A Review of the Nigerian Energy Industry

Bristow Helicopters lament poaching of pilots, security

…Affirms commitment to value addition

3 September, 2011, Sweetcrude, Lagos – BRISTOW Helicopters has been operating in Nigeria for 53 years and in that period has become synonymous with logistics and operational excellence. However, in the last few years, it has lost a sizeable chunk of its market share to new entrants. Recently, William Chiles, President and CEO of Bristow Group Incorporated visited Nigeria as part of his operational tour of business units of the group. He was gracious enough to speak with Hector Igbikiowubo, Editor, Sweetcrude and Akin Oni, Managing Director of the West African Business Unit (Wasbu) of the company was on hand to provide answers on Nigeria related operational issues.

What brings you to Nigeria and what is your group’s focus in terms of the Nigerian operation?
Chiles: I like to come here at least once a year, I don’t always do that, but Nigeria is our second largest operation and that is a big statement within Bristow. Our largest operation is in the North Sea in Europe, just right behind that is Nigeria and we have to pay special attention to Nigeria and make sure it gets the same level of support and we are putting out the same quality and the same level of care and safety that we do around the world, it’s no different. As we move down this part it becomes more and more of a Nigerian thing and there is clear separation from the Bristow group and Bristow Nigeria and Pan Africa. I hope that I still get the chance to come here because there will continue to be an association between Bristow group providing whatever support services the Nigerian companies need from us. And as I said when we began, over time there will be so much independence that the management team may not need Bristow in any of those services. They certainly can do a lot on their own today and they are very autonomous today. Another thing I want to say and again I know it is an interview and I don’t want to say too much, if you go back in history, the company has been here over 50 years and Bristow has done more for the aviation sector in Nigeria than any other company, you go right down the line, any of these companies here and even some of the new start-up competitors of ours, we can actually say we’ve gone over and beyond what these guys have done and the interesting statistics; had every employee that we’ve trained stayed with us, every pilot, every engineer that we have actually trained stayed with us, 90 per cent of our employees in this company right now would have been Nigerians and the only reason is because of turnover and the fact that some of our competitors take these employees, steal these employees away from us – they over them a little bit more money, they are not training these employees, we are training these employees. We are the ones that are making investment in Zaria at the Aviation academy-over $1million investment we’ve made in the engineering training school and we are looking at possibly moving into actual helicopter training in the country. As you know they do fixed wing training up there and possibly engineering training and we are right now supporting the engineering side, we are looking at helping them.

How much of the market has Bristow lost to these upstarts, these new companies?
Oni: well I think the upstart or start-up that you are probably talking about is Caverton, we lost one of our major contracts – the Shell contract to Caverton probably just a year and half ago. I think in the market today Caverton probably has in the region of about 18 – 20 per cent of the business and they have expanded from having no share in that market at all to one of taking on 20 per cent of the business. That is a huge chunk; it is not something that you can have over night. They have also won contracts from Aero Contractors which is the Total contract. Again I would say that has probably added on 5 – 8 per cent to the business. In totality I would say Caverton has in the region of 25 per cent of the business, while Aero because of the losses they’ve had lately may have another 8 – 10 per cent of the business. Pan African would have another 15 – 20 per cent of the business. Our share of the market today is in the region of 40 something per cent. But before the loss of the Shell contract we were a lot larger than that. The pie hasn’t grown that much; the competitors have just rejigged the sharing arrangement of the pie.

Can we look at possible reasons for the loss of the Shell contract, is it a function of your not operating in the way and manner you ought to or has your competitors upped their game?
Oni: That is a tough question to answer. The share of the contract that we’ve lost are effectively …… they have brought in a company that didn’t have any offshore experience in the helicopter business. Overnight they came into the industry. The experience that this company had before then was purely in movement of passengers using light aircraft between Victoria Island and the airport here and a few flights around the area. However we don’t want to take that away from them. They were also given the contract to operate two helicopters for the Lagos state government. But until that time they didn’t have that offshore experience. Okay, they have one now. There was a perception that we had become quite powerful in the industry and they were trying to introduce competition into the industry, that is one of the reasons I think we lost that contract, there are all sorts of stories out there, there is talk of Nigerian content, we don’t believe that is Nigerian content, because we have by far head and shoulders above any of the competitors, especially in the helicopter business more Nigerian content than any of them right across here. I joined the company in 1983 and I’ve been with the company since then. I joined as an aircraft engineer, I was trained and sent to the UK where I did my training like several of my colleagues and that’s one of the things that Bill said earlier: if all the Nigerian pilots who were trained by this company stayed in this company, we would be over 90 per cent Nigerian in terms of staffing.

Talking about Nigerian companies and how compliant you really are, let us look at that – your manpower, and going forward what are your plans to actually increase your adherence to the policy?
Oni: If you are talking purely in terms of numbers I don’t think it will give a fair picture. Let’s look at our core staff; if you look at our core staff it’s going to be more pilots, aircraft engineers and the support organisation. Let’s start with the pilots; when I was trained, I finished in 1986/87, that’s when the training of Nigerians started, then annually we would take about 10, some people would fly and some others would not be able to fly. At the end you end up with about 7, 10 of us would go and 7 of us would come back, qualified. Even with that number if you look at the business today, and I’ve got a chart I would gladly share with you, if all had stayed, we would be over 93 per cent Nigerian. But all of them didn’t stay; it’s the mobility of the work force, the attractiveness of the pilots, especially helicopter pilots, the attraction to the Gulf, especially to Saudi Arabia. A number of my colleagues who fly in the Gulf were trained by Bristow, those who fly Emirates, the 777s, people would always move on. They are doing very well today thanks to the training that we had. If you look at the aviation sector today, all the senior members of the aviation organisations in Nigeria, ExxonMobil, Shell, right across, if you look at their aviation managers, you find that they are ex-Bristow pilots or ex Bristow engineers. That speaks to the sort of training that we’ve had. We struggle there, the fact that our retention of these guys has been tough, but again it’s not a loss to the country because they’ve moved across to Aero Contractors, they’ve moved across to Caverton. If you look at Caverton today despite what is said, between 70 to 80 per cent of them are all Bristow staff and that says a lot about the training and the amount of contribution that we’ve made to our local economy.
Chiles: And that’s a very important point. They spend nothing on training other than recurrent training. What they did was say ‘why should we spend $200,000 to $300,000 to send a pilot to the States or somewhere else for training, when we can just get them for free off Bristow’ and that’s what is going on and that’s obviously very upsetting. Some of these guys are starting to come back now because they are finding out that the grass is not very green on the other side of the fence.
Oni: Today, if you look at everybody we employ, Nigerian staff is about 70 per cent of the total. But when you drill down and look at the figures in terms of pilots and engineers, I think we are in the region of 38 to 40 per cent Nigerian.

Let’s look at what you are doing about retention, no company would like to spend that much on training and lose the person the next day. Are you doing anything about retention of those you train?
Chiles: I didn’t come here to just sit in Lagos, we go down to Eket, Escravos, Warri and Port Harcourt to see all the guys there and we get that question, the guys are saying hey, the competition is paying more. What we are going to do is engage in extensive campaign to get the facts out. What we found is that the guys don’t have the facts. The cheques they are getting has a higher number on it, net number than the cheques they get from us because there is a difference in the with-holding that’s going on. What we’ve done and we found this many years ago, we found that we were not withholding the proper amount and one thing Bristow will not do is break the law. We are not going to break the law. We will abide by the Nigerian laws and all the laws that we are subject to as a company and that goes to everything from tax withholding to Custom duty payments, we are not going to cut corners to get around the problem. We will not get involved in corruption, absolutely not.
Oni: One of the things that we’ve found out is that we deduct the statutory amount, we do it at source, we are extremely proud of it, we are open to checks by the Lagos state government and anybody who thinks otherwise to openly challenge me. If it’s 25 per cent, we will take the 25 per cent and we will remit it to the government. In the past, there were all sorts of games played in this area. I think it is the responsibility of every Nigerian to pay tax. Now that becomes a hot point for our pilots when they go to other locations and they see that’s not being paid. If a pilot pays between N70,000 to N100,000 per month as tax, they are cheating the country. In real terms, they should be paying in the region of N300,000 every month.

Let’s look at your operational challenges. I am aware that security is a major concern for you especially in the delta. Can you touch on this?
Oni: Security is a huge cost for us, the example I always give is what we have to do on a daily basis to get to work. We have escorts in front and escorts at the back; we use several vehicles, we are fortunate to have been attacked three times now.
Chiles: Since I’ve been here.
Oni: The first one several people were killed in Eket, which is onshore, the next one, I pilot a very close friend, a Nigerian, Tony Yusuf Adam, the last time we were attacked he was in Eket, he was going to work in the morning, they attacked the convoy and he received several bullet wounds in his leg. Another pilot also received bullet wounds in his leg and several people were killed. It’s turned into a big part of our operational picture for Nigeria. Every day we go to work we need escorts. Especially in Port Harcourt, in Eket and here it is reduced to a certain extent these days but everywhere we operate we need this huge infrastructure of security. Things have become quiet these days. The other operational challenge that we face is getting parts into the country. There are several laws which don’t apply to other places and this poses difficulty on our ability to provide the services at sensible rates to our customers here. We don’t manufacture these parts in Nigeria, they always come in and they have to take days within the Customs, they take the taxes and all other things and sometimes you wonder why Nigerian companies can’t compete and the problems that we have within the aviation sector today. The component of taxes that we have to pay is enough to bring down airlines and you can see it. Even with that we are also exposed to unethical behaviour in our environment. If you are willing to pay you can get things done quicker. I don’t want to name names but if you are willing to pay things work faster and we will not do that. In other not to do that we need to be very smart – we don’t do last minute requirements we’ve got to plan 7 months ahead for things that we need so that even if it takes us time, we are still able to provide the same service level over here. The other challenge on the operational side and which is positive for us is that it makes us more competitive is that we do most of our maintenance in Nigeria now. We don’t ship aircraft out of Nigeria we do it here. We’ve had to develop the capabilities, it makes it expensive but in a few years’ time you will see the difference. We will have a system such that our organisation would be able to do all the major maintenance in Nigeria without shipping out. It saves money – it saves the government money and it saves us money. At the base level, other than safety of our people, the ability to move parts, equipment around Nigeria, the ability to bring parts into the country and the costs associated with that and the exposure to the ‘c’ word (corruption) is a big part of our cost.

What do expect out of this loose arrangement with your Nigerian entity and what do you expect 3 years down the road?
Oni: In 3years time we’ll be a bigger and stronger organisation, some of the contracts that we lost we will get back. We have learnt our lessons, the pie will be bigger for everybody, but in that pie we will play a major part. But then at that stage people will come to see us for what we are and what we do as opposed to perceptions – talks about Bristow not being a Nigerian company. Bristow has been in Nigeria for 53years and in that time, I don’t think the oil industry would have worked especially the offshore and the swamp areas without Bristow being there. Aero Contractors came into the picture 7 years later and have been able to be competitive. Granted they have had their issues with the problems they have had lately with Oceanic Bank and all that but they will be back. I don’t think the oil industry would have worked without n-Bristow, the amount of movements that we make and the number of helicopters that we have, 51 aircrafts, three of which are fixed wings, that’s or size. But in 3years time what I see is – the shock awaiting these new entrants, the boys would have become men and they would realise that it is not as easy as it looks – it is not quick access to money, it is not quick access to anything. You now have to run an organisation; you can come in and be flip and tripping air but to maintain the level of services required you have to grow as an organisation, you get the number and suddenly the numbers don’t look as easy as they used to look. So, boys become men, the pie would be bigger because of the activity level that is about to take place. I am sure you know that if the PIB had been out, I think it would be a lot bigger but we are beginning to see being part of the chain. With that you’ll see Bristow regain some of the lost contracts, you’ll see Bristow growing in terms of the services that we provide to people, you’ll see that yes we have aircrafts but the value that we bring to each organisation will show to everybody. That we are different and why we have been here for 53years and why certain oil companies will always stick with us. They know that when we say we will deliver, we will deliver. So, USAN, Egina, if Shell decides to go with the Bonga South West, Aparo, Erha north and all those fields coming into production, I think you will see that will grow the pie, there will be stiff competition, but we will still be very much here.

I agree with you. Bill, what kind of support do you expect to give your Nigerian entity?
Chiles: The main support that we will provide for another Nigerian company that we are creating, we call it BASS, Bristow Aviation Support Services; it is a technical service support. It will provide aircraft leasing to the extent that they need aircraft from us, which is really financial support. It will provide technical expertise, engineering support, records, software, hardware and basically all the things that are done in engineering. Everything that is done to support engineering and flight operations; and this will be done only to the extent that they need that support. The company overtime will be expected to develop their in-house expertise, their in-house financial capability where they will be buying aircraft and owning aircrafts. So overtime we see the need for financial support to actually fall off. Say, over the next 5years and in the meantime we see the need to provide the level support to ensure they continue to function.
Oni: I think we have issues with perception. We’ve always been 60 per cent Nigerian and 40 per cent the foreign partner. However the name makes everyone think that we are a foreign company. We came into Nigeria spraying oil palm fields, that’s what we did before and it was just per chance when Shell came in that we joined the…. and I think we’ve added a tremendous amount of value to the oil industry in Nigeria and we will continue to add that. We will grow from strength to strength and we will become more Nigerian as we go along. Yes you are right we have a retention issue and we are addressing it. How do we stop the people that we spend money on training from leaving? For example, we just completed some test at the moment and by the time we put the guys through the flight training school in the US we spend $210,000 each. I had to go and meet the director general at the NTAA that we can no longer sustain this training if all people are doing is poaching. I think if you need these people and for the good of Nigerians, I think you have a collective responsibility to put some money into training. It is not just poaching from aero Contractors or Bristow. Put in a bit of money, maybe you train, 5 pilots and we train 15 and you will make a difference so that people are not complaining about us having expatriates. It is not easy to get expatriates into Nigeria or even get the approval to bring in expatriates. The challenge to the rest of our competitors, not everyone, we know the few, who would not spend, get some money out, train Nigerians, don’t poach. We will do that; we will continue to train Nigerians.

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