•Assures of govt support for local airlines to have long term aircraft lease agreements
Chinedu Eze
The Minister of Aviation and Aerospace Development, Festus Keyamo, has stressed that the federal government would do everything possible to help Nigerian carriers lease aircraft on long-term agreement at competitive rates like most other airlines in the world.
The Minister also said the government was committed to supporting domestic carriers succeed on international service and would retaliate any obstacles meant to frustrate them on any route they operate.
The Minister made this known in an interview he granted during the inaugural ceremony for Air Peace Lagos-London flight at the weekend.
He said providing Nigerian airlines easy access to long term leasing and bringing down the premium on aircraft insurance were some of the Key Performance Indicators (KPI) of his Ministry to support domestic airlines and curb the exploitation of Nigerian travellers by international carriers.
“This is very significant, because it is has been very difficult for our local operators to service international routes and to take advantage of our Bilateral Air Service Agreements (BASAs), which give reciprocal rights to our local airlines,” he said.
He explained that BASAs was established on the principles of reciprocity in which a country’s airlines would be allowed to fly to another country and airline of that country also allowed to fly to the other, noting that the details of the flights were agreed upon in the BASA.
Keyamo, regretted that over the years, Nigerian carriers have been denied opportunity to utilise the BASA agreement and reciprocate the flight operation of some airlines from different countries to Nigeria because of aeropolitics in which aviation authorities of these countries use to deny Nigerian carriers the opportunity to fly to some of those country whose airlines fly to Nigeria.
He also pointed out that Nigerian airlines largely lacked capacity because of the hindrances in acquiring aircraft, which was largely done in two ways: by outright buying of the equipment or by leasing.
Keyamo, noted that because of issues of the past, Nigerian airlines were not allowed to lease aircraft on the long term; rather, they are only conceded to lease aircraft on the short term at huge cost by lessors which cite country risk and alleged repudiation of past agreements by some Nigerian carriers in the past.
“What BASAs normally say is that when you have 14 slots into my country, they also give you 14 slots into their country. But there is politics of BASAs also because after giving you the 14 slots into their country, in most cases they play politics with it in such a way that they frustrate your own airlines from being able to take advantage of that.
“But beyond that too, our local operators are handicapped because they don’t have access to aircraft that international airlines have on the same terms. For example, the terms upon which they lease these aircraft. There is no airline in the world that buy their fleet 100 percent. It is not possible. “Statistics says that out of a 100 aircraft flying around the world, about 70 percent of those aircraft are on dry lease from leasing companies and from aircraft manufacturers. So, why can’t we take advantage of these lease arrangements to empower our local operators. And that is the key to also servicing these international routes because you cannot compete with someone who has access to aircraft on better terms than you,” the Minister explained.
Keyamo also explained that what his Ministry was trying to do was to ensure, “we support our local operators to have access to these lease arrangements like what Air Peace is doing today and that is what we can start to use to crash prices on international routes.”
Keyamo, further disclosed that Nigeria was on the blacklist against securing dry leases around the world, adding that he had undertaken diplomatic shuttles to remove Nigeria from the blacklist so that Nigerian carriers could lease aircraft at cheaper cost and affordable terms.
“This is the diplomatic visits I have undertaken since I came. I have been trying to assure aircraft manufacturers such as Airbus and aircraft leasing companies that we can protect their assets if they bring them into Nigeria because what they want is the commitment from government that when these assets are brought into Nigeria, we can allow them take the assets away if there are breeches to these agreements.
“The problem we always face is that when they bring in their assets into the country and there is a breech, sometimes because of court injunctions and politics, they are no longer able to take their aircraft out and that is a huge loss for them.
“So what they want is that if they bring their aircraft into the country on dry lease, they can take them out when there is a breach.
“It is government that will assure these leasing companies and creditors to bring in their aircraft,” he said.
The Minister said for him to achieve this, “I have been engaged with the diplomatic shuttle. Beyond that, there is a lot of things under the Cape Town Convention (which deals on movement of mobile equipment like aircraft and ship from one country to another) and the requirements. We also need to comply with the Cape Town Convention so that to have access to dry lease aircraft.”
On the Air Peace flight to London, the Minister said passenger comfort was already guaranteed but beyond passenger comfort, “we are going to have competitive prices on international route. We are seeing that already. Other airlines have opened up their lower fare tickets to Nigerians now because Air Peace has come in.”
He pointed out that the advantage of patronising indigenous carriers on international flights was that there would be no problem with foreign exchange because passengers pay in naira and not only that; dollars are not repatriated from Nigeria, adding that airlines repatriating their earnings in dollars mount pressure on the naira.
“This is a very bullish approach to breaking the monopoly on this route. UK has 21 slots into our country every week. BA alone has 14 weekly slots. “So, Air Peace will compete on this level. The most important one is that there would be no problem of trapped funds because it is a local company that will not have to repatriate money through the CBN. What we experience is massive repatriation of funds that puts pressure on the naira because they have to seek for dollars to repatriate revenues from the sale of tickets.
“So, it eases the pressure on the naira because this is a Nigerian company that deals in naira. The only problem is that they still have to go abroad to do their aircraft maintenance. One of our major focus is to bring in the MROs (Maintenance, Repair and Overhaul) into Nigeria.
“The key to unlocking this country is to ensure that the maintenance, repair and overhaul facilities come into the county as quickly as possible,” Keyamo emphasized.
On the establishment of MRO, the Minister said that that the Chinese, Arabs and Americans are talking to the Ministry and that they want to do this on a PPP (Public Private Partnership) basis.
“Everybody wants to invest in Nigeria because of the new approach of government to international investors,” he said.
Also, on the Air Peace inaugural flight, he added, “We are going to pray for Air Peace and pray for Allen (Onyema) so that he can sustain this because he is doing this at great expense; even at marginal profit and loss; it is going to get better as quickly as possible. But the point is that we as government must ensure that local carriers that want to embark on international routes have access to aircraft on dry leases. If they don’t have it, it will be difficult to sustain international routes. If they (foreign airlines and their countries) introduce subtle obstacles to frustrate Air Peace, then we will introduce ours too. We will reciprocate,” he said.
