Poor Corporate Governance Ruined Nigeria Air, 40 Other Airlines
*Operators disagree, blame harsh environment
Poor Corporate Governance Ruined Nigeria Air, 40 Other Airlines – Major stakeholders in the aviation sector yesterday dissected the failure of local airlines, blaming poor corporate governance and management structure as the dominant causes of fatality in this clime.
The experts, who spoke at the quarterly breakfast meeting of the Aviation Safety Round Table Initiative (ASRTI) in Lagos, observed that while over 40 airlines had already collapsed in the last 17 years, some of the surviving seven local firms and the proposed Nigeria Air were not immune to the same problem.
But the airlines faulted the position, saying they were more likely to collapse in “this predatory and harsh environment” than due to the poor corporate management structure.
The NCAA statistics revealed that over 40 registered airlines had collapsed since the apex regulatory body was established in 2001.
Former Director General of the Institute of Directors (IoD) and the guest speaker, Victor Banjo, said airlines struggled around the world, but the major difference between the local firms and their foreign counterparts was the place of good corporate governance in management and operations of the business.
Banjo, who is a former director at the defunct Virgin Nigeria Airlines, explained that corporate governance essentially addresses measures to manage and reduce financial and operational risks by building the integrity, transparency and accountability of a company’s board and management.
He said it was not unusual to see Nigerian airlines collapse the offices of chairman and managing director in one person. Ditto for having one person as the manager and also a pilot, while wives and children are directors, and some not having a board of directors or holding board meetings.
“Corporate governance is all about the stakeholders knowing and respecting their boundaries. And that is the main difference between Nigeria Airways and Emirates that were established at almost the same time. While Nigeria Airways has collapsed, Emirates that started with one leased Airbus A300 and a Boeing 737 from Pakistan International Airways, now flies to 147 destinations on five continents, with 240 planes and 267 more on order.
“Mismanagement and interference by government officials ruined Nigeria Airways. When corporate governance is effective, they prevent abuse of office. We generally lack the most important ingredient; procedural discipline and sustained commitment to professional execution. Virgin Nigeria, which I was part of, could have been here longer, but for the overbearing influence of government officials.”
A captain of the defunct Nigeria Airways and industry consultant, Dapo Olumide, said besides the lack corporate governance, the prevailing business models were faulty, with most of the airlines parading “old and inefficient Boeing 737” while the rest of the world was moving to new and fuel-efficient aeroplanes.
Managing Director of Overland Airways, Capt. Edward Boyo, said in as much as corporate governance should be given in any business set up, mere observance of its principles and not having family members in the board of directors are not enough to sustain aviation business.
Boyo said operators set up airlines for different reasons, but ensuring that they survive is a function of the larger environment with a range of management knowledge in the area of corporate affairs, technicality, finance and political awareness to be able to manage the daily intrigues of the Nigerian environment.