High interest rates and difficulty in accessing loans from commercial banks have been identified as some of the problems contributing to the near comatose state of the aviation industry. Managing Director, Financial Derivatives Limited, Bismarck Rewane, said this in the October 2015 monthly report made available to New Telegraph.

Aviation analysts had advised that the Federal Government should offer low interest rates on loans given to airlines to keep them afloat, adding that some governments abroad took such initiative to save airlines from collapse. They noted that the quickest reform government could make is to provide low cost capital for the airlines, nothing that it was nothing new as governments in other countries had done it.

President, Air Operators Association of Nigeria (AOAN), Capt. Mohammed Joji, said that every government must protect the economy for the benefit of their people, not opening the economy for foreigners to take advantage of. He stated that a situation whereby foreign companies were coming to drop their aircraft in the Nigeria market should not be tolerated, noting that the situation was as a result of their access to cheaper capital.

He went ahead to list the problems of domestic airline operators to include low capacity of funding institutions, which hampers aircraft acquisition, high lending rate to airlines that has become a major challenge for many operators and increasing lease rates. He said: “The problem that operators have is high financing of aircraft.
This is a problem in Nigeria and Africa generally.

We have lower financing costs in Europe and more advanced countries. An aircraft is measured by its airworthiness, not by the age. “The last intervention fund had a good intention from government, but many airlines did not get the cash.
The banks that were generous in funding the airlines got into trouble. Even despite the intervention, to show you how deep airlines were in the negative, the intervention fund was not sufficient. “The Asset Management Corporation of Nigeria (AMCON) had to bail out some of the airlines so that they can survive.
That is the job of government. Government has come to the assistance of the airlines. Since the last intervention fund never turned the fortunes of the airlines for better, government felt it needed to improve air transportation system in the country.”

He listed the problems of domestic airline operators to include low capacity of funding institutions, which hampers aircraft acquisition, high lending rate to airlines that has become a major challenge for many operators and increasing lease rates. Others, according to the expert, are prohibitive maintenance costs, which have made domestic airline operators to fake aircraft abroad for major checks, such as C and D, high import duties and taxes on aircraft parts, which add to operators’ spiraling cost.

On how to attract funding and patronage to domestic airlines, Joji said that safety drives patronage and funding, adding that though the International Air Transport Association (IATA) reported recently that Africa’s accident record remarkably improved by 58 per cent in 2011 over 2010 record, it is still well below world average.