The Bilateral Air Services Agreement (BASA) between Nigeria and over 55 nations has been dubbed a case of pitting David against Goliath. WOLE SHADARE highlights the damage these treaties have done to the country’s economy.
Each time the issue of BASA comes up, what comes to the minds of Nigeria is the lop-sidedness of the deal tilting against the country. Nigeria is said to have BASAs with over 58 nations. Some of them have been activated while others are yet to be. In all of these, the country is at the receiving end, occasioned by its lack of capacity to service these agreements.
Weak and fragmented airlines
Nigerian carriers are considered very weak and fragmented. They are not only weak in terms of operations, but they are very small in terms of resources. Put together, all the scheduled airlines do not have up to 50 aircraft in their fleet to operate successfully and profitably on the African continent. Their presence pales into insignificance when you put them side-by-side Africa’s biggest airlines that have up to 100 airplanes, including some of the latest aircraft such as Dreamliner and A350. Even the South Africa Airways (SAA) that has seen its fortune plummet in a couple of years is still regarded as stronger then all Nigerian airlines put together. Kenya Airways, despite a dip in fortune and backed by state support, is still a force to be reckoned with.
But Nigerian carriers are bogged down by so many factors. Chiefs among them are scarcity of foreign exchange to run their operations, high taxation and customs duty, among others. Nigeria’s revenue drive is being undercut by about N110 billion annually, which it loses to its BASA with foreign nations that have their airlines operating in the country. There are instances where people have tried to sign the sixth freedom right; there is nobody that has the sixth freedom. There is not even fifth freedom between the two closest allies in the world. The British government and the American government do not even have the fifth freedom rights.
Aviation is not a stand-alone in any country. Aviation is a reflection of the policies and the financial health of any country. So, when you take aviation and you say we are not doing well, you have to look at the policies that are on ground. Are the policies supporting us to grow? A very clear example here is trying to name 10 things that made Nigeria. An aviator once said: “As I said, where we are, as you say, our potential and where we can be, are two different issues. The same thing reflects in Nigeria today; where we are and where we can be are two different issues. “I told somebody I was working in Dubai for eight months in the late 1980s; Dubai was like Lagos Maroko in the 1980s. Today, if you go to Dubai and you look at Nigeria, you wonder what today’s Maroko is. As we are still in Lekki, Dubai has gone to New York. So, it’s the same thing that is reflecting.”
The interference and different policies of government have stifled the growth of aviation locally. We today have been put in the ring to box with champions or with the giants with our hands tied behind. Not just even putting us against giants like David against Goliath, we are not afraid to fight with the Goliaths of the industry, but do not tie our hands behind. Many bilateral treaties have been entered without carrying the aviation community along. These treaties were done without even looking at the potential or looking at the damage that it will create to the fabric of our economy in the long run. It is akin to selling the birth right of the children unborn, because a treaty is a treaty. It’s like signing the Bakassi treaty and 20 years later you will say you don’t want to sign. If when you sign a treaty like BASA and you don’t carry the people in aviation along, you end up putting the country’s airlines that are not yet developed fighting a very developed market, which is not possible to fight. With Nigeria’s geographical position and given the abundant human resources, stakeholders stated that there is really no reason why Nigerian aviation should not contribute 12 per cent to its Gross Domestic Product (GDP) in the first two years of this administration, with a target of contributing 20 per cent in the long run. Aviation, for example, contributes 27 per cent to the GDP of United Arab Emirates. There are many services in aviation, if only the potentials can be harnessed.
President, Airline Operators of Nigeria (AON), Capt. Noggie Meggison, said: “This is not the time to play big brother and say come and do five landings at the expense of your local airlines. “We have airlines here today coming into our country and doing five landings inter-city hubs; those same airlines do not allow commercial operation in their own countries above 19 passengers. These do not happen in their own countries.” But in the last four years, royalties paid on commercial agreements, which are offshoot of the BASA agreement by foreign airlines, amounted to over $80 million annually. Analysts say the main denominator in the negotiation of BASAs is reciprocity, and before one is signed the contracting countries must be satisfied that the deal ensures both parties are equal beneficiaries. In the event that one party cannot reciprocate due to the absence of its own airlines, it collects royalties from its “performing” partner. Due to the absence of a national carrier and local operators to reciprocate the BASA deal, Nigeria has for long been a recipient of royalties. According to aviation analysts, the royalty is about $5 per passenger. Income from this has grown over the years as foreign airlines have swelled in number.
The BASA agreements gave many of the foreign airlines multi-designations that enable them to operate from different airports in the country at the expense of domestic carriers, which lose passengers to them. It is this undue advantage that gave the foreign carriers 90 per cent of the Nigerian air traffic market, while Nigerian airlines only have five per cent of the market. Former Director, Flight Operations of the defunct Nigeria Airways, Capt. Dele Ore, therefore, called on the Ministry of Aviation to urgently revisit the entire BASA agreement, which, according to him, is unfavourable to the local airlines. He admitted that Nigerian airlines do not have the capacity yet to compete with these foreign airlines, but noted that the present scenario cannot give them the opportunity to develop and compete when foreign carriers – due to unfavorable policies introduced by the Federal Government, are almost squeezing them out. “The BASA agreement was not well defined in the first instance, so, we have to revisit the agreement and lawyers would have to be involved in reviewing the agreement,” Ore said. He noted that Nigerian carriers are on the losing side in the whole agreement. Speaking also, Head of Research, Zenith Travels, Olumide Ohunayo, explained that the aviation industry genuinely demand a general review of BASA signed with some countries, reiterating that the existing one is detrimental to the growth of local carriers and other facets of the industry. He said that a lot of amendments have to be done in the implementation of the BASA agreement among the countries that have air travel partnership with Nigeria.
For some time, many industry experts have been calling for a radical review of the BASA agreement Nigeria has with these countries. The call gained momentum recently, when industry stakeholders who attended a forum in Lagos, insisted that Nigeria and its airlines are short-changed by the agreements.