There have been many calls for mergers and consolidations in the aviation industry and this has been seen as a perceived way to strengthen the airlines but the Chairman of the Airline Operators of Nigeria (AON) seem to hold a contrary view.
Captain Nogie Megisson who has been in the news of late categorical states that because it worked in the banking industry doesn’t mean it would in the aviation sector calling for a bar raise instead of policy for forced mergers and consolidation.
However, Head of Research Zenith Travel, Olumide Ohunayo who has been a proponent for mergers in the airline industry stating that pooling resources will strengthen these ailing airlines has said over the years that mergers are the critical mass that builds the financial war chest, and helps cushion operational shocks when they do occur.
He argued that Nigeria airlines are fragmented, recalling the recent report and statistics released by Accenture Consulting on industry, which compared the domestic airlines industry to those of selected countries. The report, he said, confirmed that regulatory induced consolidation is a panacea to the problem.
These form the argument for the latest debate on Nigerian Flight Deck to merge or be submerged.
Captain Megisson who spoke on a recent interview on mergers had this to say on the concept:
|Chairman AON, Captain Nogie Megisson
“From my own point of view, aviation is not banking. Most of those who label themselves aviation experts at times have very myopic views about aviation. Since they are not inside they don’t really have a clear view. It is like telling me to go and umpire a rugby match when I don’t really know the regulations. So when you look at it you look at it from a finance point of view or from a point of view as a concerned interest in aviation. Merger is a different issue. They are all private companies most of the time it is not public companies using public funds so you can’t tell Mr A selling’ boli’ (Roast Plantain), that if he wants to sell he must join with Mr. B. It is not ‘asun’. My feasibility study is different from the other person’s feasibility study. The best thing you can do is to raise the standard. But you can’t tell two people who
are taking funds from two different sources and have two different projects to join businesses. There are tricks. Some people come in with different policies and different agendas. Some came in as low cost; some came in as classic, some as charterers, while some as cargo. So, you can’t just place a blanket on all of them and ask them to merge. It doesn’t work and you will just end up with zero.”
Ohunayo who has a contrary view feels it is doable and says it can work if well thought out and driven by the regulators.
|Head Research, Zenith Travels, Olumide Ohunayo
“It must be driven by the regulator. (Fear of M&As) is a malaise in developing countries, and China, Indonesia and even India subtly have shown the way. It should not be mistaken for recapitalization.”
According to him, foreign carriers cannot interline with Nigerian domestic airlines, or just as they (Nigerian) cannot join any airline alliance because their operational and financial prowess is relatively weak.
He also contended that the managerial processes and procedure of Nigerian domestic airlines are simply shambolic, adding that lack of International Air Transport Association (IATA) Operational Safety Audit (IOSA) certification and non-membership of IATA clearing house, remains a crucial kick to the groin.
Ohunayo equally lamented that the domestic airlines in the country, have not agreed to embrace domestic interline, they cannot also get it right despite the intervention of the NCAA, there was no way they could get it right at the international scene.
“Moreover these airlines have been speaking with different tongues on domestic interlining despite all the intervention of the Nigerian Civil Aviation Authority (NCAA) and other organisations. If they cannot get it right on the home front with the bar lowered how will they get it right on the international scene” he said
These are the arguments on merger, please let’s hear your views as your they will strengthen this decades long argument.