Private sector driven aviation industry myth or ethos
1. Travels | Aviation | Consultancy | Training
Private Sector Driven Aviation
Industry: Myth Or Ethos
âTayo Orisadare
2. On A Warm Note
Welcome to all participants
Thanks to the organisers for this
opportunity
3. In Retrospect
⢠The aviation industry ⢠Then serious decline due
enjoyed rapid growth military rule
following the boom of ⢠Unfriendly business
the â70s environment
⢠Profit driven ⢠Mal-administration
⢠Growth in the number of ⢠Growing cost
operators ⢠Still history is incomplete
⢠Increase in passenger ⢠Why?
traffic
4. Remember this?
⢠Either on her tail?
⢠On your ticket wallet?
⢠On the road?
⢠In your home?
⢠In your heartâŚ
5. âWTâ
⢠Founded in 1958, independent corporation (from
WAAC) in 1968
⢠Hq. in Lagos
⢠Fully govt. Owned
⢠About 21 routes
⢠Service halted since 1998, refused entry
into UK in 2001
6. Like Others
⢠Mismanagement
⢠Corruption
⢠High Debt Profile
⢠Legal Suits (Fagbenle Attorneys On Behalf Of 400 NYC
Stranded Pax)
⢠Wrong Business Approach And
PrioritiesâŚ
7. Those Vices
⢠Personalised rewards
⢠Mediocrity rather than professionalism
⢠Dwindling commitment
⢠National cake syndrome
⢠Federal character
⢠Down it went
11. Financial Services
⢠AFRIBANK
⢠Privatised in 1993
⢠Through share flotation
⢠First bank
⢠Privatised in 1989
⢠Through share flotation
12. Hospitality
⢠Durbar hotel
⢠Kaduna
⢠Privatised in 1981
⢠Core investor
⢠Deferred public offer
13. PETROLEUM
⢠African Petroleum
⢠Privatised between 1989-2001
⢠Share flotation
⢠Core investor
⢠UNIPETROL
⢠Privatised between 1989-2001
⢠Share flotation and core investor
14. Transport
⢠Nigerdock
⢠Privatised in 2001
⢠Core investor
⢠Global energy ltd
16. ⢠Barred from flying into us
on 28 July, 2004 due
safety reasons
⢠Board was sacked on 13
august, 2004 and ticket
⢠Ghana airways sales stopped
⢠Established, 04 July, 1958 ⢠Replaced with GIA a
⢠Hq in KIA govt-private sector
partnership
⢠Started ops 15 July, 1958
⢠Plagued with
maintenance problems
⢠Domestic ops stopped in
Sept., 1991
18. SwissAir Hunter Strategy
⢠Former national
airline
⢠Formed 1931
⢠Flew for 71 years
⢠âFlying Bankâ due
financial stability
⢠Swiss national symbol
and icon
19. Hunter Strategy
⢠Heavy expansion in the ⢠High financing and
â90s hence cashflow crisis
⢠Buying small airlines ⢠9/11
instead of forming ⢠October 2, 2001 entire
alliances Swissair fleet was
⢠Acquired 49.5% of grounded
Sabena ⢠Two large bridge loans
⢠Bought into Air Liberte, from Swiss fed came to
Air Littoral, Volare, Air the rescue
Europe, SAA, Tap ⢠March 31, 2002 Crossair
Portugal etc took over most of their
assets
20. ALAS!
⢠Assets not taken over were liquidated
by Kurt Hoss liquidators, Zurich
⢠Cross air was renamed Swiss
international airlines.
21. Their albatross
⢠Directors were predominantly
politicians
⢠Conflicts of interest
⢠Hunter strategy
⢠Payment despite insolvency
⢠Federal aid and politicians
22. The BAA Story!
⢠1960: MOD controlled all ⢠1986: Airport Act was
commercial aviation passed and the authority
⢠1965: Airport authority bill dissolved and passed to a
introduced by the then new coy called baa
labour minister (British ⢠1987: BAA was floated on
Airport Authority was the Stock Exchange with
established) for flexibility capitalisation of ÂŁ1,225m
and profit reflecting profitability
⢠1966: BAA assumes ⢠BAA acquired
ownership and responsibility Southampton Airport
for Heathrow, Gatwick, ⢠Sold Prestwick in 1992 and
Stanstead and Prestwick won 15-year retail and
Airports catering contract for
⢠By 1971-5 BAA acquired Pittsburgh Airport, USA
Edinburgh, Aberdeen and ⢠1994: won ten year contract
Glasgow airports to manage Indianapolis
airport, USA
23. BAAâŚ
⢠1997: Won 10-year contract ⢠2002: Awarded a ten year
to manage Harrisburg contract extension for the
airport, USA Airmall at Pittsburgh Airport
⢠1998: Opened £450m ⢠2003: invested in UK
Heathrow Express Rail Link National Air Traffic Services
and a long term lease of provider (NATS) group
Launceston Airport as part ⢠2004: Awarded a ten-year
of APAC consortium retail management
⢠2000: £200m Airport Hotels contract at
partnership was set up. Baltimore/Washington Intâl
Govt. also announces BAA Airport
retainership of London ⢠Acquired Budapest Airport
Airports following A and announce 50:50
competition review property joint venture with
⢠2001: Acquired TBIâs Morley Fund Management
investment in Australian
Airports : Perth, DarwinâŚ
24. BAAâŚ
⢠Following all of these achievements
⢠Grupo Ferrovial declared interest in
acquiring baa in Feb., 2006
⢠By June 2006, the Ferrovial Consortium
receives valid acceptances from 83% of
BAAâs issued share and the offer is declared
unconditional.
⢠Ferrovial takes control of baa
⢠July, 2006: Stephen Nelson succeeds Mike
Clasper as CEO
⢠Aug., 2006: BAA de-lists from the LSE
25. The Effect In â06
⢠UK pax traffic up by 2.0%
to 1,44.6m AS AGAINST
(141.7m)
⢠Revenue up 7.4% to
ÂŁ2,232M (ÂŁ2,078m)
⢠Operating profit up 8.1%
to ÂŁ710m (ÂŁ657m)
⢠UK Airports net retail
income grew 4.8% TO
ÂŁ616m (ÂŁ588m)
⢠Net retail income per
passenger rose 2.9% to
ÂŁ4.28 (ÂŁ4.16)
27. From HomeâŚ
⢠Aero was formed in ⢠Stake increased to
1959 as a subsidiary 60% in 1976 in
of Schreiner airways anticipation of
B.V, Netherlands Nigerian
⢠Charter ops for oil indigenization
companies decree (planning)
⢠1973, Oteri holdings ⢠Had Schreiner as
bought 40% stake Managing Partners
28. .
⢠Only commenced schedule
operations in August 2000 due
increasing demands for air
transportation
⢠Manageable fleet
⢠Good maintenance facility and
records
30. ...and Abroad
⢠Commenced operations
on June 22, 1984 with a
single leased b747-200 in
Gatwick
⢠Became profitable during
the first year
31. VS ContdâŚ
⢠Timed start up to ⢠August 2002, first
take advantage of airline to use A340-
full summerâs season 600 with Rolls Royce
⢠Sold 49% to Trent 500s
Singapore Airlines in ⢠VS carried 3.8m pax
december,1999 in 2002
⢠Increased to 4.5m in
2005
32. Still VS
⢠VS moved to Heathrow following the
abolition of âLondon air traffic distribution
rules of April 1977âŚ. (Govt)
⢠Led to BAâs âDIRTY TRICKSâ regime
⢠Relationship with BA improved following the
appointment of Rod Eddington as CEO
⢠VS now has a fleet of B747s and A340s with
order placed for 06 A380s due to be
delivered from 2008
33. VS Fact Sheet
⢠Founded 22 June, 1984 ⢠Total Pax: Over 50m
⢠51% virgin group and ⢠Annual pax: 4.6m in 2005
49% Singapore Airlines ⢠Av. Fleet age: 5-7yrs
⢠27 long haul routes ⢠Virgin Nigeria: 49%
⢠8900 employees owned by VS
⢠34 aircrafts
⢠Turnover y/e 2006
ÂŁ1912m
⢠Profits y/e 2006 £41.6m
34. Not all gloomy
⢠Diplomatic
⢠Patriotism
⢠Economic (FOREX)
⢠Balance of trade
36. The SAA Experience
⢠Founded 1934 â Acquired Union Airways
⢠Owned by South African Railways & Harbours
Administration (now Transnet)
⢠Headquartered in Airways Park, OR Thambo
Intâl
⢠Fleet â 56 + 20 on order
⢠History spanning 78 years
37. ⢠Many expansion and fleet renewal drives
⢠Apartheid induced sanctions â Longer routes,
aircraft /crew lease, office attacks, bans etc.
⢠Post apartheid (1990-96) â flights resume,
new routes, codeshares, interline, inflight
greetings in destination language, stake in SA
Express
⢠Rebranding (1997-2005) â new image, livery,
name change, online ticket sales, Voyager
04/04/13
38. The Success Story Tarries
⢠Joined Star Alliance â April, 2006
⢠Talks of restructuring SAA/Transnet â financial
⢠May â07, 18month comprehensive restructuring
was launched â profitability
⢠Business into seven subsidiaries â target R2.7bn,
R2.5bn saved
⢠30 intâl destinations in 26 countries
⢠Revenue @ R26.4m
⢠Load factor @ 73%
04/04/13
41. Why Private Sector?
⢠Business is business
⢠Profitability not charity
⢠Performance
⢠Result oriented
⢠Accountability to shareholders
⢠Maximization of limited resources
⢠Professionals not politicians
⢠Corporate interest above personal
⢠Effective monitoring and control
45. Our Solution
⢠Private sector to drive the process true and through
⢠Waivers from govt. on aviation related transactions
⢠Better control on financing and lending rate by govt
including inflation
⢠Aviation professionals capacity development to fill
the impending vacuum
⢠Scholarship by govt. and blue chip companies (oil
coys)
⢠Sustained fight of corruption and corrupt practises
46. >>>
⢠Government intervention in flying
schools (NCAT)
⢠Favourable economic and political policies
⢠Organise workshops, symposia and seminars
⢠Step up regulatory activities
⢠Provide effective and efficient airport
facilities or concession where necessary