High Exchange Rate Threatens Future of Domestic Airlines

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Chinedu Eze

Nigerian airlines are now spending more money on aircraft maintenance and purchase of aircraft spare parts as checks by THISDAY revealed that the cost of maintenance has risen by over 35percent in recent times due to the high exchange rate.

It is feared that the situation might force airline operators to skip routine checks or cut corners, a development, which could hurt air safety.

Some airline operators told THISDAY on Wednesday that the high exchange rate is taking a toll on domestic airlines operation because major checks are carried out overseas and payments for such services made in foreign currency, whereas they earn their revenue in Naira.

The slide in the value of the naira since last year, prompted airlines to vote more funds from their meagre earnings on maintenance.

Also, in order not to jolt the domestic market, the operators were said to be reluctant to increase fares, fearing it could further shrink the number of air travellers as purchasing power has nose-dived due to prevailing economic crunch.

A recent report revealed that most Nigerians who hitherto travel by air now resort to other means of transportation to get to various destinations.

THISDAY learnt that the huge cost of carrying out mandatory C and D checks has become a very big burden for the airlines given that when an airline is able to carry out these checks and scales through, “it means it has come to stay.”

A and B checks, which are lighter checks are usually done in Nigeria and there are the daily line checks, which airlines do after daily service of the aircraft.

C-check maintenance of a Boeing 737, which cost between $500, 000 and $700,000 prior to the foreign exchange volatility has tripled because of the sliding Naira.
On the allegation that airlines may begin to cut corners owing to the high cost of aircraft maintenance, the Director of Airworthiness Standards of the Nigerian Civil Aviation Authority (NCAA), Benedict Adeyileka told THISDAY on Wednesday that there are structures put in place to monitor the airlines and the structures are foolproof and transparent that they cannot be compromised by the operators.

Adeyileka said NCAA officials carry out ramp inspection of aircraft operations; they check and review aircraft maintenance status, cockpit and cabin crew and overall airline service.

“We drive through the ramp to review the operations of airlines, so it is difficult to cut corners; in fact, this will be dangerous for them. When we carry out reviews at the end of the review if you are found to have compromised the given standard you are fined or your license can even be withdrawn depending on the gravity of what you have done.

“It is difficult to manipulate. For you to manipulate it means that you will have to collude with the engineers, the pilots and other technical personnel in your organisation. NCAA gives license to those people to work; they know that if they act against the rules their license will be withdrawn. we are very transparent and we keep our doors open to the airlines to resolve any issues that may be affecting them,” Adeyileka said.

Recently Nigerian airlines implored the Central Bank of Nigeria (CBN) to allow them direct access to forex market in order to meet the demands of their creditors and be able to renew their aircraft leases and carry out maintenance of their aircraft.The airlines said the limited access to foreign exchange, has made it difficult for them to pay for aircraft spares, carrying out the routine maintenance of their aircraft overseas and to also carry out simulator training for their pilots.

Former Director General of NCAA, Dr Harold Demuren said recently that Nigerian airlines are going through difficult times because they earn their revenues in Naira and carry out maintenance, buy spares and pay some technical personnel in foreign currency, suggesting that government should help them in order for the airlines to sustain their operation.

“Our Nigerian airlines are going through hell to survive. There is high fuel cost; all the business they do they have to pay in dollars; their sales are in Naira; they have to use the Naira to get dollar and that is at what rate? Our airlines are suffering. You generate the money in Naira but you have to pay in dollars,” Demuren said.

  • Victor Udoyoh

    Chinedu Eze, you are so pathetic in this report… ”It is feared that the situation might force airline operators to skip routine checks or cut corners, a development, which could hurt air safety.” this gross display of ignorance is contradicted by what the Director of Airworthiness Standards of the Nigerian Civil Aviation Authority (NCAA), Benedict Adeyileka told you, This means that misrepresentation of safety concern in your opener should not have been there in the first place. Yes the dollars exchange rate is affecting the airlines , but there is no airline without safety first.