Daily Champion (Lagos)

Nigeria: Domestic Airlines in Shambles-Stakeholders

Domestic airlines in Nigeria have expressed fear for their survival due to the numerous hardships they are facing including heavy debt, low passenger traffic, harsh economic environment among other factors and are looking for government or any other aid so that they in turn will not be put out of business.

Assistant Secretary General of the Airline Operators of Nigeria (AON), Muhammed Tukur, in a recent chat with a news magazine in Lagos had described the Nigerian airline industry as being in a thorough mess.

Also, just last week in an interview with the Executive Director of Chanchangi Airlines, Alhaji Rufai Chanchangi, he called on government's support for the local airlines stating categorically that all the airlines are having financial problems, even the then Virgin Nigeria had to stop its international routes.

He said," With the prevailing economic situation and the revenue that comes to us, we find it difficult to plan, with the revenue that comes in; it is difficult to plan our operations ahead. When there is a variation in running into difference of 20 to 30, 40 naira in the price of aviation fuel, how can an airline manager plan?"

Some airlines which had collected bank loans in the past no longer have access to these loans given the recent reforms and restructure of the banking industry by the Central Bank of Nigeria (CBN)

The problems of the various airlines have been compounded by the crisis in the banking sector which has made it difficult for banks to advance credit facilities to the airlines. Beyond that, the oil marketers have stopped giving out aviation fuel to the airlines on credit as was the practice before now.

The new position of the oil marketers was fuelled by the current bad bank loans saga. Most of the oil marketers are indebted to banks and the current debt recovery drive has put them in a difficult financial situation which makes it unhealthy to continue to give the airlines fuel on credit. African Petroleum, Conoil, OANDO and Texaco are the major suppliers of JET-1 to airlines in Nigeria.

Domestic operators have since been complaining about the environment they operate in and this has led some of them to take some drastic measures to survive.

However President of the Aviation Round Table (ART), Captain Dele Ore blamed most of the airline operators for the problems they are currently facing stating that most of the managers know little or nothing about managing airlines and that was the problem.

He said that most of them clamoured for the death of the national carrier, Nigeria Airways but can not live up to fill the boots it left behind. He said carrier was able to develop routes, something that these carriers cannot do.

"Most of them are complaining about hardships but they are not developing routes they are all over stretching the Lagos- Abuja route, this is not healthy as it won't help them. If you start with a route be consistent on it and in maybe five or six years you will begin making profit."

Airlines, in the past year have faced various problems, operational and environmental, that have crippled them, Nigerian Eagle, former Virgin Nigeria Airways, has initiated various moves to regain its wings after various problems that nearly left the airline marred.

To survive the airline has had to cut on staff, routes including its Lagos -London and Lagos-Johannesburg and various excesses including changing its brand name which was gulping an annual $250million.

The airline, now under a new management, is overhauling its structure as part of its survival strategy. Accordingly, it will be selling some Embraer jets it ordered from a Brazilian aircraft manufacturer in 2007. The aircraft cost Virgin Nigeria $811 million. Sources attributed the airline's decision to dispose of the aircraft to financial crunch and the need to cut down the huge liabilities of the airline put at $250 million.

A domestic airline, Afrijet Airlines had come to the Nigerian aviation sector as the toast of the town announcing reduced fares and breaking into new routes.

The airline which began scheduled domestic flight operations in October 2008 on an impressive note by offering passengers the lowest fare (N16, 000.00) as at then, for a one hour flight, had come in right on time during the era where air fares were very high.

The airline was instrumental to crashing the fares by providing competitive prices in the industry.

However, it seems to have hit troubled waters as some of the unions including Air Transport Services Senior Staff Association of Nigeria (ATSSSAN) have set their eyes on the airline over non-payment of backlogged salaries in months.

Worse still, the airline seems to have taken drastic steps as part of moves to stay in the air when it sacked over twenty staff from its payroll.

Despite the airline's plans to give passengers seamless air services and cut down on operational cost, by signing an $80 million agreement with a French based aircraft firm Avions de Transport Regional (ATR), for the purchase of four ATR 72-500 aircraft, the sack still went on.

Like many other domestic operators, the airline is heavily indebted to Federal Airport Authority of Nigeria, FAAN. The agency recently grounded the airline's aircraft during its debts recovery drive following management's inability to pay its 'debt.'

President, Air Transport Services Senior Staff Association of Nigeria, ATSSSAN, Benjamin Okewu, described as dangerous and mind-boggling considering the fact that the airline owes its staff a backlog of salaries. "The situation is dangerous; we don't see how it is possible for you not to pay salaries for months and you are reducing airfare," he said.

Associated Airlines, is another airline in a crisis emanating from the controversial sale of the airline to new investors in May 2008 at the cost of N2.3 billion. The new owners were required to make a down payment of N650 million with a promise to pay the balance at a later date.

This deal has however gone bad as Tunde Oremule, former owner of the airline, repossessed it last May, accusing the investors of reneging on the payment agreement.

Oremule also recently placed five of Associated Airline aircraft for to enable him raise enough funds to repay the debt owed Oceanic Bank. The airline has not only sacked many of its staff since the problem began but still owes those still in its employ.

Bellview Airlines is one airline still trying to understand the mess it is in with numerous flight cancellations and an attitude that has caused serious melee at the international airport in recent times.

Over 200 passengers of the airlines traveling to Heathrow Airport London got stranded.

According to some of the passengers most of whom were frustrated at MMIA departure hall said that they had already been checked in to board but to their surprise, they were later called back out of the tarmac on as they were about to enter the aircraft.

Things got worse when the airline was forced by the Nigerian Civil Aviation Authority (NCAA) to suspend her scheduled passenger service between Lagos - Johannesburg with effect from July 11, 2009 to March 31, 2010.

According to the airline management however, the move to suspend the service was informed by Over-capacity on the Lagos - Johannesburg route.

The management stated that "In the first quarter of 2009 alone, frequency between Lagos and Johannesburg has been increased indiscriminately from six to fifteen weekly flights. This indiscriminate increase is not supported by logical market demand, serving only to erode

The airline has followed suit on its Lagos-London route linking the problem to non-availability of an aircraft for the route and has led to its already booked passengers stranded for days in Lagos, as of now Bellview has grounded operations temporarily.

Even Aero Contractors, reputed to be one of the most successful domestic operators in the country, is also immersed with some problems. The airline was reported to have, last May, sacked over 42 pilots and engineers in its employ.

The federal government has compounded an already bad situation by recently ordering an audit of the domestic operators to ascertain their true state.

Accordingly, the NCAA listed fresh conditions which domestic airlines in Nigeria must scale through for them to continue flight operations in the country. Harold Demuren, director-general of the regulatory agency, said as part of the new conditions, all domestic operators must have adequate funds to finance their operations, provide evidence of non-indebtedness to aviation fuel marketers and must conduct periodic maintenance of their aircraft.

The aviation ministry in conjunction with NCAA, last August, began a monthly review of all the aircraft that operate in the country together with their technical crew. The screening would include appraisal of airworthiness, aircraft operations altitude and behaviours of pilots and engineers. The aviation minister said the measure "is imperative as a way to ensuring safety in the country's airspace."

Although most airline operators know it is a good move, they still feel that the federal government is not giving much opportunity for them to grow, most liken the situation of the current audit to killing an already dead man.

" Instead of looking at ways they can aid us and make this industry grow, they are trying to kill us, if the capital injected into the banking sector is injected into our airlines, I am telling you we would not be complaining', one of the airline's CEO's had said.


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