HomeBusiness Airline consolidation: How far can it go?
Airline consolidation: How far can it go?
Written by AKOMA CHINWEOKE
Sunday, 02 November 2008
The Federal Government recently directed that airlines operating in Nigeria should be merged to meet with the consolidation directives in the aviation sector against the backdrop of government effort to towards strengthening the industry, not only to guarantee safety of passengers and goods but also to be a major economic earner to the country. But there seems to be some doubts about the success of the merger. So, the pertinent question is how far is the journey of consolidation and merger?
Yar Adua
AIRLINE merger might lead to leadership problem —Captain Dele Ore, President, Aviation Round Table: Merger, while it may not happen in Nigeria, has always been a subject of discussion. It has been happening in other countries.
The country has done so well with bank consolidation and people thought that it should also happen in the aviation industry. But it may not happen because aviation is different. You are talking of one common currency in the banking sector. Here you are talking about airlines that have different airlines to come and merge. You would end up creating two airlines in one.
What I think is the way forward is for the airlines to imbibe safety and quality culture. But if one has, and the other does not, you cannot mix people apple with grape. The vision of those promoters of the airlines are so different. So, there would be leadership problem.
Who is going to be chairman? In the banking sector, prior to consolidation things were clearly worked out. In the aviation sector, I don’t see that happening for ego reasons. Since they have different reasons for which they set up these airlines, they would not give up leadership and for that reason, I believe airline merger may not happen. But there would be take over because if they are now dying suddenly and they find out that somebody would just pay one naira and take over the airline.
It would encourage competition — Captain George Anyanwu, Aero- Contractors: Well, the aviation matter in Nigeria is on-going just like in any other industry. It has its own ups and down. But today I look at the sector as gradually growing. For instance in about 18 months, the country would soon get a radar coverage as the government has promised and contract to that effect awarded.
At the moment, there are some talks among the airlines, on merger even though it might not be as much as it is going-on with the banks, with the big competition that is out there between, Aero-contractors, Virgin Nigeria and Arik, the other airlines would be forced to compete and to be effective. They have to be able to merge with the small ones. So, for some of the smaller airlines to survive, they need to merge to become bigger and better.
The more we have safety in mind, the better —Captain, Mohammed Sherriff Badamosi: First and foremost, to check the wrongs in the aviation sector, the government should listen to the professionals. There are lots of mediocres still in the industry and until they get rid off these mediocres, we can never move forward.
Right now, we are still sleeping. However, I think merger of airlines would not be the best option for the country because a lot of Nigerians like entrepreneurship and that is what is killing the industry because if you look around, you would discover that there are lots of small airlines now and more are coming. If we are interested in merging, we have other smaller airlines that should get together to form an airline. At the moment new ones are coming up with different names. So, if the new ones are coming with different names, what do you expect of the old ones?
So, it is not possible. I don’t see it happening unless government makes it the way the banks were forced to merge and maybe raise the capital base. They keep saying it is not good for the industry that the more the merrier, but I think the more we have safety in mind, the better. It is not the matter of the more, the merrier.
Merger would lead to efficient service delivery—Engr. Gbolahan Abatan, freelance engineer and former engineer, Associated Airlines: Well, I don’t see any reason why airlines should not be able to merge. As you know we have categories of airlines. Even in people, we all are not of the same strength. When talking about aviation, we should not be talking about weak airlines or strong airlines. Every airline should be strong, financially buoyant and technically strong as well.
If an airline is weak, then that airline has no reason to be in the business. For if an airline is weak, it is either financially weak, technically weak or vice visa. But the bottom line is that the airline is financially weak because it is the finance that is the driving force for any successful industry. So, for that reason I believe if we are able to notice some airlines that are doing very well, then it would be wise for them to merge with others. Let them pull all their resources to give the people the best of service.
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