McTighe: Turning Arik Air into Nigeria’s largest carrier

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When Mike McTighe received a call from a head hunter in early 2006 asking him if he was interested in working for a Nigerian start-up, he hesitated. McTighe recalls looking up Nigeria on bbc.com and cnn.com and his first thoughts were “no way”.

“But then I met the principal and was impressed with his vision on what he was doing for Nigerian aviation,” says McTighe, who served as Arik’s chief operating officer for seven months before becoming managing director shortly after its October 2006 launch. “Nigeria is not nearly as bad as what you read.”

Just over a year later, McTighe has successfully led Arik Air through the start-up phase and is now leading the carrier through a period of ambitious expansion. In this quarter alone, Arik’s fleet will swell from eight to 16 aircraft, which McTighe says will make Arik the largest airline in Nigeria in terms of fleet size, overtaking AeroContractors. As Arik expands into long-haul services, with a Lagos-London Heathrow service slated to be launched in August, McTighe expects Arik will also soon pass Virgin Nigeria as the country’s largest carrier in terms of overall traffic.

Arik was founded by Nigerian entrepreneur J.I.A. Arumemi-Johnson, also the carrier’s chairman, with a vision to give Nigerians a safe and reliable carrier. Nigeria has one of the worst air safety records in the world and most of its domestic carriers operate ageing aircraft and are not known for their punctuality. Arumemi-Johnson promised to reverse this trend by operating new aircraft and a reliable schedule.

“We want to deliver on our promises,” McTighe says. “We said last year we’d bring in new airplanes and we have. We say we’ll bring in more new aircraft and we will.”

Winning the hearts and minds
Arik quickly captured the attention of the Nigerian public when it ordered last May three CRJ900s from Bombardier. “At the moment that is the flagship aircraft in Nigeria,” McTighe says. “It is the first new aircraft in Nigeria in some time. People want to see it. We always open a new route with the CRJ900.”

Arik also acquired two 737-300s prior to its launch. But these will eventually be replaced with new-generation 737s and on 26 April Arik is taking delivery of two 737-700s, the first new Boeing aircraft that any carrier in Nigeria has received in two decades.

The 737-700s are part of a major fleet expansion programme. At the end of March Arik had eight aircraft – two owned 737-300s, three owned CRJ900s, two wet-leased Bomardier Dash 8 Q300s and one wet-leased Fokker 50. Earlier this month it added a fourth new CRJ900 and next month it will take delivery of three dry-leased second-hand CRJ200s. In May and June it will also add two more wet-leased Q300s.

Adding eight aircraft in only three months may seem crazy for an airline that is less than one year old but McTighe responds: “The demand here is such that even with 16 aircraft we’re still under pressure because customers are demanding more services.”

Port Hardcourt demand
He says demand is highest on services to Port Hardcourt, which are averaging a 92.5% load factor. Arik is now the only carrier serving the city because its fleet of wet-leased turboprops are able to access Port Hardcourt’s small military airstrip while the main international airport is closed. A generator fire and runway safety issues forced Nigerian authorities to close the international airport last year. “Within a month we were able to get turboprops and begin operations [at the military airport],” McTighe says. “It shows how quickly we can react to a given situation. We initially said we wouldn’t operate turboprops but this opportunity came up and this is a lifeline for Nigeria.”

McTighe says Port Hardcourt International will not re-open until early next year, after the runway is resurfaced and a new terminal is constructed. In the meantime, Arik plans to take advantage of the fact it is the only carrier currently serving Port Hardcourt by doubling capacity on the Lagos and Abuja routes and launching a service to Calabar. Arik is now turning away passengers at Port Hardcourt because it cannot accommodate all of them on the three turboprops currently supplied by Dutch carrier Denim Air, which will also supply the two additional Q300s.

“The booking process in Nigeria is totally different,” McTighe says. “Nigerians look up the timetables to see who flies when and they just show up at the airport with a bag of cash.”

McTighe acknowledges the rest of Arik’s network is not doing as well, with a network-wide average load factor of only 54.5%. But McTighe says this figure is respectable given the intense competition on domestic trunk routes and he is confident Arik’s plans for schedule improvements and frequency enhancements will win over more customers and push up its load factor. “We’re quite pleased with [54%]. A lot of customers have moved over from other carriers and the market is telling us they want more frequencies,” he says.
And Arik has the cash to continue expanding until it breaks even, which according to its business plan will happen in the third-quarter of the third year. Arumemi-Johnson’s Ojemai investment firm owns the entire airline with backing from two major Nigerian banks. “He’ll be able to back us up all the way,” McTighe says, adding the carrier is capitalised at $5 billion.

The carrier is now investing in a new maintenance complex which will see construction of a large widebody hangar begin in May and be completed in 2009. Its initial hangar and headquarters building, which is not large enough to accommodate all 466 of its employees, was acquired last year from the assets of defunct flag carrier Nigerian Airways.

Arik is also investing in new widebody aircraft. In January Arik signed a contract with Boeing for three 787s, two 777-200ERs and two 777-200LRs. The order will be formally announced later this week in Seattle in conjunction with the delivery of its first two 737-700s.
McTighe says the 787s will be used primarily for London, the 777-200ERs for a Houston service and the 777-200LRs for a possible Los Angeles service. All four 777s are now slated for delivery in 2011, with the 787s to follow in 2014. But Arik is interested in accelerating all the deliveries. “Seven years is a long time in the aviation industry. You never know who will get rid of their slots,” McTighe says.

Long-haul routes
Arik is not even waiting seven months to expand into long-haul routes. It aims to launch in August a daily service to London, its first-long-haul route, with a wet-leased Airbus A330-200. Arik won access to Heathrow in December as part of a new UK-Nigeria bilateral. McTighe says Arik also seeks to launch flights to Houston before the end of this year using a wet-leased A340-500 and flights to the Middle East and South Africa in 2008 with a second wet-leased A330-200.

The two 737-700s will be used in June to launch Arik’s first international services, to Accra, Dakar and Duala in western Africa. Over the next three years, Arik plans to add up to another seven regional international routes within Africa. Its business plan also envisions 737-800s operating thin long-haul routes to destinations in continental Europe such as Brussels, Madrid and Milan. Domestically, Arik’s network will expand from eight to 12 destinations in May, with the newly acquired CRJ200s opening up thin domestic routes.

McTighe initially joined Arik in March 2006 on a six-month chief operating officer contract. “My job was to build the airline, get an air operators certificate and launch the airline,” he says. After Arik successfully commenced services, McTighe decided to stay on and was promoted to managing director on 1 November 2006 after initial managing director Alex Van Elk left the company.

McTighe is no stranger to start-ups. The Scotsman was on the launch team at UK leisure carrier Britannia Airways, where he worked 18 years, as well as at Berlin-based Britannia Germany, where he served as managing director for two years. Britannia is now part of TUI.
After a consulting stint, McTighe launched Air Atlanta Icelandic UK subsidiary Air Atlanta Europe, where he worked for 18 months and served as managing director. After another consulting stint he went to Ryanair, where he served as the Stansted-based deputy flight operations director for one year before he was offered the job at Lagos-based Arik.

“I really enjoy living here,” he says. “Yes it is hard work – the weather is hot, there are sandstorms, there are birds around the airport and the pavement isn’t good. [But] it gets in your blood. It feels like home now.”

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