Captain Nogie Meggison
High insurance premium, rising cost of operation and unfavourable government policies have been identified by aviation experts as some of the factors hampering operations of Nigerian airlines.
Some stakeholders in the industry, who spoke to THISDAY on Wednesday, accused the government of introducing policies that are inimical to the growth of domestic carriers. One of such policies, according to them, is the Bilateral Air Service Agreement (BASA) policy, which allocates multiple entry points to foreign airlines that now undercut the market for domestic operators and discourages code-share with foreign carriers.
The Chief Executive Officer (CEO) of Aglow Limited, an aviation support services company, Tayo Ojuri told THISDAY that high insurance premium digs a big hole in the coffers of Nigerian airlines. He said comparatively, most countries in Africa pay lower insurance premium than Nigerian airlines.
The local operators recently called on the federal government to save them from the exploitative insurance premium, which according to them, is the highest in Africa at the moment.
The Executive Chairman of Airline Operators of Nigeria, Captain Nogie Meggison who also spoke on the issue, said the high insurance premium is not justifiable because it takes a huge chunk of the airlines’ revenues, as aviation fuel alone takes over 30 per cent of cost of operation.
He faulted the system whereby Nigeria Insurance Commission (NAICOM) insists that airlines must insure their aircraft through Nigerian insurance companies, which partner the international insurance companies to spread the risk, insisting that they (airlines) would prefer to insure directly with the international insurers.
The Managing Director of Arik Air, Chris Ndulue, who spoke in the same vein, observed that insurance companies’ assessment of Nigeria as high risk country might be responsible for the relatively high insurance premium Nigerian airlines pay for their aircraft.
He said that Nigeria is wrongly perceived as high risk country because of the activities of insurgents who operate at only one section of the country, adding that this might have influenced the high aircraft insurance cost in the country.
But NAICOM had argued that as a regulator, it has the duty to ensure that Nigerian insurance companies participate in insuring airlines in Nigeria as it is done in other countries.
Ojuri said Nigerian airlines expend huge resources on their operation because of poor, obsolete or lack of facilities at the airports. For example, lack of airfield lighting at some of the airport runways deny airlines the chances to fly to such airports, thereby hindering them from making additional revenue.
“The operating environment for Nigerian airlines is harsh because of obsolete airport facilities, inadequate supply of aviation fuel, lack of well trained personnel in the airlines and the fact that major aircraft maintenance is done outside the country. This means a huge cost in foreign exchange to these airlines. If these are addressed, domestic airlines will become stable,” Ojuri said.
He also noted that one of the things that has undermined domestic carriers was their inability to develop more domestic routes, noting that generally, route development is poor in Nigeria because all the airlines concentrate on four major airports in Lagos, Abuja, Kano and Port Harcourt, adding that there could be other viable routes if developed, which may include Port Harcourt-Warri route; Enugu-Kano route and others.