Capital flight: Nigeria spent $2.5b on overseas aircraft repairs in 2021

 

The lack of functional aircraft maintenance facilities otherwise known as Maintenance Repair Overhaul (MRO) cost Nigeria $2.5 bil­lion (about N1.25 trillion) in 2021 in MRO investments in neighboring countries like Ethiopia,  Morocco, Egypt, United Arab Emirates, South Africa, and other nations with advanced maintenance facilities.

This revelation was made on Tuesday by the Managing Director of the Federal Airports Authority of Nigeria (FAAN), Capt. Rabiu Yadudu at the first-ever National Aviation Conference holding in Abuja with the theme, “Advancing the frontiers of possibilities for safe, secured profitable air transport” in Abuja,

 

Aircraft undergoing maintenance repairs

Having such investments here in Nigeria according to the FAAN boss would have created more employment opportu­nities for Nigerians, revenue generation, and training of technical personnel for main­tenance of aircraft.

About five years ago it was projected that Nigerian airlines spend about $2 billion overseas on aircraft maintenance. But with an increased fleet that amount has risen to a projected $3 billion in 2022. Experts consider this a huge capital flight from Nigeria.

The instability of the naira in relation to its value against other major currencies has been a protracted problem that is getting worse as the nation’s economy plummets. Not having major Maintenance, Repair, and Overhaul (MRO) facility in Nigeria has forced the airlines to be at the mercy of such facilities in other parts of the world.

Conducting maintenance overseas has three major disadvantages: one it is relatively costly due to forex, two, it causes delays and three, it gives rise to logistics challenges. Sourcing foreign exchange has become extremely difficult for airlines.

Although, the Nigerian Civil Aviation Authority (NCAA) had licensed a few firms like Aero Contractors and 7Star Hangar to carry out aircraft maintenance jobs but does not have the capacity to handle more than three or four aircraft in a year.

As such, many airline operators ferry their airplanes overseas at huge costs because of the inability to wait for slots and the under-capacity of the maintenance for wide-body aircraft repairs.

Much of the continent’s MRO business estimated at $3.2 billion was leaving the region. The 2019 air transport MRO market was ~$87B; Africa represents~four percent ($3.2B); the Asia Pacific 33 percent; North America 23 percent; Europe 25 percent ($22B); the Middle East nine percent; Latin America six percent.

The interlink and value chain between the air transport, tourism, and hospitality industry for economic growth cannot be over-emphasized. Today, the Eiffel Tower in Paris, London bridge, Dubai Mall, Burj Khalifa, the British Museum in the United Kingdom, e.t.c. have all been consciously developed into major tourist attractions that drive passenger traffic to those destinations and by implication attract businesses and generate employment for the locals and foreigners alike.

This conference will also feature trade and investment sessions, where opportunities for investments at our various airports will be showcased. Investors will also have first-hand information on how to partner with FAAN in mutually beneficial business arrangements.

Some existing Nigerian airlines

An airline operator who spoke to Aviation Metric on condition of anonymity said, “Every year so much money is expended by airlines as capital flight as aircraft is taken overseas for maintenance. Nigeria as of today has only Aero Contractors maintenance facility as the only place to maintain commercial aircraft, the Boeing classics. The facility there is even inadequate.

“If Aero commits 50 percent of what it has put in scheduled airline service to its MRO, it would go a long way in equipping the facility. Most of the existing hangars that we have in Nigeria are for small-body aircraft. It is only 7 Star Global Hangar that is sizeable and the facility needs to be expanded for long airplanes|.

Wole Shadare