Clipping the Wings of Private Jet Owners

15 May 2013

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Private Jets

Adeola Akinremi writes that the new aviation policy may be a checkmate on the well-heeled Nigerians, though the authorities claim it’s an attempt to sanitise the industry to bring it to form with international standards

These days a private hangar located within the precinct of Nigeria's Murtala Muhammed International Airport in Lagos has become a hub of aviation activities. At the hangar, private jets land and take off at such frequency that is typical of commercial flights. Yes, corporate jets are still reserved for the well-heeled, even chartering a jet for one flight costs thousands of dollars an hour.  But now, there is a twist in the tale. Officials say the number of private jets in the country has steadily increased and seem to be overshadowing commercial flights in numbers.

Perhaps a direct response from business travellers to the increased hassle of flying commercially, the General Manager, Corporate Communications, Federal Airports of Nigeria (FAAN), Yakubu Dati thinks otherwise.

He says there is illegal operation going on among the private jet owners.  According to Dati, the need to stop the illegality informed the new Nigerian Civil Aviation Policy (NCAP) unveiled in Abuja last week by the Minister of Aviation, Stella Oduah.

Dati says, about 80 per cent of the 150 private jets operating in the country are registered overseas, “which means that they are exempted from paying taxes and five per cent charges to the Nigeria Civil Aviation Authority (NCAA) and although they are owned by Nigerians they are still designated as leased so they are brought into the country without paying Customs duty.

“So when you collate what government agencies lose by the illegal operations of these aircraft it amounts to over N25 billion in a year. And I can authoritatively tell you that it is now a lucrative business that businessmen bring in aircraft to operate as private jets while they are actually used for commercial purposes, so it makes nonsense of those charter operators who followed the laid down process, whose business has now been taken away by the illegal private operators.”

He adds:  “These illegal charter operators have taken away substantial business from scheduled airlines because those that would have filled the business class cabin are now airlifted by illegal private charter services.

“This explains why our airlines are not growing. Instead of marked growth of our airlines it is the number of private jets that are growing. This is an aberration, so government cannot fold its hands and watch this unfavourable situation which has already started affecting the nation’s economy, knowing the crucial role scheduled airline operation play in any country.”

Dati is also concerned that most of the money used to buy these aircraft were made locally but taken away from the country to maintain foreign licence, foreign pilots and engineers and foreign maintenance services.

So a part of the new aviation policy reads: “For private aircraft owned or leased by individuals, only the family members of the owner/lessee of the aircraft will be permitted on board as passengers.

“For private aircraft owned or leased by companies or corporate entities, only the employees and members of the board of directors of the company will be permitted on board as passengers.

“For aircraft belonging to non-scheduled or scheduled operators, only the employees and members of the board of directors of the company or the corporation may be permitted on board as passengers; all operators will declare the identities of all passengers on non-revenue charter flights in the appropriate general declaration forms prior to obtaining Air Traffic Control (ATC) clearance.”

This section of the law is however generating reactions, especially among the private jet owners who feel the policy is injurious to them.

For instance, Chairman, Private Flyers Nigeria, Bala Na’allah says the policy would undermine the existing Civil Aviation Act, adding that “Section 33 of the Act does not require an owner of private jet to look for a permit from anywhere as stated in the policy.”

Na’allah says: “Since we are having some sections of the policy that are not in agreement with certain parts of the regulation in terms of putting up a defence, which one supersedes the other? I suggest that the ministry allows us to study the policy, and where necessary, have it reviewed if we must grow this industry.”

Also, a private jet owner who would not want his name mentioned says: “Demand for passengers’ manifest will bring bottleneck and it is just like asking the police to mount roadblock where it is not necessary.”

He argues that requesting that private jet owners should not carry friends or relations might impinge on freedom of association and in particular frustrate harmonious relationship.

“We are studying the policy, but clearly from what we have seen so far there would be infringement of rights to associate and freedom to relate with friends. We are also concerned that there may be need to go around with certificates to proof relationship and whatever since there must be clear identification and I hope someone is not just doing this to satisfy ego,” he says.

But the Minister of Aviation, Princess Stella Oduah insists that the new policy is in the best interest of the private jet owners and the country as a whole because the aviation policy in the country was last reviewed in 2001.

According to Oduah, many provisions in the last policy review had become obsolete and out of tune with modern realities in the global aviation sector. The new policy, she argues will introduce new and sustainable regulatory regimes into the country’s aviation sector.

"The sections of the policy which people are mixing up are related to insurance for passengers on private jets. There is nowhere in the new policy where friends are barred from being on board their friend's private jet,” she explains

She further maintains that there is need for sufficient focus on air safety and passenger insurance as well as a coordination of both.
She says: "Any insurance policy that indemnifies private jet owners in the event of an accident or mishap will be adequate."

During the presentation of the policy to the public in Abuja, Oduah notes that “this revised policy captures the new vision and mission, the Aviation Master Plan of the Ministry and more importantly major programme areas like state safety programme; accident investigation and prevention, including the establishment of family assistance programme in the case of aviation accident; monitoring and control of General Aviation; introduction of an effective search and rescue mechanism, and the development of an effective and sustainable Economic Regulatory Framework, among others.”

She says the new policy places considerable focus on the efficient airspace management, human capital development, infrastructural development, and the introduction of dedicated policy and regulatory framework in controlling and monitoring of General Aviation operations, especially foreign registered aircraft. The essence of this, according to her is to streamline the operations of non-scheduled flights to conform with International Standards and Recommended Practices (ICAO SARPs) and the Nigerian Civil Aviation Regulations.

The minister claims that the adoption of the policy would ensure that the General Aviation would now have a dedicated policy, regulatory framework, infrastructure and services to support its operations, unlike in the past when it operated largely in the shadow of commercial airlines.

“The policy also captures the validation of foreign crew licence required to certify foreign pilots who will be employed solely to train our qualified local flight crew towards the acquisition of mandatory flying experience.”

She believes that the revised National Civil Aviation Policy would, among others, “be responsive and adaptable to the new safety, security and technological dynamics of the global aviation industry; strengthen the existing regulatory framework; facilitate the growth of domestic airlines, the setting up of the National Carrier, the development of Aerotropolis (Airport Cities), and support the introduction and sustainability of affordable flights to remote and underserved cities as a Public Service Obligation.”

Perhaps the policy will impact negatively on the outlook of the sector and in particular the wealthy Nigerians’ insatiable demand for private jets which currently put the total private jets in the country at 150 with a value worth  $3.75 billion, analyst say there is no reversal of the trend, especially with prevalent global security issue.

On the average, each jet costs $25 million, which carries both local and international registrations.

The total number of private jets in the country has made Nigeria the continent’s largest market of private jets.

Across the nation’s airports and private hangars are state-of-the-art Gulfstream (300. 450, 550, 650); Bombardier Challenger (604, 605) Global Express; Embraer Legacy; Dassault Falcon; and Hawker Siddeley (125 - 800, 900XP), with supply countries such as the United States, Canada, Brazil and South Africa.

Acquisition cost goes from $10 million to $65 million; excluding other associated costs like registration and legal; remuneration of pilot and crew; fueling and maintenance; insurance, landing, parking and overflying.

Depending on the jet usage and size, the associated costs can be $250,000 to $1,000,000 per year, according to experts, just as 70 per cent of jet purchases are made with cash according to industry sources.

For the policy, Dati who is also the Coordinating Manager of information and communications for aviation parastatals, says: “Nigeria is a signatory to the Chicago convention where some of the statutes were agreed upon and cannot act otherwise.”

There are strong indications that most private jets in Nigeria carry foreign registration because their owners do not want the ownership traced to them. An industry expert says the Nigerian Civil Aviation Authority, the regulatory agency, which registers all aircraft operating in the country, keeps records and with those records it would be hard to keep any secret by the private jet owners.

“The politicians for instance prefer not to register in Nigeria, because in the process of trying to do so, they will need to reveal who really owns the aircraft and you know, security and other agencies can take advantage of such information to go after them. Many of the aircraft are parked in Accra with foreign registration and they belong to Nigerians.

“Let me also add that some of them are registered as private jests but in the face of economic situation they are now being used as commercial jets without obtaining necessary documents to fly commercial including the pilots flying them and that is truly not good for security which may have informed why the aviation authorities respond with the new policy,” he reveals.

And as the battle rages it may not be too long before the die is cast over the new policy.

Tags: Life and Style, Life, Featured, Private Jets

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