PoliticsNews & AnalysisArik Air seeks to address imbalances on London-Abuja route


Posted on Wednesday, 20 June 2012 12:39

Arik Air seeks to address imbalances on London-Abuja route

By Billie McTernan

As the Nigerian airline reduced the frequency of flights to the UK because of limited access to landing slots, its CEO warned that high fuel costs could eat into profits.

MICHAEL ARUMEMI-IKHIDE Group chief executive/Courtesy Photo/Arik Air/The Africa Report: In the past few months, there has been an ongoing row between the Nigerian government and the UK Civil Aviation Authority about the suspension of flights between Abuja and London. Where does this case stand now?

Michael Arumemi-Ikhide: There is a very clear discrepancy in the UK- Nigeria Bilateral Air Services Agreement (BASA) which needed to come to light. It is a complicated issue and unfortunately it has been misinterpreted by the media and in turn by the public.

What Arik Air highlighted at the time of suspension at the end of the summer schedule [2011] was that there is an imbalance between each country's allocation of landing slots vis-à-vis the agreed frequencies. Under the terms of the BASA, each country has 21 frequencies, and the Nigerian authorities do not make a distinction between these frequencies and access to landing slots.

In the UK you have to apply for these slots. Unfortunately, due to capacity constraints, we were not able to access slots per the BASA and had to enter into a commercial agreement and lease these slots to operate the route.

When it came to the start of the winter schedule [2011], the UK government facilitated the temporary continuance of the route through the extension of the slot lease agreement until 26 March 2012. However, the carrier that Arik leased the slots from has now been sold, so we were not able to continue to lease the slots.

Do you feel you've been treated unfairly by the British authorities?

No, not really. Whilst there is an imbalance that needs to be addressed, we have to undertake the same procedure in order to access slots at UK airports as any other carrier so it is not a one-sided issue. There's a problem with capacity and that's a macro-economic problem which the country has to handle, so there are bigger issues for the British authorities in terms of trade and investment.

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The capacity to Nigeria is now reduced and Nigeria can only fulfil seven of its 21 frequencies, whereas Britain fulfils 21 of its 21 frequencies via British carriers. In this sense there is disproportionality I would say, rather than unfairness.

In January, the Nigerian federal government announced it would be removing the fuel subsidy. How has this affected profitability?

The removal of the fuel subsidy was invariably going to have an impact on the aviation sector and airline operators as a whole. We haven't noticed any particular adverse effect with regard to profitability as yet.

However, we can't deny that this, allied with the continuing price increase in aviation fuel (Jet A1) in the country, is going to squeeze the profits. The global rise in fuel price is going to cause severe financial constraints on the industry.

Given that one of your most lucrative flights is the Lagos-London route, what does the introduction of the EU carbon tax mean for Arik Air and other African airlines?

We have not changed our operating aircraft on the route so the levels of carbon emission that we are adjudged to emit are based on last year's levels and won't fluctuate greatly. So we are not hugely impacted by it. A couple of [other African] airlines have decided to pull their UK routes citing the introduction of the tax as the reason.

Where does Arik see itself in 10 years time?

As Africa's largest carrier and a leading global airline. Since we launched the first flight in October 2006, Arik Air has a fleet of 23 new aircraft, flies to 33 destinations domestically and internationally and has carried 8.5 million passengers. We have also obtained placement on the IATA Operational Safety Audit (IOSA) register and been made members of IATA.

Achieving this in five years is impressive by any standard and we are looking forward to building upon it in the next five years. ●

Last Updated on Wednesday, 20 June 2012 13:06

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