Domestic Airlines’ Fresh Headache

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As the number of operational aircraft continue to diminish, while domestic carriers are finding it difficult to acquire more planes, industry experts fear that paucity of commercial aircraft may hamper air travel in Nigeria, writes Chinedu Eze

Nigerian airlines face two major challenges: delayed maintenance of their aircraft and the inability to acquire new fleet.
The impact of the first challenge mentioned above is that airlines have many unworthy aircraft that are on ground or in maintenance facility overseas. Some of the aircraft under maintenance are still on queue; while others are undergoing checks. The consequence is that existing aircraft on operation are grossly depleted, so airlines cannot meet growing traffic demand.

The second challenge is that it is becoming increasingly difficult for some airlines to acquire new aircraft because many leasing companies are not willing to lease due to their negative perception about Nigeria, which they said has high country risk.
Without the acquisition of new fleet, it is certain that domestic airlines’ fleet would continue to deplete. They may over time not be able to meet passenger traffic demand and the airfares would inevitably skyrocket.

Depleting Fleet
The Chief Executive Officer of Aero Contractors, Captain Ado Sanusi, confirmed to THISDAY that there has been continuous reduction of existing commercial aircraft in the domestic market.
“If you look at the number of operating aircraft in the entire system, including all the airlines in the past 12 months or starting from January 1, 2019, till date, you will see that there is remarkable decrease in the inflow of aircraft into the country, there is definitely a significant decrease. If you also look at the inflow of leased and acquired aircraft, you will also notice that there is a decrease.

“The only airline that is bringing aircraft to operate in the country is Air Peace. So the capacity of the airlines has not grown because Nigerian airlines are not able to lease aircraft that will operate in the country. Passenger demand has increased because after the election there was stability, which triggered the demand. More people travel since after the election and this is natural.
“But unfortunately we are not meeting the demand by making sure that we have a certain number of aircraft that are operating in the system to feed the market,” Sanusi said.
Sanusi regretted that despite Nigeria’s huge passenger traffic, high population and robust air travel market, it cannot grow strong carriers.

“It is quite unfortunate that Nigeria that is well blessed with a lot of natural resources and well respected in Africa, we still cannot boast of buying aircraft and bringing them into the country for operations.
“If you look at Rwand Air, the airline is buying new aircraft; even Uganda is buying new aircraft and they are operating. We have to look inwards to see what went wrong at the beginning and then correct it.
“We could establish a leasing company that can make aircraft available to us or we make the leasing companies in other parts of the world feel comfortable to lease aircraft to us,” he said.

Speaking in the same vein, the CEO of Aglow Limited, an aviation consulting firm, Tayo Ojuri, said the aviation industry in Nigeria was yet to grow to a level that it can compete with major countries of the world despite the fact that the country has huge population and records high number of local and international passenger traffic annually.

“The aviation industry in Nigeria is still in its infancy. There is lack of infrastructure, there is lack of enabling environment and the sector is wracked by policy summersault. The aviation industry is supposed to be catalyst to economic growth. We have the geographical location; we have the population so we need a quicker way of moving passenger and cargo to grow the economy.
“So infrastructural deficiency is making the industry not to function the way it should. That is why it is difficult to meet world standards in many areas of the sector,” he said.

Hitches in Aircraft Acquisition
Sanusi, who has invaluable airline experience, told THISDAY that Nigerian carriers are actually facing difficulty acquiring aircraft for their fleet because a lot of leasing companies are not inclined to leasing aircraft to Nigerian operators; rather, they request for outright sale, which requires huge capital outlay.
“There is a big hitch because a lot of leasing companies do not want to do business with Nigeria. So when Nigerian airlines make enquiries to lease aircraft the response they get from the leasing companies is that they are only willing to sell; that they are not in the position to lease. What is the reason to that? They said country risk. What is country risk? They don’t think that if there is default and they want to reposes their airplane they will have smooth repossession or at least, a hitch free repossession.

“They don’t also feel that at the time of returning the aircraft it would be returned based on the leasing conditions. They feel that the safety oversight is not strong enough to make sure that the aircraft are effectively maintained and when they are to be returned, they will be returned in good condition,” he said.
The Aero CEO said the leasing companies feel that Nigerian airlines are not good at record keeping and said the country should address these challenges.

“As an industry we need to go to government and urge them to make sure that the Cape Town Convention (which facilitates easy acquisition of aircraft and other mobile equipment) is fully implemented.
“Yes, we are signatory and it is fully domesticated but is it implemented to make sure that anybody that is bringing his aircraft will feel very safe, knowing that the government of the day is the government of rule of law and respects international treaties signed by the country; and whenever the leasing companies want to take their asset (aircraft), they would be freely allowed to take their asset.
“In fact, they will be assisted to take their assets. If we do this they will be willing to lease their aircraft to us,” Sanusi assured.

Nigeria’s goodwill was said to have been battered by some airline operators that leased aircraft in the past and when the terms of lease was not met, the lessors wanted to recover their aircraft but the operators stopped them with litigation.
A former Director of Medview Airline, Lukeman Animaseun, told THISDAY that Nigeria was not fully implementing the Cape Town Convention, which it is a signatory to.

“Before you lease any aeroplane, NCAA will sign Cape Town Convention form, known as Idera, which obligates NCAA to comply when the lessor if he wants the lessee to return aircraft leased in the event the airline refused to pay for the lease or any other issue, but NCAA has refused to assist lessors take back their aircraft.

“If you fully abide by Cape Town Convention, no court can stop a lessor from taking back his aircraft and most of the time it is the lessee that do not keep to the agreement 98 per cent of the time.

“Take the case of a Nigerian airline that leased three aircraft but did not pay the lessors but grounded one aircraft and used it to repair the other one and when the lessor, Air Cab came to take back their aircraft he went to court. NCAA should have insisted that Air Cab takes its aircraft,” he said.
However, THISDAY gathered from the NCAA that it has helped leasing companies recover some of these aircraft to the chagrin of the domestic operators involved.

Sanusi, further highlighted challenges Nigerian airlines were facing.
“What is currently going on is that if we want to lease airplanes or engines we have to go through a third party because they don’t want to deal with us directly.

“This means that they would lease the aircraft to a company in Dublin, Ireland, for example, and the company would now package it and lease it to us in Nigeria, because the company knows us and this comes at a higher cost. “Immediately they see Nigeria they will say oh, the country risk is high. I think the Nigeria government should address this problem of country risk,” he said.

THISDAY investigation revealed that some airlines are having difficulty maintaining their aircraft. For example, Arik Air few days ago issued a statement rescheduling its flights because it has to withdraw some aircraft and ferry them out for maintenance.
Informed source disclosed that like some other Nigerian airlines, Arik Air is also facing problem on acquiring spares because of poor goodwill and the image of Nigeria as a harsh environment for aircraft operation.

Effect on Airfares

Inadequate number of aircraft has led to increase in fares because the demand is high while the supply is limited.
In fact, Sanusi projected that if this situation continues to prevail, fares may rise to N70, 000 for economy class.
“When you look at the trajectory, you will notice it is shrinking. This may bring us to a time of 1992, 1993 and 1994 when Nigeria Airways was down to one or two aircraft and Kabo Air was coming in with aircraft and Okada Air was coming in with aircraft.
“Then people were struggling for aircraft seats, running on the tarmac to get on board the flight.

“But that is not exactly what will happen now. What will happen is that the highest bidder will be inside the airplane. If I know that I am the only airline that goes to Abuja from Lagos at 1 pm, what I will do is that I will put the price at N70, 000. That is how the demand will be if this trend is not checked in the next three to four years,” he said.
He also explained how paucity of operational aircraft could influence airfares.

“Let me give you an instance. If I have 10 aircraft, I can deploy two to Abuja alone and they will be shuttling between Lagos-Abuja. If other airlines have the same number of aircraft, it means that the market has been supplied to a saturation level. So what I will do is to lower the price so that I can attract more passengers. When you lower the price you can even attract travellers that go by road to now go by air. So definitely the availability of aircraft influences the airfare. So when there is enough supply of aircraft, the fares would be lowered,” he said.

Owing to this unfortunate development, industry experts have continued to warn about the depleting number of aircraft in the domestic market. However, what might have exacerbated the problem is that suppliers are no more willing to lease aircraft to Nigerian operators.
Therefore, the sector may need urgent government intervention.