Private sector driven aviation industry myth or ethos
1. Travels | Aviation | Consultancy | Training
Private Sector Driven Aviation
Industry: Myth Or Ethos
‘Tayo 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 ’70s 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 heart…
5. “WT”
• 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
Priorities…
7. Those Vices
• Personalised rewards
• Mediocrity rather than professionalism
• Dwindling commitment
• National cake syndrome
• Federal character
• Down it went
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
• “Flying Bank” due
financial stability
• Swiss national symbol
and icon
19. Hunter Strategy
• Heavy expansion in the • High financing and
’90s 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 £1,225m
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. BAA…
• 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 Int’l
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 TBI’s Morley Fund Management
investment in Australian
Airports : Perth, Darwin…
24. BAA…
• 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
BAA’s 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 ‘06
• UK pax traffic up by 2.0%
to 1,44.6m AS AGAINST
(141.7m)
• Revenue up 7.4% to
£2,232M (£2,078m)
• Operating profit up 8.1%
to £710m (£657m)
• UK Airports net retail
income grew 4.8% TO
£616m (£588m)
• Net retail income per
passenger rose 2.9% to
£4.28 (£4.16)
27. From Home…
• 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 Contd…
• Timed start up to • August 2002, first
take advantage of airline to use A340-
full summer’s 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 “London air traffic distribution
rules of April 1977…. (Govt)
• Led to BA’s “DIRTY TRICKS” 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
£1912m
• Profits y/e 2006 £41.6m
34. Not all gloomy
• Diplomatic
• Patriotism
• Economic (FOREX)
• Balance of trade
36. The SAA Experience
• Founded 1934 – Acquired Union Airways
• Owned by South African Railways & Harbours
Administration (now Transnet)
• Headquartered in Airways Park, OR Thambo
Int’l
• Fleet – 56 + 20 on order
• History spanning 78 years
37. • Many expansion and fleet renewal drives
• Apartheid induced sanctions – Longer routes,
aircraft /crew lease, office attacks, bans etc.
• Post apartheid (1990-96) – flights resume,
new routes, codeshares, interline, inflight
greetings in destination language, stake in SA
Express
• Rebranding (1997-2005) – new image, livery,
name change, online ticket sales, Voyager
04/04/13
38. The Success Story Tarries
• Joined Star Alliance – April, 2006
• Talks of restructuring SAA/Transnet – financial
• May ‘07, 18month comprehensive restructuring
was launched – profitability
• Business into seven subsidiaries – target R2.7bn,
R2.5bn saved
• 30 int’l 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