26 February 2017

Nigeria: How Regulation Reduced Nigeria's Local Airlines From 150 to 9 in 17 Years - Official

Photo: Premium Times
Arik Air.

While Nigeria has about nine functional local airlines in 2017, it had 150 registered local airlines in the year 2000, an official has said.

A spokesperson for the Nigerian Civil Aviation Authority, NCAA, Sam Adurogboye, described the drastic reduction as one of the achievements of effective regulation by his agency.

Mr. Adurogboye on Sunday absolved the regulatory agency of any responsibility for the problems being encountered by some domestic airlines.

Two of Nigeria's major local airlines, Arik and Aero, have been taken over by the Assets Management Corporation of Nigeria, AMCON, over their huge debt profiles.

While AMCON has blamed mismanagement of the airlines as the main problem, airline operators have blamed multiple charges by agencies like NCAA for the problems confronting the airlines.

Mr. Adurogboye, at a press briefing, however, said it was an erroneous claim that the NCAA was pushing airlines out of business through multiple charges and levies.

"When the NCAA started on January 1, 2000, it had about 150 airlines on its register," the spokesperson said.

"By 2006, they had reduced to 28 from 150, so what happened to the rest?

"They all went under because the NCAA had started regulating their operations."

He added that "at the moment, we only have between eight airlines and nine airlines. If we didn't regulate those airlines that went under, they would have been dropping from the sky by now.

"In addition, it was because we did what we needed to do, those airlines that were to collapse had to, naturally, do so."

According to the spokesperson, there is no way the NCAA can prevent any airline from going under because it is not the regulatory body's statutory responsibilities to run the business for the owner.

"This is also against the rules and regulations of the International Civil Aviation Organisation (ICAO).

"We don't run airlines for the owners or write feasibility studies for them," he said.

Mr. Adurogboye explained the procedure for the registration of airline businesses.

"When an airline wants to start business, it expresses an interest by sending an application of expression of interest to the NCAA," he said.

"The airline will have to demonstrate the capability of running a smooth operation.

"This is done by acquiring the plane, paying the necessary fees, employing the staff and the liquidity to back it up.

"The necessary security checks are conducted here and abroad while the source of the airline fund will also be established.

"However, once an airline commences operation, the laws are so clear. If an airline is not able to fulfil safe operations as the operations continue, naturally, such an airline will find its way out of the business."

Mr. Adurogboye said that the lack of good corporate governance and use of right equipment were two critical factors that could affect the operations of any airline.

"When you run an airline, you must use the right equipment for the right operation. Your insurance and maintenance must be on schedule.

"Corporate governance is an issue in this country. It is not the number of aircraft you have.

"It doesn't matter if it is a brand new. It is not whether you have all the money in the bank; it is determined by the way you run your business.

"It is within the purview of investors to recruit the right personnel to do the job; and of course once it is done, you will definitely be prosperous in the airline business."

The spokesperson, however, said not all local airlines are badly run.

"As we speak now, there are airlines running domestic operations that the NCAA sends recommendation letters to for doing the right thing," he said.

"There are airlines that pick their bills with the agencies as and when due without default. We have about three or four of them but I don't want to mention names.

"I am saying this to let the public know that there are still few airlines that are doing the right thing by running the business in the way it supposed to be run and such airlines will make profit.

Domestic Terminal, Murtala Muhammed Airport, Lagos

"More importantly, an investor needs to know himself if it is what he has passion for. He needs to know the problems he wants to solve. So you don't just go into business because others are making money from it."

Mr. Adurogboye also criticised functional airlines for refusing to return charges collected on behalf of the federal .

He said the five per cent Ticket Sales Charge/Cargo Sales Charge (TSC/CSC) were monies collected by the airlines from passengers on behalf of the aviation agencies.

According to him, it is, therefore, unfortunate that after collecting the money, the airlines will be finding it difficult to remit same to the agencies.

He also disclosed that the Federal Government had extended the deadline given to airlines operating in the country to automate their remittance/payment systems to aviation agencies to March 31.

He explained that the automation system was being introduced to ensure transparency, accurate billing and prompt payments of charges due to the NCAA from airlines.

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