What Hope for Domestic Airlines

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As the fastest means of moving from one place to another, air transport industry plays pivotal role in any country as a critical springboard to economic development.

But the confidence of the public and government officials has been eroded over the efficiency and reliability of Nigeria’s domestic airlines; not just because of safety fears, but because of their precarious existence.

Last week, when the House Committee on Aviation, in line with its oversight function toured the facilities at the Murtala Muhammed International Airport, Lagos, it was the same anxiety about the survival of the airlines that resonated.

The legislatures wanted to know what should be done to ensure that more Nigerian carriers did not go under. They also expressed worries that some foreign airlines had left the Nigerian routes as well as why airfares to international destination have been on the rise.

They literally closed in on the Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Murtar Usman and queried him about all these, ventilating their worries as they expected him to provide all the answers. They wanted to be assured that the worst in the aviation industry was over; that henceforth things would be better.

In a way, the Director-General of NCAA allayed their fears but at the same time put the realities on the table. For example, he told them that the fares to international destinations are high because international airline operators sell their tickets in dollars and as the value of the Naira is nosediving, it is expected that the local currency equivalent of the dollar fares would continue to rise.

Chairman of the House Committee on Aviation, Hon. Nkiruka Onyejeocha, who encapsulated the fears of the members seemed apprehensive about the future of air transport in Nigeria and even asked whether more Nigerian airlines would go under.

“We want to know the lasting solution to funding of domestic carriers. How can we fund the industry? We gathered that the government bailout given to the airlines in the past was mismanaged. How can the airlines get forex? How can the regulatory body, NCAA ensure that there is corporate governance in the industry? We know that certain issues that border on the ownership syndrome of the airlines play important role in the funding of the airlines but what actions can government take through NCAA to alleviate the problems of the airlines under the present economic recession. Are there measures being taken by NCAA to solve this problem. What of Aero Contractors; when is it coming back?” Onyejeocha asked Captain Usman.

The House members expressed the fears that many people (about 1, 3000) will be out of job if Aero fails to come back. They also got assurances from NCAA Director-General that Arik Air, which stopped operation for a day due to insurance issues and First Nation Airways, which could not continue to operate when its aircraft were due for maintenance and later resumed would not have any cause to stop operations again.

Industry observers said that the House Committee on Aviation was apprehensive because the members knew that there was nothing on ground to suggest that the airlines could not stop operation any time “and they also know that government is not doing anything particularly to assist the airlines, despite the challenges they face in operating under this adverse economic situation.”

But the argument is that if other sectors of the economy are struggling to remain in business, why not the airlines? But an airline operator noted that airlines record tiny margin of profit at the best of times and with the Nigerian harsh environment many of them operate at a loss.

“But aviation is not what you can ignore. If the airlines withdraw service now it will ground the whole economy, so you cannot treat it like any other business.

The Director-General of NCAA who responded to questions asked by the House Committee on Aviation allayed their fears and called on government to continue to give support to the airlines and the industry.

“One of the major challenges of both the local and foreign airlines is non-availability of foreign exchange. It was difficult for the foreign airlines to repatriate their money back to their countries. That was one of the reasons why some of them stopped operating to Nigeria. In the Bilateral Air Service Agreement (BASA) which Nigeria signed with the countries where the airlines come from, it was agreed they will repatriate the revenues from the sale of tickets. So government should allocate forex to the industry. Domestic airlines need foreign exchange for aircraft maintenance, for purchase of spares and training.

“What is happening is also affecting us because if the airlines do not operate and record revenues they may not be able to pay us our 5 per cent charge. That is the way NCAA is financed; we do not get money from government,” Captain Usman said.

He noted that airlines operations are also hampered by high cost of aviation fuel (Jet A1) which are not always readily available.

He also assured the House Committee on Aviation that airline operation in Nigeria has improved significantly in terms of safety and noted hopefully that none of the existing airlines would go under because “airlines are no more disappearing like before but there should be effective economic regulation and that is what we are doing to ensure that airlines have money to carry out their operation activities.”

The Director General informed that the Minister of State, Aviation, Senator Hadi Sirika has secured tariff waiver for aircraft importation, including spares and now facilitating the inclusion of airlines in special foreign exchange allocation.

The House Committee members’ apprehension could be understood. Industry observers still insist that government is not doing enough to assist the airlines.