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Now that debt yoke is clipping local airliners’ wings…

The difficulty domestic airlines in Nigeria are now getting through is no longer news to stakeholders in the industry as well as the general public.…

The difficulty domestic airlines in Nigeria are now getting through is no longer news to stakeholders in the industry as well as the general public. Airline operators are not finding it easy considering the harsh economic environment. Observers are of the opinion that beyond giving financial bailout to them, certain factors which constitute operational challenges to these airlines have to be tackled.

Most of the airlines are heavily indebted to their bankers, aviation parastatals as well as the fuel marketers, a situation that has seen some of these airlines voluntarily halting their operations before safety is jeopardized.

Apart from the airlines’ problems, the overall aviation industry itself is burdened by crises ranging from decay infrastructure, mismanagement of government agencies, inadequate and aged personnel.

The Deputy National President of the National Union of Air Transport Employees (NUATE), Comrade Aturu Samuelson, recently put an estimate of N300 billion as capital requirement to urgently fix various challenges setting the aviation industry backwards particularly in the area of infrastructure.

He noted that the federal government must quickly make this fund available so as to rescue the collapsing industry, adding that there must be a national policy on aviation that will serve as a white paper and guideline for the industry.

Currently, some domestic airlines owe over N5 billion in debts accrued from unmerited five percent ticket and cargo charge over the years apart from the debts on terminal navigational charges which some of them are owing the Nigerian Airspace Management Authority (NAMA) and the Federal Airports Authority of Nigeria (FAAN) on landing and parking.

Several avenues have been employed by the agencies to recoup these debts. For instance, last month, the revenue Task Force Committee (TSC) jointly set up by the Nigerian Civil Aviation Authority (NCAA) and NAMA, clamped down on Arik and IRS airlines when it temporarily grounded their operations for many hours before the intervention of the minister of aviation, Mrs Fidelia Njeze, with a written commitment on how to off set the debts.

The issue took another dimension recently when the Economic and Financial Crimes Commission (EFCC) summoned the Managing Directors of some airlines, the Director General of NCAA, Dr Harold Demuren and top officials of the regulatory body responsible for the collection of revenue for questioning on the development.

The affected airlines were: Arik, Allied Air (a cargo operator), Associated Airlines and Top Brass airlines (charter operators).  

EFCC had to step in because of the affected airlines’ seeming unwillingness to remit the five percent tax collected on behalf of the agencies at the point of purchase of tickets and payment of airway bills by passengers and shippers of air cargo.

The decision to clamp down on the airlines has been attributed to the agencies’ tight financial situation as they are seriously affected by low cash flow.

The five percent ticket sales charge built into passengers’ fares which the airlines should have remitted to the agencies have been allegedly diverted by them which is against the Civil aviation Act.

Investigations by Sunday Trust revealed that out of the amount, Arik was said to have owed N1.8 billion on the domestic routes while the airline owes $126,000 on the international operations.

It is said that about 17 airlines are indebted to the aviation agencies. Aero was said to be indebted to the agencies to the tune of N942 million and $477,000 as at April ending.

The self-grounded Bellview is said to owe the agencies N121 million on its international operations, N87 million on the local scene and $66.7 million on the hajj operations. Ethiopian airlines allegedly owes $181,000 while Medview’s own is put at $1.3 million on its hajj operations.

Virgin Nigeria now Air Nigeria is said to be indebted to the tune of $67.9 million, Air Meridian owes $697,000, TAP Airline (Portuguese) $3 million and N5.8 million through the airlift of Christian pilgrims. Chanchangi owes N325 million and $10,621 on the domestic and regional operations respectively while Overland Airways also owes $12 million.

Nigerian aviation industry is currently having 19 registered domestic airline operators with Air Operation Certificate (AOC) out of which 10 are into commercial scheduled flights while 11 operate chartered and cargo services.

Out of the 11 commercial operators, three of the airlines are grounded due to their inability to meet the challenges while seven others are not even sure of continuing their operations as they keep stumbling.

The most distressed airlines are Bellview, Afrijet, Capital and Chanchangi which was currently grounded for operating with only one aircraft against the law. According to the country’ civil regulation, an airline must have a minimum of two aircrafts to carryout a safe operation.

Chanchangi was operating with only one Boeing 737 while it is battling with the renewal process for its Air Operation Certificate (AOC) which expired on Tuesday July 6, 2010.

There is clear evidence that the state of airlines in the country is fast deteriorating. Presently, the airlines that are operational are: Arik Air, AeroContrator, Associated, Air Nigeria (Virgin Nigeria), IRS, Dana Air and Overland Airways. They are heavily indebted to aviation agencies, ground handlers and fuel marketers.

The poor financial standing of domestic airlines goes to further buttress the deepening financial crisis that is threatening to cripple such businesses out of the economy.

Afrijet Airline’s problem began in 2008 when it extended services beyond cargo services to passenger commercial flights. When it could no longer cope with operational costs having owed staff salaries for months, it sacked many workers and finally went off the sky in 2009.

The same thing was applicable to Bellview. Even though the airline had struggled to resume operations, it has still not come to pass indicating that no operator is finding it easy. Capital Airline also suspended services based on its inability to meet operation obligations.

The remaining operators in business are neck deep in financial trouble. As it is now, the airlines are apparently in dire straits. It is not clear whether those that have gone down will rise as those afloat still stagger badly. Over 10 airlines have gone under in the last one decade and have not seen the light of day.

Airlines such as Al-Barka Air Services, EAS (NICON Airways), Sosoliso, Aviation Development Company (ADC), Amako Airlines, Dasab Airways, Okada Air, Concord Airways, Nigerian Airways, Space World International Airline that once attempted to re-open operations have all closed.

The Central Bank of Nigeria (CBN) recently announced N5 billion economic bailout for the airlines. This received acclamation but analysts have observed that the facility may not really tackle the problems of these operators. They say rather, those factors considered as catalysts to it should be first attended to.

For instance, Nigeria currently lacks aircraft maintenance hanger, a standard training centre for major airlines’ personnel training requirement. This means that these operational aspects of airline business is carried out overseas.

Pilots and cabin crew go for six months periodic training to update their knowledge while aircraft is sent abroad to undergo either C or D checks. These are done in America, United Kingdom and other places.

The closest aircraft maintenance base to Nigeria is Ethiopia where it is always not easy to secure slot due to high demand, being the only one in Africa. Cost of carrying out all this is quoted in dollars and looking at the depreciating value of the naira to foreign currencies, the airlines are in a mess.

Analysts have suggested a merger option for Nigerian airlines and a review on the kind of airplanes they use for various operations as all this have been identified as part of their operational burden.

The airlines are advised to use small aircraft with less fuel consumption and efficiency. That may reduce the number of cabin attendants. And to cap it all, good administrative management is key to the success of airline business just like any other business because mismanagement has been noted as a major problem of some of these airlines.

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