Early collapse of indigenous airlines is the major reason why Nigerian banks refuse to give credit facility to investors in airline operations, Managing Director of Medview Airline, Alhaji Muneer Bankole has said.
Bankole, who acknowledged that airline business is precarious, said it has become a policy among Nigerian banks that they would never extend credit facilities to airline operators.
The airline operator noted that out of 18 airlines that operated about 10 years ago, only six are still operating today adding, out of that six, two are under threat to go under.
He pointed out that there is lack of sincerity among many operators who are not disciplined enough to differentiate between operating funds from personal monies and in the mix they encroach into their capital. This, he said, explains why many airlines find it difficult to offset their loans and when they exhaust their operational funds in frivolous expenses, there are no funds to continue to carry out the airline business.
Bankole also said that for an investor into airline business to succeed, he must have passion for the job and sincerity with everyone involved in the business.
â€œWhen I wanted to secure $10 million loan from a major bank in Nigeria, I was refused because they said that they had it as a policy not to give credit facility to airlines because of their precarious situation. They have very short life span. So they refused to give me the loan and I insisted. I had meetings with them and at a time they asked me why Nigerian airlines do not exist for a long time, as obtained in other parts of the world.
â€œI explained to them that it is partly due to lack of discipline, lack of determination and inexperience. Some of these operators just come to the industry and decide to establish an airline so they rely on expert and professional advice from pilots, airline managers and others and most of the time these people are not sincere to these operators. Of course, they will not be as dedicated as you who are committing your money in the business,â€ Bankole said.
He said that when these industry professionals are engaged, they most often go into spending spree with the funds made available by the investor and because the investor is inexperienced, he may not know how to adopt cost cutting measures.
â€œSo before you know it they will expend your money but if you are experienced you will know how you will spend your money, what you will spend your money on and you will have the discipline not to deep your hand into the revenues earned from ticket sales. I want to use myself as a test case. I was able to get that $10 million loan and we used it to acquire two aircraft and later paid the loan back. So we demystified the banks,â€ Bankole added.
The Medview Airline boss warned that operators to be careful in managing revenues from tickets because those monies are from passengers many of whom might have purchased their ticket in advance and such revenues are warehoused and should not be spent.
â€œAviation is safe, fast and secure. The beauty and the success of any airline is discipline. I donâ€™t see the airline money as my money; neither is the revenues generated because customers buy tickets in advance. So what we did was to open account with no cheque book and all revenues go to that account.
â€œMost of the success of the airline is based on discipline. We are succeeding because we went into diversification. We operate Hajj, Umrah and we also operate charter. We are also into other related businesses,â€ Bankole said.