Mr. Isaac Orolugbagbe, a graduate of Chemistry from the University of Ife (now OAU) and a Masterís in Business Leadership (MBL) from the University of South Africa,, is a public speaker on Business Leadership & Strategy, leading sessions on Business Strategy on a part-time basis at the Lagos Business School of the Pan-African University.
He has published reports on Courier, Express and Postal Industry in Nigeria, and the Effectiveness of Audit Committees in Nigerian Banks.
Since his appointment over a year ago as the Chief Operating Officer of Skyway Aviation Handling Company Limited (SAHCOL) , he has facilitated an enabling environment for all employees to perform at peak level, and provide superior returns to investors and other stakeholders.
In this interview with journalists recently, he shares his thoughts on the aviation industry. Daniel Eteghe was there. Excerpts.
On the success stories in SAHCOL.
There are a few tangible things you would have seen in terms of equipment. I think that so far, we have spent over N3 billion to acquire new equipment. Most of the time we borrow money from banks to finance the purchase of new equipment.
We have also completed the warehouse which is adjacent to the old one, it is 5000 square metres. We have also acquired software, so whether you are in procurement, purchasing, HR, finance, there is one software that everybody uses to run the company now.
If you have a requisition for biro, you go to your computer, you put your requisition, there is a manager that will authorise, as soon as he authorises, the system passes it to somebody, cheques are made and if you donít attend to it on time and you are the authoriser, the e-mail will trigger and it will get to your superior that you havenít done your job. In that way, the entire company is integrated in a seamless manner.
We have also signed contract with Lufthansa subsidiary for cargo and warehouse management software, they call it cargo soft. It is one of the most popular software for managing cargo business in aviation. I am sure within the next 2,3 months, the team will come and install it because we have paid and we are waiting for implementation. That is as far as software is concerned. We have communication between the warehouse and the office at the airport and our head office at Apapa, so all the computers can talk to each other.
So there is communication system in place. Also on IT we have installed a CCTV system that records the entire cargo operations, inside the warehouse and outside the warehouse, even from some sections of the tarmac.
So when you are bringing things in, we have about 50 cameras there, operating 24 hours and it also has an internet base CCTV system. From my telephone, I can check any of the cameras and then we are recording on the 24-hour basis. Those are some of the things that we have done.
Staff are getting trained and as I am talking to you now, we have concluded construction of our training school. Before we were training people from a small cabin, now we have a training school that is almost 20 times where we left, such that all employees can be trained there.
We are still going to build one that would accommodate all staff. But the target is every single staff of SAHCOL, all the 1300 will benefit from the training.
As we are talking right now, training is going on. We have also started implementation of the ISGHO, it is International Standard for Ground Handling Operators and operated by IATA.
We have started, we have signed, we have established links with IATA and the IATA instructors are right here with us and our first batch of auditors are undergoing training.
We are going to train about 40 sets of quality auditors. And you will begin to see the effect of these things in another 12 months.
We are not using consultants, we are using our own people to drive the process. The training school is a very huge place, there is a library facility there, we conference room and all that.
On plans for customers
We have the largest airline in the world now, partnering with us. United is a very happy customer of SAHCOL. And gradually every great company will also knock at our door and come and participate in enjoying great service.
Our customers are extremely delighted and we are receiving letters of commendation from the people we are serving and they are also expanding the scope of the services that we used to give them.
For some of these people, we are only handling them on about one, two stations, they have given us the entire businesses that they have and we are talking to additional airlines who have also indicated interest.
What is disturbing us is capacity, but the truth is that the SAHCOL that you used to know is different from the SAHCOL that you will begin to experience. That is as far as what we have achieved.
As for our creditors, we have managed to reduce the size of debts that we met. I remember when I came we have so many people coming to the office and queuing up, I met about 200 groups, we have cleared all of them and we are taking each segment and clearing them.
We want to be as honourable as we can, so that we donít disturb anybody.
Anybody that does business with us should be a very happy man. I am looking at every single airline as potential new customer. The airlines are not many but we are hoping and praying and requesting all of them to come and ride with us.
On the debt profile of the company
We are owing a lot, we are still owing. It is an ongoing concern. By the grace of God we will continue to owe, the bigger our business is the more money we will owe. And people are owing us and our debt growing and my job is to manage the balance sheet. I manage the creditors, I manage debtors.
I grow my business by extending credit to new customers and I use the money from my creditors to extend those credit to the customers. What is important is are we keeping the balance sheet current? And what we are doing is to make sure that we are keeping the balance sheet very, very current. Our debt is growing so also is our liability.
Donít worry about the size, what you should worry is the currency of the balance sheet. So those of us in this kind of trade that I am in, to focus on the key issue.
Some people have debts of 50 million because their turnover is only 100 million. Some of us are doing one billion and we have debts of 500 million. Who has the current debt? What is important is the average age of the debt not the absolute size.
When people are owing you for 30 days, that is a very good debt. But when people are owing you for 50 months, 50 years, the chances of recovery is extremely low. But if it is big and it is current, then you are doing good business. So it is our prayer that it should be big and it will be very current.
On Airlinesí complaint on charges by ground handling companies
We have representatives at the stakeholdersí meeting, one, you have to understand customers are changing, they are getting more sophisticated, their wants are increasing and everybody is facing pressures from different port element.
When they say arbitrary, definitely arbitrary charges does not apply to ground handlers. The tariff that the ground handlers are operating today was approved more than 10 years ago.
It has not gone up, it is only going down. So if anybody talks about arbitrary charges, it must be from some other regulators or operators. I donít think I have heard that there has been an increment in the tariff or the rate that the ground handlers are charging.
Be that as it may, we still expect customers to ask for more. Diesel price last year is not the same as the price this year. And all our equipment are operated with diesel. The exchange rate of naira to dollar that we are paying today is not what we paid 3, 4 years ago. People are asking us to buy new equipment at a higher exchange rate and they want to pay for those services at a lower rate. Those are the issues that are coming up at the stakeholdersí meeting.
It is for us to educate, try as much as you can to give improved services so that what people are paying for, they are getting value for it. Business is essentially a matter of exchange of values. The issue of complaining of arbitrary charge or no arbitrary charge, that is an issue of exportation of values.
Where is the value that the airlines want? The customer wants? The ground handlers want? The airport wants, everybody is scrambling to take as much as they can take. And that issue of complaining about charges has been before I was born, would be during my time, would continue long after I have gone.
On domestic airlines
Well, it is my prayer and sincere wish that this industry continues to grow so that we can have more of our brothers and sisters in employment, so that competition can push prices down. If it doesnít push prices down, it will push service standards up.
That is why I love competition. The growth of domestic aviation has a direct link with the economic wellbeing of Nigeria. It is Nigerians that fly aero planes. When the demand is high the supply will respond to the demand.
What we are having right now is a lot of structural issues. Quite a number of the airlines have limited capital and aviation business is serious capital business.
The Nigerian banking environment is significantly constrained as far as credit in aviation industry is concerned. Considering the size of money they are able to give, considering the expertise within the bank, can they really appraise an aviation business whether it is good or not good? Or the bank could lend money to it?
In those days when I was growing up, when you go to a typical bank they have desks, you have agric desk, manufacturing desk. How many Nigerian banks have aviation desk that can sincerely look at or study an application for a facility by an airline and claim that they understand what they have written?
Those are issues that are constraining domestic aviation industry. If you go abroad and look at any of the companies producing the aviation equipment, Boeing, and all others, just name it, all of them simultaneously set up finance companies. They donít expect anybody to put hand in the pocket and come and buy aeroplane.
They encourage you, bring 10 per cent of the money, we will lease the equipment to you and then you pay gradually as you are operating the equipment. What we need is replication, we need systems that people can bank on.
We need companies that whether the MD or chairman is around is around or not, the system runs.
Aviation business is a very serious and discipline business. It requires capital, it requires process and procedures and it requires management.
A lot of the aircraft in the aviation industry that we have is either they have two out of three or they have one out of three. It is a very, very complicated business.
The other element which is present and seriously inherent in aviation business is the issue of security and regulatory control. Anytime a security breach happens in the industry the controls are increased and therefore the cost of doing the business automatically goes up.
All of us needs to understand that aviation is not just a business, it is the major infrastructure that any society needs. In those days federal government was at the commanding height of the economy, they do understand that government will provide airport, runways and airport and all that but over the years we have also seen how efficient government can be in running such enterprises.
What we have to do is to see how we an encourage private capital and private management to come and do this business, in which case some of the problems and risks and disadvantages that are been faced by federal government businesses are minimized with private enterprise.
So how is the Federal Government responding in mitigating the additional cost of controls? How are they responding in helping these airlines to cushion the impact of various regulatory controls and approvals that have been imposed on a global basis?
On baggage bags
The baggage cab, we just brought in about 50 from Turkey, the containers doleys, we just cleared them last week, we have capacities now to meet a lot of needs as I am talking to you now, we are expecting about 3 extra push bags and these are costing us not less than a thousand of Euros and I want you to know that all these things are on the way and right now they are on the sea
On the activities of illegal loaders
What I will say is that we do have congestion sometimes but the use of Area Boys or no Area Boys, we also have our own loaders so you donít need to bring Area Boys when you can use loaders that have been screened and have security check.
It is the process of palletization and depalletization that you have need for labour but if your goods come in the way that ICAO specify in terms of standard, when your consignments comes, they come with wooden pallets, the four lift can always carry from one place to the other we donít have problem with standard cargoes, the cargoes that we are considering now are cargoes that are packed with nylon bags where they are limitations as to the number of people that can carry those of them that are not available to automation, all the ones that comes in standard type like the regular carries like the British Airways, Arik, and others come in their wooden pallets and we donít have the issues with anything
You know in the security issue in terms of the DDC machines, I must say that it has nothing to do with the handlers, the security system that we have then, we still have them now, I mean we have an army of security people in SAHCOL, we are using external security companies and we also have internal security staffs so our security is quit in order.
I just told you that we have acquired CCTV Camera to make sure that we cover all the areas of operations 24 hours these are things that were not there last year
On what he wants the government to do as regards infrastructural decay in the industry
You can see that the airport that we have here in Nigeria is 30 years old and no extension, no phase one, phase two, phase three, when are we going to have extra wing, extra concord for our airport, it has been long overdue and somebody needs to sit down and announce to us in a number of months how are we going to expand the airport, the place is crowded, it is doing more than the capacity for which it was built, most of the issues that we are raising today is because of the shortage of capacity.
When the terminal was built, it was just meant to handle about 10 percent of the passengers that it is handling now. Why do you renovate the conveyor belt that is meant to carry 1 ton that is carrying 10 tons, it will always break down.
This airport needs expansion, I mean the number of passengers that we are having is many and we are paying tax for these things, it is time for somebody to sit down and say look whatever is operating in New York must operate in Nigeria.
I mean if you want to buy a computer today, you will not say that Nigeria is backward, therefore you buy an old computer, you look for the latest capacity that is what we should be talking about. And in terms of knowledge and capacity, there is no area in the world that we do not have Nigerians that are excelling and the airport business is not an exception.
Nigerians are running airport in New York, they are running in South-Africa why canít we run our own airport let us identify these brilliant people, create space for them to turn the aviation industry in this country around. This airport is too small for this country