The Managing Director, Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Lawan Kuru has identified lack of corporate governance and inadequate oversight as major challenges affecting growth of the nation’s aviation sector.
Kuru, made this remark in a paper with the theme ‘Corporate Governance and Airline Industry development in Nigeria’ which he delivered as Guest Speaker at the 3rd edition of the Nigeria TravelsMart Colloquium organised by the Nigeria Travel Market (NTM) in Lagos.
While noting that the industry needs adequate regulation to address incessant collapse of airlines in the country, the debt recovery expert called on the Federal Government to concession the airports across the country in order to improve their efficiency and attract more investments into the sector.
This is even as he pointed out that it was high time the government, the regulatory agencies and practitioners realised the important role of aviation in the development of a nation.
Kuru expatiated: “The aviation sector is a catalyst for the economic development of nations. It is a wheel that drives economic activities. It facilitates trade, tourism, boosts productivity in the economy, improves efficiency in the supply chain, it is an enabler for investments and can spur innovation. Critically, it is a source of quality employment.
“For these reasons, it is a strategic sector deserving of a careful plot to greatness if Nigeria is to occupy its rightful place in the comity of nations”, he added.
The AMCON boss also said that aviation regulatory bodies, particularly the Nigeria Civil Aviation Authority (NCAA), must muster the courage to emphasise corporate governance principles in the running of airlines in view of the fact that many airlines failed due to lack of corporate governance in their day-to-day management.
For instance, he pointed out that most board of directors of the airlines were usually represented by family relations who have no competence to manage a business as fragile and sensitive as aviation.
The debt management expert listed other challenges constraining the growth of the sector as including, the lavish lifestyle of owners of airlines; owners of airline and employees becoming contractors for services thereby compromising standards; and the chairmen of the airlines taking decisions to buy aircraft that runs into several billions of Naira without due diligence, amongst others.
The AMCON boss clarified: “The Board of Directors are represented by father, mother, son who have no form of aviation/airline training to qualify to be on the Board in the first place. Also lifestyle of owners takes precedence over payments to pilots and engineers etc.
“Owners and staff are contractors for service, thereby compromising standards and quality. In most cases, overpricing services. Airline staff become flight ticket agents, in most cases creating artificial ‘full capacity’ situations where when passengers eventually board, a lot of seats are empty.”
According to him, the implications of the ugly trend is that in such airlines without structure, staff loyalty is only to the owner, not to the company just as proper attention is not paid to suppliers of parts, lessors, line maintenance providers, while fuel suppliers, are not paid as at when due.
Kuru noted that once an airline’s operations are based on this sort of structure, vendors will naturally withdraw all forms of business support and the airline will tether to the point of failure.
To ensure corporate governance in the sector, Kuru charged the NCAA to step up on regulations like has been done in the banking sector, saying that this is critical in view of the fact that “the Aviation industry is as important as the health industry because it deals with the lives of travellers.
“It requires more regulation than even the banking industry. It is only in Nigeria that an airline can abandon you at the airport for more than five hours without any recourse. Indeed, there are consequences for frequent cancellations, however I cannot recall any airline punished in the recent past”, the AMCON boss added.
