Why Nigerian airlines may close shop, by operators
Aviation experts have again raised the alarm over problems that airlines in the country are presently going through, which may drive others out of business.
They listed factors ranging from increase in Jet A1 (Aviation fuel) to its non-availability down to access to foreign exchange to do business (as aviation in Nigeria is 98 per cent foreign exchange dependent), to the multiple charges that airlines have to bear.
To them, the aviation industry is not looking good, reiterating that the sector is in serious dire straits.
President, Airline Operators of Nigeria (AON), Capt. Noggie Meggison lamented that skyrocketing Jet A1 price and its scarcity, has made it difficult for airlines to be profitable, arguing that the group has made a presentation to the Federal Government on how to stem the tide.
Also piqued by the situation is the Managing Director of Arik Air, Chris Ndulue, who noted recently that the situation including scarcity of foreign exchange, has made it extremely difficult to do business.
When the International Air Transport Association (IATA) announced a fortnight ago that due to low prices in oil, its forecast profit was increased to about $39.4billion, it was evident that they did not take the exception rule into cognizance, as the opposite is the case with Nigerian airlines. As global aviation fuel continues to maintain a steady low, the product in Nigeria has continued to increase and worse, for an oil-producing country there are a lot of instances where the product is simply unavailable.
Now, the new reality has set in, where airlines also have to struggle to get forex to do their business in a world where every transaction made is not in local currency.
Presently, Nigerian airlines carry out maintenance overseas (forex), buy or lease aircraft overseas (forex), import aircraft spare-parts from overseas (forex) but their charges are done in naira – a currency currently spiralling against all other global exchange tenders. Consequently, these are some of the factors that made airlines under the aegis of AON to meet the Federal government to find a lasting solution for airlines so that they do not all go under like the airlines of the mid 2000s.
Meggison said, “It is no longer news that airlines in Nigeria charge very competitive fares in local currency but have to carry out numerous operational activities including maintenance and purchase of spare parts in foreign currency (Dollars) thereby adding to the already unbearable burden the airlines have to carry on a regular basis. “And the current forex constraint being faced by airlines has further exacerbated the situation and threatening to cripple airline operations in the country.”
Just recently, the Accident Investigation Bureau (AIB) commissioner, Dr. Felix Abali, advocated for the increase of the bureau’s three per cent of the ticket sales charge to 10 per cent, stressing that paucity of funds had prevented the agency from carrying out its duties as a responsible accident investigator.
This call, innocent as it is, following the AIB’s perceived challenges, but once it is considered, there is every possibility that there will be a canvassed increase of the total Ticket Sales Charge (TSC) and in turn the bill will be passed to the flying public who may turn to the roads, denying the airline’s revenue.
