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Captain Akin George, Managing Director & Chief Executive Officer, Aerocontractors Company of Nigeria

Interview - November 17, 2011
IFC Reports discusses plans to improve Nigeria's transportation infrastructure with Captain J. Akin George, Managing Director & Chief Executive Officer, Aerocontractors Company of Nigeria
An essential part of any economy's ability to grow lies in its transportation infrastructure, given the freedom it conveys for the transfer of goods, services and people. In your opinion, how would you describe and rate Nigeria’s current state of transportation infrastructure?

With infrastructure as a whole, that is air, sea and roads we are not quite where we ought to be at this point in time. The road network is vast but it has not been maintained and there is the issue of safety. The rail network is just in its infancy, we had a network that covered the north to south of the country as well as south to east but this has unfortunately, deteriorated over the past 20 years. I know there is a focus to get this up and running again. We do have it running in Lagos at this point in time on 1 or 2 routes but it is still in its infancy. The main mode of transport for Nigerians around the country is air. This is where we come in, the infrastructure in not bad but needs improvement. We have facilities that we have been using since the 1970s and now that the volume of air traffic is increasing and the facilities are unable to handle this. Airports and the entire infrastructure that goes with it all need attention.

Looking more specifically at the aviation sector, we note an increasing passenger load which in 2009 stood at approximately 12.5 million air travellers. With such positive GDP growth forecasts of around 7%, do you believe this is a sustainable increase?

It is a sustainable increase. What you are seeing now is the growth from additional airports being constructed in the country and the fact that the country is actually growing. Depending on who you are talking to, Nigeria is supposed to grow from anywhere between 7% and 15%. If we are able to start putting things in place and making life a little bit easier by creating an enabling environment, then the sky is the limit. The current growth plan is supposed to take us at least for the next 10 years. The population should also be increasing quite significantly in these 10 years. The market for transportation is a win-win one if it is handled appropriately. We need to be part of that and without the support of aviation it is really going to hinder the growth of the country.

Despite Nigeria undoubtedly having great market potential with 150 million approximate inhabitants, we note that 70% of the population live below the poverty line and, given the cost of air travel today what are the effects of this on the real growth of the sector?

I think the figures are that only 14% of all Nigerians have been able to fly in an airplane. The market we are targeting is that of travellers who usually use road transport, so we are not only catering the business traveller but all travellers. Our fares are one of the lowest in the country and we have seen the sector grow and the effect of entering new markets within the first month. The total market has actually increased; it is not just about taking more of the market share from another operator. For us it is a good time and looking at what we have achieved this year alone, we are still expanding. We expect to expand our fleet to at least another 3 or 4 aircrafts this year.

The number of airlines seems to fluctuate quite a lot year per year and many have claimed it to be a very competitive market. Please provide us with your account of the competitive landscape In Nigeria's aviation sector?

There are quite a number or airlines registered in Nigeria, however ; the majors consist of about 4 companies, of which we are one of them. The competition is tough but we have the legacy of what we have done over the past 50 years  providing a safe and reliable means of transportation; so we do have our core customers out there.
Whilst there is room for a small growth in the market, the industry would not be able to survive a massive increase in capacity.  We do have a strong brand; with good customer loyalty however we can’t take this for granted. We must continue to provide the customer with a superior product that is recognized for its value.  Having more than 8 airlines is a bit too much for this country. Some will eventually have to consolidate with other airlines or exit the market entirely.

Looking at the safety aspect now of the market we note that after some considerable investment, Nigeria’s safety record has improved and incidences have decreased, so much so that Nigeria has been awarded category 1 status which allows it to fly to the US. How would you rate the current safety standards?

We like to think that at Aero we have always had high standards because of our oil and gas background, we have always been used to operating at this level of safety. Getting into category 1 is a big deal but it takes effort to stay there. The good part of us getting to category 1 is that all airlines in Nigeria have to go through re-certification and it is not just Aero is operating at this level today. Nigeria is much safer in terms of operational standards today.

You mentioned there that you have a background in oil and gas, please tell us a bit more about Aerocontractors and its journey over the past 50 years?

We actually started out as an oil and gas service provider; in the 1960s transportation needs from a helicopter perspective came out of the Niger Delta area with the international airport being Lagos. Aero Contractors owned the airstrip in the Niger Delta so we actually had the market of providing helicopters to the rigs but also transport customers between Lagos and the Niger Delta. We have grown both sectors simultaneously.

Originally aero was owned by Schreiner Airways B.V of the Netherlands, but after new company ownership laws came into effect a Nigerian partner purchased 40% and later in 1976 increased its holding to 60%. Following the takeover of Schreiner Airways by Canadian Helicopter Corporation (CHC) in 2004 the 40% foreign ownership was then transferred to CHC, until eventually last year they were bought out and Aero has been a completely Nigerian owned company for over a year now. Looking at expertise we have managed to build up a lot of our expertise in house, therefore we no longer need to partner with CHC for knowledge. We are the number 1 aviation company in Nigeria and we are our own technical partners. We service ourselves and also provide services to other airlines.

Aero seems to be quite an innovative company; for example in being the first airline to offer the Aero web mobile. What is the significance of this to the market?

A couple of years back we said that if we are going to stay in this business, especially on the scheduled services side we need to stay in competition. Our previous business model was quite expensive to customers and we would have been left with a niche of the market. We needed to grow. We decided to pick up a new strategy for aviation, we are not a low cost carrier but have elements of a low cost carrier, while still maintaining our business class and providing hot meals on board. However we have the low cost carrier concept of low fares. This has allowed us to be on average one of the cheapest airlines in Africa and grow our market. The only way we can ensure we get our customers in is by offering them web services. We made a conscious effort to promote our business on the web and we have grown from this. I was actually quite surprised with the results; I did not expect so much exposure from bookings online. Currently, over 60% of our bookings come from the web. When it first started I was one of the people in the company who was not entirely sure whether it would take off. We also have SMS alerts and it is working. I imagine when we eventually improve the bandwidth in Nigeria how much we can gain from it. The current limited bandwidth does cause us some problems with bookings but the amount of hits we get a day is increasing, currently around 40’000.

Do you have plans for regional expansion?

We have done this before, but we decided to shrink back to the domestic market and this is actually working. We have a project going on now and before the end of this year we are looking to launch at least 3 regional routes. By nature we are a conservative company and are not going to jump into regional flying without taking it one step at a time to see what the market looks like. In Africa there are still some restrictions, some countries are tough to get into, for example we have put in our request for Rwanda and we will see what happens.

What is your future vision for Aero and how do you intend to implement it?

My vision for aero over the next 3 years is to solidify being the preferred carrier in Nigeria. We want a good strong network across West Africa and some other places to the East. We also hope to make a few alliances with some international airlines going northbound and westbound. Flying and making money long haul is not easy to do. We have had requests from many people saying we should do this but the business is not quite there yet. There has been some growth in the oil and gas sector and some business in the U.S. that will change the dynamics a bit. We expect some changes but are waiting for the dust to settle in order to make the next step.

Given our elite audience, is there any final message you would particularly like to convey to our readers?

“AERO” Safe, Reliable, Value for money Airline.