13 February 2017

Nigeria: Arik to Reduce Flight Operations Over Small Fleet Size

Photo: Premium Times
Arik Air.

The new management of Arik Airline will this week scale down flight operations to realign with the number of serviceable aircraft currently at its disposal.

The new schedule, The Guardian learnt, will mean smaller number of flights per day, compared to about 100 to 120 the airline ran some months ago.

With limited frequencies on some high-traffic domestic routes, and temporary suspension of others including the internationals, passengers may be faced with limited options. There may also be further reduction in the revenue accruing to the airline, regulators and government agencies.

The Assets Management Corporation of Nigeria (AMCON), owned by the Federal Government, last week took over the managerial control of Arik Air to save the carrier from collapse due to a heavy financial debt burden.

Arik, the largest carrier in West and Central Africa, was accused of bad corporate governance, erratic operational challenges, inability to pay staff salaries and a heavy debt burden, among others.

Upon AMCON's takeover, it was discovered that the airline's 28 aircraft fleet size is left with 10 functional planes, with 10 in overseas and eight grounded at the Lagos airport.

The Federal Government on Friday said plans were on to return the 10 aircraft stuck overseas over unpaid maintenance cost to boost the capacity of the airline.

Sources at AMCON confirmed that a temporary scale-down of operations had been agreed pending the arrival of more aircraft. The measure is to ensure efficient services and put an end to the era of flight cancellations.

A source, who would not want to be mentioned, said: "The management is planning to stabilise its operations by scaling down flight operations based on the number of serviceable aircraft at its disposal, until more aircraft return from C-check and maintenance yards abroad. Therefore, a new schedule will be announced in the next few days to accommodate its existing fleet of 10 aircraft."

While the airline's Lagos-New York services had been suspended, the Lagos-London and Lagos-Johannesburg flights ran at the weekend.

Head of the Corporate Communications Department of AMCON, Jude Nwauzor, stated that the "mess" met on ground was actually bigger than anticipated, and that it would require over N10 billion to fix the rot before the airline could resume full and uninterrupted operations to its regular routes across the country and beyond.

"It appears that unlike previously recorded, Arik has debts in excess of N300 billion, especially with some banks, excluding fuel suppliers, lessors and maintenance companies.

"Due to government's intervention, operations are continuing and the insurance cover for the aircraft which would have expired on Sunday, 12 February has now been sorted out. Trade creditors and fuel marketers have been assured that all indebtedness will be looked into; they have offered to support the new management to get operations run smoothly.

Meanwhile, airline operators have blamed the misery of Arik Air and Aero Contractors on the burden of multiple charges and taxation forced on the local airlines.

Chairman, Airline Operators of Nigeria (AON), Capt. Nogie Meggison, alleged that despite the challenges of economic recession and unfriendly business environment, the system continued to "manipulate, feasting on and pushing the financial envelope of airlines by inflicting multiple taxes, charges and levies to the extent that airlines are now groaning under the pressure and some are going bankrupt."

Meggison added that the airlines had been complaining about the same issue over the years that had culminated in sending of over 27 of them under in the past 25 years.

"A case in point is the recent takeover of Arik Air and Aero Contractors by AMCON in the face of huge financial burdens that have shown themselves as fallout of the multiple and sometimes unfair charges, levies and taxes that airlines are forced to grapple with on a daily basis.

"This is without recourse to the fact that aside from all the multiple charges, levies and fees, airlines still have to pay mandatory statutory corporate taxes to relevant agencies."

He said if the difficult environment continues, none of the airlines would survive for long.

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