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NIGERIA
A new business climate |
Read our exclusive interview
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 ADC
Fly the Best, the Very Best
Manager:
Engineer (Dr.) J O Sonuga Chairman of the Board:
Mfon E Udom, MD/CEO
Contact:
84 Opedi Road, P.O. Box 6392, Ikeja
Lagos, nigeria
Telephone : + 234 1 493-6221
+ 234 1 496-5750
+ 234 1 496-2657
+ 234 1 496-2230
Fax : 234 1 4970086
E-mail : udom@micro.com.ng
adc@gacom.net
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Strategy
 OUR VISION
To become a dominant carrier in West Africa and a major player in Africa by the year 2003.
MISSION STATEMENT
The mission of ADC Airlines is to be a leader in the airline industry. We are committed to transporting passengers, mail and cargo in a safe, expeditious and most courteous manner, in a style that blends the best of African culture and hospitality with modern technology. We shall ensure satisfaction and good returns to those who invest their time and money in us, while guaranteeing that our success is off benefit to the larger society. Our goal shall be to achieve excellence in all our endeavours.
BUSINESS DESCRIPTION
ADC PLC is a public limited airline company involved in the transportation of passengers and goods for profit. Since it began passenger operation on January 1, 1991, ADC Airlines has recorded very significant growth, securing a dominant share of the nigerian domestic air travel market through its regular flight services between Lagos and Abuja, Port Harcourt and Calabar.
CURRENT POSITION AND FUTURE OUTLOOK
The nigerian air travel market is expected to grow at an annual rate of about 5% over the next 5 years as air travel retains its leadership as a primary mode for business and business-related travels. Emphasis of Government on tourism promotion as well as the liberalisation and full deregulation of routes offer opportunity for new market and additional traffic. These promise enough traffice for operators in the industry. However , this support is expected to tilt in favour of the operators that pay attention to customers concern for higher levels of safety, offer efficient and reliable schedules and are customer friendly. Despite its recent problems, ADC Airlines remains a market leader with considerable customer goodwill. This is due to its benchmark services in the industry and its concern for operstional efficiency and customer satisfaction. Since its inauguration in 1991, ADC's market share has been growing at an average annual rate of
10%. Our load factors average 75%. This informs our projection of 60% market share over the next 5 years. Over teh same period, ADC Airlines is positioning to becoming a major regional airline offering the most convenient connection on the West Coast through a network of alliances and commercial co-operation.
UNIQUENESS OF SERVICE
The airline's customer-friendly service has come to define the benchmark for operations in the nigerian air travel industry. On-time deparures, innovative in-flight services and flexible schedule have helped to put ADC Airlines ahead of its competitors. At full operation, our frquencies on the routes we serve enable our various flights to compete primarily with themselves.
BUSINESS BASICS
THE COMPANY
Aviation development Company PLC voted the "most favourite " airline of 1996 by air travellers was incorporated on December 11 1984, as a wholly owned nigerian private limited liabity company and re-registered as a public company on June20,
1992. On September 16,1994, its shares were formally listed for trading by the nigerian Stock Exchange, becoming the first airline in nigeria and Africa to be so listed.
Up until November 1996, the airline accounted fro 42% of the domestic market share (1996 figures) making it a clear market leader. Since inception, traffic traffic has been growing at an annual rate of 10% while turnover has grown from 63.34 million Naira in 1991 to 2 billion Naira in 1996, an increase of 3,058%. The focus of the airline is to serve the major business cities with frequencies and capacity that are tailored to suit the business needs of the passengers. Its services are customer-driven, and there are a number of loyalty schemes like the frequent flyer programme (Unicorn Club) and the corporate airline account (CAA), the flyaway Weekend packagepromoted jointly with the NICON Hilton Hotel, Abuja and the Atlantic Run, promoted with the Atlantic Hotel, Banjul, which enhance repeat patronage.
INTERVIEW WITH
MR.UDOM,
MANAGING DIRECTOR OF AVIATION DEVELOPMENT COMPANY
June 21st, 1999
1) Mr. Udom, could you start the interview by providing some information on ADC Airlines?
Aviation Development Company, ADC, was formed in December 1994 to provide support services in the industry. The company was formed out of the disagreement between the pilots and management of nigeria Airways. The four founders were pilots in nigeria Airways. We decided to start ADC to correct some things we thought could be done better, but money was not immediately available. So we set out by utilizing the experience and expertise we had. We started by providing consultancy services to the industry and later moved to crew leasing because we were all pilots.
Down the line, we found out that there were other opportunities. We bidded for a job with Air Guinea, the airline of the Republic of Guinea. The airline needed operational management including crew development. We were chosen ahead of Air Lingus and Yugoslavian Airlines, JAT. We started the job in 1985 developing the crew there, providing training and organizing their operations. It was a five year contract. Later, we saw new opportunities in cargo movement where there was no capacity particularly between the Middle and Far East and Europe. We marketed ourselves as being able to supply some little capacity and we won an ad hoc 6 months cargo contract with Singapore Airlines through an agency. We supplied a 707 capacity, that’s about 40 tons, to move mainly cigarettes around the region from Singapore to Kuala Lumpur to Colombo. From this, we were able to generate some reasonable amount of money to start an airline. In 1990, GPA (Guinness Peats Aviation) - at that time one of the biggest leasing companies in the world - provided us with our first aircraft. The first airplane was delivered in December 1990 and we started flying in January 1991.
2) Were you the first private air company to operate on the domestic market?
No, there was Okada, Kabo and Gas but they were not doing what we thought should be done. We created a unique service for the nigerian air traveller which caught on well. As a matter of fact, I am proud to say that we set the standard which all nigerian airlines are now operating. For example we had seats allocated when you purchase your tickets.
3) Which is not the case of Kabo Airlines for instance.
Well some haven’t really caught on. We provided refreshments and full meals on most of the flights, and the air planes departed on schedule which was a far cry from when we got into the business. New entrants after ADC and the previous ones started copying the things we did. We recorded tremendous growth. The growth went on until
1996 when we were carrying approximately 40% of everybody travelling in nigeria. We did fly around 55,000 passengers a month. That doesn’t look big when you look at the United States and Europe but in nigeria, it’s a large number of people travelling by air. We also maintained our traditional cargo operations and established a link between UK and nigeria. We did a scheduled weekly cargo flight from Europe to nigeria and took back agricultural produce from West African countries mainly from Ghana. We took pineapples and mangoes from Bamako north-bound and brought finished goods to nigeria. In November 1996, we had an unfortunate incident when one of our airplanes crashed. The accident report came out this April. The accident was caused by the untidy separation by air traffic control which put our aircraft in close proximity to another aircraft departing out of Lagos and in order to avoid a mid air collision, our airplane did a collision avoidance manoeuvre and went down. That created a lot of difficulties and since then, we have tried to restructure the company, to reposition for growth. That has taken us the last two and a half years.
4) I know that this incident did affect your business seriously. What is ADC today, where does it stand? We are talking in terms of figures, we’ve talked about the number of people who travelled before, but what of today?
Today, it’s a much reduced operation. Because of the magnitude of the crash, we decided to down-size to be able to cope with the effects of the crash. Immediately we crashed, the company was grounded, so the signals that were sent out was as if they had found something wrong with the operations of the airline. But soon after they had a preliminary investigation they found out that there was nothing wrong with the airline, we started flying again. But in people’s minds, we were to be blamed. The passenger and public perception of the operation was badly hurt until last year when the Pope, His Holiness Pope John Paul II came to nigeria. Before his arrival in nigeria, the Vatican sent out a team of technical experts to inspect the airlines as they needed an airline to fly the Pope within nigeria and when this was done, ADC was chosen to fly the Pope. That corrected the poor public perception, because it was done by an independent team and it was clear that ADC was a good airline. The Pope came and we flew him. So today we are just about to start the growth again, we have stabilized.
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5) So could you give us some figures, to have an idea of the size of the company?
Today we are much reduced. We are down to about 20,000 passengers a month. The turnover in Naira terms is about a billion a year, that is about $10 million. Before the crash, we were already exceeding $40 millions. But there are no serious worries about this because we have succeeded to a great extent to regain passengers loyalty. Despite all the difficulties, we still have a percentage of passengers who prefer ADC. The fact that we don’t have the capacity creates a problem in terms of market.
6) It seems the aviation industry is more and more a fearful environment, where competition is fierce and strong, so what are your best assets compared to competitors in the domestic market?
To survive, you have to give quality service and that is what we continue to do. Because everything we innovated has been copied by others, we have to continue to innovate.
7) What about mileage?
60% of our passengers are members of the Unicorn Club which is our frequent flyer program. And with this, we are able to communicate with them regularly about the changes, about the development in the company and they also help us by sending in regular suggestions. We maintain a good link with our passengers and they do not see any reason why they should change to another carrier. We have a personal relationship with most of our passengers. That is our strong point. A passenger comes on board, the crew know the passenger by name. It is very personalised. The airline, the passengers and the shareholders, it is like one big family. I believe that this is our strongest point. But these days the economy is so tight that most of the airline passengers are corporate passengers. So we have developed the Corporate Airline Account where we offer a lot benefits to those who subscribe to the accounts. The company that subscribes to the accounts can even issue themselves their tickets, with the customised tickets. Let’s say Forbes is a member, you have tickets with Forbes on it, and you issue it to your staff when they want to travel. You call a special number and reserve your seat 24 hours a day. That is the kind of flexibility that attracts a passenger. So it is all those little innovations that endears us to the customers. Also we have empowered the front office staff, those who have contact with the customer, to solve problems immediately.
8) The service is one thing, at least it’s the main thing in this industry, expansion is another strategy, do you have any plans.
We suspended the freight operations into the UK due to the noise regulation, even though we still have the rights to go into the UK until the year 2002 because of a special exemption. We plan to restart some time in the future with a Stage III airplane because of the operational flexibility. Our plans for the immediate future is to be strong regionally, within nigeria and West African sub region, span a little to Central Africa and the Southern part of Africa. If you have travelled a little bit, you will find out how difficult it is to move around Africa. The market is there but no one is focusing on it. We are planning to start a fleet modernisation programme and increase the number of our airplanes from this half. As a matter of fact we are already discussing to add two aircraft every year. At the end of this year we plan to operate four (4) aircraft of the size of 737 and from next year, we add new planes till the year 2003 to operate 12 airplanes. Commencing from the year 2001, we intend to operate brand new airplanes and for this we hope to place orders from the end of next year. I can’t say exactly what airplane it will be but I am certain that they will be Boeing 737 - 600 or 800. Today, we will start by going into operating leases and towards the end of this year, we are going to re-capitalize and bring new capital into the business.
9) So would you say you would be interested in finding a partner or having a good international partner working with you .
Certainly, it is an option that we are very ready to consider since this is the trend world-wide. There are no stand alone airlines these days. There are benefits to derive from partnership. Yes, if we find a willing partner, we are ready to consider that. In our plan, we have also looked at an equity partner to take an equity stake in the company. We are also looking at an alliance partner where we will feed the long haul operation from our regional hub which we intend to keep at Lagos.
10) Partnership, increased capacity, services?
Service is a key.
11) So you’re aggressive to gain the position you were before the crash.
It is something that we have to be careful, moving one step at a time to achieve it. In nigeria, today, there is a democratic government in place and we can predict very fairly the direction of policy over four years. So we can now positively plan for the 4 year term. We need that stability to be able to facilitate the different strategies that we have. Most particularly if you want a partner, an alliance or even an equity partner, they have to see what environment you are in, where you are operating. Even the lessors would question the safety aspects involved. Safety in the sense that ‘My equipment is operating in this region, if anything happens can I take it back?’
12) And how do you see the business climate now, on a short term basis?
It’s going to be a lot better. Quite clearly so, because of the few statements our president has made so far. Because we need to give that confidence to the business corporations who are interested in investing in nigeria. That there is a pattern of doing things and that you can not just wake up one morning and your investment is lost. Even nigerians rather than invest here would prefer to do so in the UK. So this perceived risk, we have to see that very quickly the image is changed.
13) So could you say that ADC contributes to the national development of nigeria?
Certainly, today if you take a look at all the airlines in nigeria, I think you will find there is an ADC airline staff working in almost all the airlines including British Airways, Lufthansa and all the nigerian airlines, the reasonable ones. We have done a lot of training, a lot of re-orientation. So one of our strategies when we started was to have a small team that was not corrupted by the larger society, a small team that had a focus and was able push through the programs of the company. Now we have down sized to cope with the difficulties created by the 1996 incident. We had to ask a few of our staff to leave not because they were not good but because we were downsizing. We actually helped a lot of them to gain employment in other places, but one thing we noticed is that most of the companies that were employing preferred to engage ADC staff because the quality was much better than what was available. And so we continue to see that we concentrate on training
, re-training, exposing our staff to what is happening in the rest of the world. And that of course has helped us tremendously. I believe that we will continue to focus on our people to be able to carry through our programs, in the short and medium term.
14) We know you are a Captain, a pilot and one of the co-founders of this company, could you put us through on the personal background?
After high school, I attended the nigerian Civil Aviation training centre, Zaria, as it was called then. Now it is the nigerian College of Aviation Technology. Before going into the civil aviation training centre, I had only flown once in an airplane and I only flew to gain the experience before the interview. I never planned to be a pilot. The change was necessitated by the economy of my family. The civil war in nigeria just finished and since we were so many in my family, my father who was a university lecturer at the University of Ibadan moved to our part of the country which was affected by the war. He lost all his money and everything, so we couldn’t all continue to go to university. I opted to work, and came down to Lagos to work as a clerk in the Central Bank of nigeria. And luckily, in my office there were quite a few young men like myself, who were eager to further their career. We did apply to universities where we can get scholarships and I ended up with one in the United States where I had only the tuition’s scholarship. At the same time I applied to the civil aviation training centre and was invited for the interview which took three weeks. I lived in the place for three weeks and I just liked what I saw. You know then you had accommodation on campus and you had a private airport and you were earning about the same salary I was earning in Central Bank, as allowance. When I got back to Lagos, I declined the university offer and went into the civil aviation center. I completed and became an instructor there. Then, I moved on to fly corporate jets with a Greek company and moved on to nigerian Airways in 1979 and at the end of the day, the pilots didn’t agree with management and we left at the end of 1984 and started ADC.
15) What would be your final message to our readers.
I’ll like the readers to recognize nigeria as a big investment area. In the last couple of years, we have witnessed Asia as an emerging market but I want to believe that nigeria would create more income for investors than any other emerging markets. nigeria has a big population nigerians love travelling and moving around and nigeria has a lot of resources and it only requires an investor to study the situation and the picture would be very clear. In our business, we need that investment, we need the partnership, we need collaborations in key areas in this industry in order to realise our dreams in ADC. I would advise the international investors to come and see for themselves that they can live a very reasonable life here. We need a few years to provide the infrastructure, get electricity to run properly and get communications and all those things that would make investors comfortable. I would say that even though the nigerian tourism industry is not well developed, it is important that investor come to see what is on ground and interact with their counterparts here, people like myself in order to make decisions, rather than stay so many miles away and take a position about nigeria. |
© World INvestment NEws, 1999.
This is the electronic edition of the special country report on nigeria published in FORBES Magazine,
October 18 th issue.
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