Rewane faults states’ investment in airlines, airports

…Airline failures fuelling state-owned carriers – Aligbe

By Dickson Omobola

THE Chief Executive Officer of Financial Derivatives Company, Mr Bismarck Rewane, has criticised growing investments in airlines and airports by state governments, saying their priorities seemed misplaced.

Rewane argued that rather than investing in airlines and building unviable airports, government should focus on providing social amenities for the populace, while prioritising airport concessions and other public-private partnerships in the air transport sector.

He spoke at the 29th edition of the annual conference of the League of Airport and Aviation Correspondents, LAAC, themed: ‘Financing Aviation In Nigeria: Risks, Opportunities and Prospects,’ held in Lagos.

According to him, the aviation sector also needs consolidation to allow the strongest players survive, while the weaker ones merge to improve efficiency and increase profit margins.

His words: “State governments should focus on things where they have comparative advantage. Just as Fareed Zakaria said: first, stop doing dumb things.

‘’Second, start doing smart things. Finally, start doing modern things. Concessions and public-private partnerships should be prioritised. You do not need to spend on an airport if you have a concession.

“Industries that are in difficulty should consolidate. Consolidation means that they merge, they become more efficient and become more competitive.

‘’It happened in the insurance industry, the banking industry and it is happening in downstream petrol. It is natural that industries consolidate. Consolidation means there will be a shakeout and the most viable would survive.

‘’The non-viable will merge and it brings down the average cost. When average cost comes down, profit margins expand and then that industry begins to do better.”

Meanwhile, the Chief Executive Officer of Belujane Konzult, Mr Chris Aligbe, had recently told Vanguard that the decision of some states to invest in airlines could be attributed to the country’s failure in the airline sub-sector.

While using Cally Air, which is yet to get an Air Operator Certificate, AOC, as an instance, Aligbe said if Nigeria had a formidable carrier, Calabar State government would not have considered it.

He said: “If we had formidable airlines, they would not be thinking about such. There is nothing to attract passengers to Calabar. Is it just the Calabar carnival?

‘’Cross River ceased to become a destination for passengers when Donald Duke left. It was Tinapa, which Duke was growing, that became the attraction for passengers. And since passengers no longer exist, airlines reduced operations into Calabar, which is what the state government wants to address.”

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