Two years after, Cross River’s Cally Air’s planes grounded over concession moves

The Memorandum of Understanding (MoU) between Aero Contractors and the Cross River State owned Cally Air on the operation of the airline may have hit the rock over aircraft concession move.

The aircraft belonging to the state government, a Boeing 737-300 with the registration number: 5N-BYQ is in the centre of the crisis, which has stalled the operation of the aircraft and left it grounded.

The state government’s plan to concession the aircraft has been challenged by some indigenes with a senior lawyer, Mr. Mba Ukwenu (SAN) suing the government to stop it from going ahead with its plan.

It was learnt that the Cross River State government planned to “concession” the airline to its consultant and assets manager, IRS Airlines Limited.

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Also, Aero Contractors, which has been operating and managing the airline since it signed a MoU with the state government on April 30, 2021 for operations and maintenance of the airline until recently, is reluctant to release the aircraft to the state government over an alleged breach of agreement by the government.

Our correspondent gathered that the government owed Aero Contractors over N900 million for services rendered to it on the operations and maintenance of Cally Air for over 24 months.

The MoU was signed among Cross River State government, IRS Airlines Limited and Aero Contractors for the operation, commercial profit and maintenance of two Boeing 737 aircraft.

According to the MoU, the Cross River State government, acquired two airplanes; 5N-BYQ and 5N-GRS, and selected IRS Airlines Limited as its consultant and assets manager, while Aero Contractors was designated as the operator and expected to provide licenses, permits and certificates necessary for the airline to operate a passenger transport aircraft.

The B737-300 with the registration number: 5N-BYQ is still parked at the Aero Contractors hangar, while the other B737-300 with the registration number: 5N-GRS is grounded at the Murtala Muhammed Airport (MMA), Lagos due to its non-airworthiness.

It was learnt that about two weeks ago, representatives of Cross River State government, led by Jake Ottu Enyia and Mr. Udiba Effiong Udiba, Commissioners for Aviation and Assets Management and Recovery, respectively, held a meeting with the management of Aero Contractors management on the possibility of returning the aircraft for concessioning.

The Aero Contractors management agreed to the deal, but raised concerns over the N900 million debts owed by the government.

A source at Aero who spoke anonymously said, “There are so many agents. I was not there when it was concluded. If I were there, I would have asked for a full dry lease of the two aircraft, which would enable us manage them 100 per cent and pay to the state government but they extended the arrangement to a third party, which they dubbed coordinator. I didn’t understand that. The arrangement is not favourable to Aero.

“I learnt it is also not favourable to the Cross River State government. So, the arrangement is not transparent and sustainable and that’s why we may not operate the aircraft again; unless they are given to us on dry lease, which is an arrangement that is obtainable all over the world.”