Nigerian aviation in dire straits, experts warn of imminent collapse

 Aviation experts converged in Lagos to brainstorm on factors that have held the aviation industry down for many decades, warning that the aviation sector may collapse if the drift is not stemmed.

They cited lack of maintenance hangar for airline operators which has cost them over N500 billion in the past five years; scarcity of foreign exchange which has made airline operations cumbersome and face threat of extinction.

This is coming as the Federal Government said that it will not be involved in the establishment of Maintenance Repair Overhaul (MRO) planned by stakeholders in the industry.

The minister, who was represented by the Director of Operations, Nigeria Civil Aviation Authority (NCAA), Capt. Abubakar Sidi ,said that the government would only provide conducive environment for the project to thrive .

According to him, “Federal Government will not get involved in the setting up of MRO but will provide conducive environment for stakeholders to build MRO and thrive.”

The experts made the disclosure at their quarterly meeting under the platform of Aviation Round Table (ART), a think-tank group for the sector.

Country Commercial Manager for British Airways, Mr. Kola Olayinka said that the Central Bank of Nigeria (CNB) had made a committed to helping foreign airlines repatriate their over $800 million that had sat with the apex bank for the past one year.

Already the CBN have already started helping the carriers to repatriate their funds on a quarterly basis with plans to allow them take the tranche of the funds; a situation that has added to the pain of the airlines and threatened airline jobs.

Olayinka further disclosed that the flexible currency policy of the CBN led the airlines to a loss of N80 million for every $1 million because of depreciation. The implication is that foreign airlines lost about N4b on the value of their trapped funds which was with the CBN before the depreciation of Naira.

Just penultimate month, after a long wait, the Monetary Policy Committee of the Central Bank of Nigeria bowed to pressure, thus, directing its management to switch to a flexible exchange rate policy.

A flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by supply and demand. With the development, the Naira has experienced further decline against the dollar.

He noted that the economic situation which he said was a blessing in disguise because of Nigerians’ wasteful nature had taken a serious toll on international and domestic airlines, adding that Spanish carrier, Iberia could not survive as BA switched to an aircraft with smaller, 300 capacity B777 airplane, a departure from the super-jumbo B747 airplane on the London-London route.

Aside that, Virgin Atlantic Airways also changed from A340-600ER aircraft to a smaller one too. United Airlines equally left Nigeria because of the sharp drop] in oil and gas business that has done incalculable to its operations.

Ironically, while airlines are switching to smaller airplanes, Nigeria’s flag carrier airline, Medview, on Monday acquired super-jumbo B747-400 with almost full passengers to London Gatwick.

Olayinka further disclosed that government is heavily affected by the economic woes the country is currently faced with; stressing that revenue accruing to government has seriously plummeted

His words, “We should be thankful for this recession. Dollar scarcity is what I call economic re-adjustment. It helped us to cut off things we do not need as an airline, some expenses that do not make sense. Airlines made a loss of N80 million on $1million as a result of the devaluation of the Naira.”

“The recession has seriously affected government and depleted their revenue. There are so many charges that go into government coffers. The government collects $20 aviation security tax on each passenger, $50 passenger tax on each passengers and another five per cent tax paid from the total fares passenger pay.”

The reduction in passenger traffic would reduce revenue as there are indications that passenger air traffic for 2016 could be less than 16 million recorded last year due to economic issue and the raise in air fares which shot up fares by over 50 per cent.

National President of the National Association of Nigeria Travel Agencies (NANTA), Mr. Bankole Bernard said international airlines operating to Nigeria have reduced from 50 to 36, adding that the problem is temporary, exuding confidence that the economy would improve.

President, ART, Gbenga Olowo said that dollar scarcity, which is affecting airlines, 6,000 travel agencies in the country is a major issue that should be addressed by the Federal Government.

He accused aviation stakeholders of singing discordant tunes, stressing that these tunes often times does not bring about growth.

He lamented that these tunes are based on parochial and personal gains, adding that the aviation industry is sick and that it was going beyond remedy.

Olowo said that though MRO is good for the industry to stop capital flight but that the management, viability domestically, regionally and internationally must be discussed by the stakeholders.