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Eichelgruen: Nigerian Market Is Very Important To Delta Airlines

Jimmy Eichelgruen, the Sales Director for Africa, Middle East, and India for Delta Airlines, in this interview with WOLE SHADARE, speaks on the 15 years of operation of the airline into Nigeria, the importance of the market to the carrier, among other issues

Today marks 15 years of incredible service of Delta Airlines to Nigeria. Could you let us into the journey so far?

I remember 15 years ago when we started our service and we have served Nigeria for 15 years and it has been wonderful; you see results and that is the important thing. The US is the biggest trading partner with Nigeria. Things are happening. Over the years, we have done really a good job; with our operations here, the in-flight service, and meals that cater to the passenger in Nigeria and West Africa. Our operation in Nigeria is run by Nigerians, for Nigerians as headed by a Nigerian. We know the market.

That has been the journey that we have been on. It has been exciting. Fifteen years ago, not many gave Delta Airlines a chance, with people wondering whether they can be really strong in this market It has been 15 years of non-stop service. It speaks for itself. We are in this market because we are committed to the market. When we started out 15 years ago, we had identified even 15 years ago that Nigeria was a market we wanted to serve properly.

We have been here for 15 years without a break. If you take the Nigerian market or the West African market in general, we restarted, opening back services in Nigeria before we did Europe. That is a fact. That just shows that we identified the market, the Nigerian market has been important. We have been successful in the market. We have done well. We have kept our promises for 15 years.

What has been the response in terms of traffic in the past 15 years?

We have done very with high load factors, filling up our aircraft, particularly with flights from Lagos to Atlanta and the reason for that is that first of all, Atlanta is a strong point for Nigerians.

There is a huge Nigerian community in Atlanta that everybody recognises that there is a huge strong point that Atlanta is to the rest of the USA. We serve 200 cities from Lagos. That is a really strong year-round success of the service. The flight to JFK is more of a seasonal type of service and you know that you have got your peak season. It has been extremely good.

Eichelgruen

Delta is into codeshare with some African airlines but we have not seen that with Nigerian airlines. Why is that so?

Delta uses codeshare and joint venture partners to expand our footprints in Africa. We g o t joint ventures with Air France, KLM, and Virgin Atlantic. In addition to that, got a codeshare agreement with Kenya Airways which is an African airline and that has proven to be successful for us and also success for Kenya Airways because we got quite a lot of codeshares within Africa and that works for us. Delta is always looking for codeshare opportunities for an additional footprint in Africa.

Could you make a comparison with the market in Ghana and Nigeria in terms of fares?

I have to give you a comparison of the two markets. I don’t know what the fares are up in Nigeria. The only thing that I could say is that Delta fares are competitive in the market that we serve.

We have to look at what the fare is on the offer of which we are competitive in the same way for Ghana or South Africa, Cairo or Senegal which we also serve, we need to be competitive with what is the offer in those particular markets.

I can’t give a comparison because I don’t know the fares from Nigeria. We want to be competitive like other quality airlines in a particular market.

We are looking at your investments in this region. A few years ago you announced plans to invest massively. How does that translate into getting a huge market share and what are those areas you are investing in?

There are so many things that we are investing in. We are investing very heavily in in-flight products in general. We got a new class called Delta premium select which has got expanded section which has got wider seats, much more space, in-flight entertainment, wifi, and more.

Technology is another big issue which we are investing in the product if you take Nigeria where we are operating A330 which is one of the state-of-the-art aircraft.

It has got 223 seats which have got four classes of service with Delta One, Delta Premium, bumper plus, and the main cabin. We are addressing all sectors of the market. We are operating good aircraft for Nigeria.

The infrastructure here in Lagos airport; we really got a fine team on the ground here both at the airport and have Nigerian-led operation here in Nigeria which we are very proud of. The various things we are doing to improve the product that is what we did. Sustainability is a big issue not only in Nigeria for Delta Airlines.

We have invested a huge amount of money to make the customer experience better. Delta operates 4000 flights a day. It is a huge operation. We always want to be at the forefront of offering the best and it costs money.

What other investments are you planning for this route because it is very lucrative not only for Delta but other international airlines?

The investment is in the aircraft and the product. That is the core value of what the passengers want, a pleasurable experience and so many things going on behind the scene; the technology that we use; how we track baggage.

Basically, it is what we are doing for this market that will ensure that our customers have got a first-class product, and nice aircraft and address the market needs.

You operate to Lagos and Abuja. Any expansion plans in Nigeria?

Abuja is operated in conjunction with our joint venture partners like Air France-KLM via Europe. The reason of course is that transfer in Lagos is difficult, so passengers like to fly by Europe. We work in conjunction with our joint venture partners which helps to increase our footprints in Africa in general. That is what we are looking at. As far as expansion in Africa is concerned in general; just last week Thursday, we introduced a non-stop service between Cape Town and Atlanta. We are constantly reviewing opportunities and we do think also in conjunction with Air France-KLM and Virgin Atlantic Airways operate to 40 cities in Africa. We got together a very strong footprint with codeshare as well as our own operated flights as well as Kenya Airways which is a purely African airline as well. Infrastructure is one of the challenges airlines have been having, particularly at the airports in Africa and not only in Nigeria, how has that affected your operation? Of course, there are challenges but we work together with the airport authorities to see what can be done to increase operations, and efficiency; that is what we have to do. If you can take for example in Ghana, they have developed a nice airport, nice facilities and you got a new terminal here in Lagos but we will check what is going to happen there, we will work together with the authorities to try and improve the situation. It is something that is going to be worked on in various countries that we serve.

How about the high taxes and charges? Even IATA expressed disappointment with the high charges in aviation in Africa

Delta Air’s aircraft

I have mentioned to you that our fares are very competitive but we have got to recognize that the operation costs for airlines are high in Africa but you have got to balance that. We offer competitive airfares.

 How much of your fund is trapped in Nigeria?

I can’t give you the exact amount but what I can say is we do have like all airlines we do have some blocked funds in Nigeria. Some have got more, some have got less but we all have blocked funds. What we are doing until we can get things sorted, is the government in conjunction with the airlines is that we only collect in US dollars airfares out of Nigeria. That allows us to still operate as we have done for 15 years. So, we collect in dollars. If we issue a ticket in Nigeria, it is going to be paid for in US dollars.

Do you mean if you issue the tickets in Nigeria, is it going to be paid for in dollars?

That is correct.

 If you issue the ticket outside Nigeria, is it going to be paid for in dollars? Is it safe to say you collect in dollars now?

Yes, we are collecting in dollars at the present time. That allows us to operate a normal frequency. The interesting thing is, of course, we are still going with an extremely high load factor. We may review the situation as we go along.

When the issue was tough and airlines were trying to pull out of Nigeria telling everybody that they ran out of operating cash, not for one day did Delta complain

You are correct. We are committed to serving Nigeria and Nigerian passengers. We never said anything. We operated the full schedule on the basis that we are collecting in US dollars which I think is under the circumstances. You started collecting in dollars recently.

During that difficult period, how were you able to sustain your operations to Nigeria?

It was through a commitment to the Nigerian market. We just said that we will continue to operate. We got to a point where we said we could not continue until we collect in US dollars which is what we have done.

Where do you see Delta Airlines in the next five to 10 years?

We are still operating successfully in Nigeria. We have a successful formula for the 15 years that we have been serving in Nigeria. We provide the services that Nigerians like; we provide consistent service and we have been successful. The third quarter marked a milestone – the highest revenue and unit revenue quarter in Delta’s history. Operating revenue of $12.8 billion, was three percent higher than the September quarter of 2019, which includes a $35 million impact from Hurricane Ian. Delta also provided its outlook for the December quarter of 2022 and we expect fourth-quarter revenue recovery to accelerate relative to 2019.

There is an allegation that foreign airlines operate ‘old’ aircraft to Nigeria

How possible is it that? I know that no one aircraft is dedicated to one route. We do not have aircraft allocated specifically to Nigeria or any other parts of the world. As I mentioned to you, we operate the Airbus 330. It could be operated from Frankfurt to Atlanta. It may fly from Atlanta to Lagos. We are flying the same aircraft from Germany to the USA, or from Los Angeles to Tokyo or Atlanta to Lagos. Our aircraft are not used for specific routes. This aircraft that serves Lagos also serves London, Paris, Amsterdam, Tokyo, and other destinations. We use our aircraft worldwide. That allegation is not correct. We are very proud of the aircraft we operate to Lagos. It is one of the state of the art aircraft in our fleet.

 In Africa, we are beginning to see the emergence of national airlines or flag carrier airlines like Nigeria and Ghana are planning to do, what do you say to this? Will Delta want to partner with any of these national carriers?

As I said, we are working with a codeshare with Kenya Airways. We will work with airlines as opportunities present themselves. We are proud to be serving Nigeria and we will continue to provide great service to Nigerian passengers.

How lucrative is the Lagos route for Delta Airlines?

We are getting good reactions from Nigerians from both the business and the leisure passengers, we are doing pretty well here. It is a good route for us. We are operating with a good load factor. We have seen pent-up demand for traffic post-COVID-19. It is really a good story to tell.

You have another US carrier on this route under the Nigeria-US Open Skies pact, one would think that the airline would eat deep into your market share. How big is this market?

Delta is not afraid of competition. We have got a good product. The more competition on the route, our load factor has not diminished. That shows that there is more than enough. We haven’t seen a dip with COVID. We are very pleased with those results on the flights from Lagos to Atlanta. We are happy. We welcome competition. It helps the market, it helps the passengers. We are not afraid of competition.

 Is it true most of the big airlines do not want competition from Nigerian airlines?

We welcome competition. As a commercial airline, we look at our operating costs. That is what airlines will probably look at. You have got to have a sustainable business model and a huge potential market that can be tapped. We welcome competition.

How many aircraft do you have and do have any plans to acquire more?

We have a thousand aircraft. What we are doing is that we are changing our fleet as we go back to the sustainability issue. Aircraft today are more fuel efficient.

We are getting more aircraft, especially the A350s which is a long-range aircraft that is more environmentally friendly aircraft. We got rid of our B777. We are replacing them with the A350. Our hubs are very positioned. Our hubs are in Atlanta, Los Angeles, Salk Lake City, New York, Orlando, Detroit, and Seattle. We have 879 total wide-body and narrow-body aircraft in Delta’s fleet, which does not include the 383 in the fleet of our three regional connection partners.

How many passengers have Delta flown in the last 15 years of operations to Nigeria?

We have flown 1.65 million passengers in 15 on this route and that is an incredible number. We talked about trade. Cargo is part of this trade. 20, 000 tonnes of cargo we have shipped on this route. That tells you valuable airline Delta is flying between Lagos and the USA. What is the trade volume between Nigeria and the US? The US is the largest foreign investor in Nigeria. The trade, in 2019 stood at $3.2 billion. Nigeria is the second largest US export destination, in sub-Saharan Africa. It is the second-largest US export destination. In 2019, trade between the two countries totaled more than $10 billion.

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