in the evening to collect money. It has been happening; it happened last year. They run the airline; they win public confidence and then they go public. And because they don’t want you to know what is in the kitty of the airline they go to the counter, collect the money and divert it. So, it is important they have a functional board that has the experience; that is confident to stand up to any unethical behaviour or conduct. So the issue of having a functional board will impact positively on internal corporate governance. If you have internal corporate governance you will be able to plan.
Point A to point B airline operators
What is happening in Nigeria is that everyone runs Abuja and Lagos within two hours every morning. Most of the airlines go to Abuja and Lagos; these are the profitable routes. No one has the patience to develop the other routes. So, if you have a well-thought out business plan and really do your investigations, you will find out that you can still make it if you get the right aircraft for that route. All these add up to corporate governance, taking the right decision, applying the right equipment on your schedule.
No more portmanteau business plan or airline
As NCAA, what do we do because everybody knows about good corporate governance is crucial to the survival of airlines. I think we are already on the right track. We are trying to revise our regulations and we are emphasising on the financial health audit of the airlines. We are trying to develop a template so that we can actually find out what is happening to the airlines. Are they running down; are they owing? There are many of them owing to the extent some of the airlines owe their pilots and crew. And you can imagine how that impacts on the performance of these personnel. So, we want to arrest that situation. It is not going to take the shape of what used to happen, that somebody would just submit his business plan he might have lifted somewhere. We will be asking you to come and defend your business plan; it has to be a bankable business plan so that we know that you are on the right footing to start the business. We want to have robust air operations in Nigeria. The market is there; the population is there, it’s just that we have to manage ourselves very well and we should be ethical in our conduct.
