‘Within six months, we have stabilised Arik’s operations’
The biggest domestic airline in West Africa Arik Air, operations was taken over by Asset Management Corporation of Nigeria, (AMCON) in February 2017 over huge debt burden. Against all reasonable doubts, the receiver organisation has boosted the operations of the airline, achieved on-time performance and regained customer trust. In an interview with Ifeoma Okeke, Roy Ukpebo Ilegbodu, the Chief Executive Officer, Arik Air speaks on how the organisation has achieved these feats within a short period of time. Excerpts.
How has operations been for you since you took over the management of Arik Air and what have you been able to achieve?
We are barely six months old here and I think what we have done have been quite obvious. Original mandate was to stabilize the operations of Arik Air and today we are proud to say that we have achieved that mandate of keeping operations stable. The airline business is complex world wide and that complexity means that it requires a lot of attention to keep it efficient and safe. We faced all the challenges that any other airline will face in the world but we have been able to surmount all these challenges. Today, we boast of on-time performance, which I think is a great feat. I believe that locally we are number one in terms of being on time today. We are also back to being the biggest airline in Nigeria and in West Africa. We have worked very hard to regain customer confidence, which was battered in the past. Today we boast of moving approximately 4,000 passengers daily. All these are thanks to the Asset Management Corporation of Nigeria, (AMCON). AMCON has been very supportive, without their intervention, I do not think Arik would have survived.
What are the challenges you have faced since you took over operations of Arik Air?
The challenges we are facing are challenges other operators are facing. We have issues with foreign exchange. This business is highly dependent on foreign exchange. Apart from local manpower and a few others, everything else is based on foreign exchange. Aircraft spare parts, even the fuel that we use, even though we pay in naira, the marketers actually import the fuel. Some of these issues are issues government will need to address in a bid to make it easier for the operators. For instance having local refineries that can produce Jet A1 will be quite significance because fuel constitutes about 40percent of our operating cost. If you are faced with two checks in the same month, it becomes quite heavy for the company to bear but if we can spread it apart, it makes it easier. In our case, when we came and met what we met on ground, we had no choice but to try to adjust. We brought some checks forward and did them earlier. The regulations will always stipulate when something must be accomplished and when it gets to that date and it is not done, then that aircraft will be grounded automatically.
The 4000 passengers you carry daily, are they both locally and regional and what destinations are you plying now?
We have resumed flight to all our local destinations in terms of what we have always been known to do. When we came in, we suspended operations to the international destinations such as New York, Johannesburg and London. On the West Coast, we scaled back. At the moment some of the countries we go to are Senegal, Accra, and Monrovia. We will eventually expand but we were able to first shrink the operations to a more manageable size and slowly expand. The expansion on the local front has been completed. We are also planning to put more flight into service locally. There is a big market in Nigeria.
How many aircraft do you have on ground now?
Right now, we have 10 aircraft on ground. What we have done is that we have contained a fleet size of 14. If you assume that every aircraft is due for C-check in 18 months and you take 14 airplanes and spread them in a year, you find that at no point in time will some be flying. The ones on the ground doing the job are ten. We have airplanes that have gone out for C-checks in Lithuania. As I speak, there are two of them. One is back from C-check. So, there is a plan to slowly bring those airplanes back into service and slowly expand our fleet. There is also one on ground having a C-check.
Are the costs of maintenance in anyway affecting your operations with the foreign exchange rate?
The same problems other companies are having in Nigeria are also what we are having, especially with foreign exchange. The demand for foreign exchange in Nigeria is high. It is a big country and that demand is going to remain. So, government will have a hard task in fulfilling that demand. Like I said, most of our operational support is dollar based, so you find that we cannot do without dollars. Until we get to a stage where the major maintenance can be conducted here in Nigeria, then it may be difficult. There is a refinery that is scheduled to be established somewhere close to Lagos and we are looking forward to it. If it happens, that will be great because what it means is that if we produce JetA1, it is going to be a huge relief to the industry. We are looking to some companies at some stage, setting up a maintenance base here that will cater for the C-checks. The C-checks are quite heavy. The airplanes are basically stripped and almost rebuilt. It cost money; the technicians are paid with foreign exchange. Anywhere from $500thousand to & 1million is what you need for a C-check. When the airplane is going for a C-check, depending on the age of that aircraft, there are some things that the manufacturers will look at. For instance an airplane that has flown for 1000 hours, there are things they expect. So, based on that, the checks will be done. As you carry out the checks, you may find out more than what the manufacturers will have recommended. You find things like corrosion for airplanes that have operated in our region because of the moisture. When you find corrosion in an airplane, the cost of repair sometimes will double. But the good thing is that our airplanes are very new, so you hardly will find corrosion in airplanes that are less than 10years old.
Have you been able to offset some of the debts you inherited since you commenced operations?
In the past, we were hearing of staff not being paid but today from when we started, we have been able to pay all our staff up till date. For me, that is very important because you have to pay people who work for you. More so because it is a safety related industry, you need to be conscious of the fact that we want people that are working to be happy. I will feel bad if I have a pilot flying that he is thinking of his salary because I have children and a family and I know what it means when you are running late in providing children’s school fees, food and other things. So, we take this seriously and our staff are being paid promptly. We have not been able to offset other liabilities. Because it is a receivership, the receiver manager himself is more of a representative of all the creditors. So, apart from AMCON who is the major creditor, every other creditor is represented by the receiver. All creditors must be treated equally, so for that reason, the creditors will have to be a part of the decision on how their monies will be paid to them. We have financial advisers and they are international in nature. They have been appointed to look at everything about the money owed, and then they will advise on the best ways on how to manage those debts because the debts are quite huge. The financial advisers will tell us what to do. Recently we had the KPMG coming to carry out forensic audit. They have come up with a draft report and within the next few weeks, the final report will be out and will be available to the public.
Are there measures that you have been put in place to see how satisfied your customers are?
We are working on this and we are very conscious of this. We are actually here because of the customers and we have to factor them into everything we do. We set up the Arik Ambassadors and this has been quite successful. What we try to do is that as soon as we identify a passenger that has issues, we try to resolve those issues. Interaction is quite good and we have gotten a lot of good feedbacks from passengers, commending us for our efforts. I let passengers judge, so we are going to occasionally put on our flights opinion sheet for the passengers to fill so we get their feedback and act on. We have embarked on all sorts of promo to invite the passengers to see what we are doing.
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