Nigerian carriers on brink of collapse as Aero suspends flights

  • Cites Forex hiccups, high maintenance costs, fuel, others
  • Why Jet fuel is costly globally-Walsh

 

 

The sign that all is not well in the Nigerian aviation industry is manifesting as a prediction that three carriers could cease operations this year is becoming a reality.

The apparent positive recovery mood of the Nigerian aviation industry following the devastating effects of the COVID-19 pandemic may after all be a ruse after all.

Just today, Nigeria’s oldest airline, Aero Contractors said it would temporarily stop scheduled passenger operations. This has further fueled concern and apprehension in the industry.

The carrier is suspending operations temporarily with effect from July 20, 2022, due to the impact of the challenging operating environment on its daily operations.

It also attributed the stoppage of operations to the impact of the challenging operating environment on our daily operations.

Aero Contractors B737 aircraft

According to the management, the decision was carefully considered and taken due to the fact that most of its aircraft are currently undergoing maintenance, resulting in their inability to offer a seamless and efficient service to our esteemed customers.

“We are working to bring these aircraft back to service in the next few weeks, so we can continue to offer our passengers the safe, efficient, and reliable services that Aero Contractors is known for, which is the hallmark of Aero Contractors Company of Nig. Ltd”.

“The past few months according to the carrier had been very challenging for the aviation industry and the airline operators, in particular, adding that with the high cost of maintenance, skyrocketing fuel prices, inflation, and forex scarcity resulting in high foreign exchange rates. These are amongst the major components of airline operations”.

“In the meantime, we are working assiduously to return to service as quickly as possible, and do assure our esteemed customers and stakeholders of our determination, that our short absence will not create any major void in the market, as we are coordinating with our business partners to ensure minimum discomfort to ticket holders”.

The signs that Nigerian carriers are ailing showed with myriads of challenges ranging from a shortage of airplanes, poor remuneration of workers, poor conditions of service, harsh operating environment, Forex hiccups, and inability to get back their airplanes that had gone for overseas maintenance among others.

The shortage of airplanes by many of the carriers has led to flight delays and unreliable scheduled operations including many cancelled flights without prior notice to the passengers.

An airline operator who spoke to Aviation Metric under the condition of anonymity said that Nigerian carriers are not the only ones suffering, stressing that many airlines in the United States, Europe, Africa, and South America are seriously going through hard times that had seen many carriers close shops as a result skyrocketing jet fuel prices occasioned by the global energy crises as a result of the Russia-Ukraine war which has seen a sharp rise in the price of crude oil in the international market.

The global economic recession which has led to increase in commodities, he said has seriously led to high global inflation rates and by extension dealt a huge blow to aviation.

Aside from the fact that many of the airlines have shown signs of insolvency, there are two carriers (name withheld) that are showing signs that they might stop operations and further add to the plethora of over a hundred carriers that have collapsed in the past 20 years.

If that happens, it would bring to three the number of airlines that ceased operation in the last seven years.

A chieftain of Airline Operator of Nigeria (AON), Allen Onyema had stunned delegates at the recently concluded FAAN National Aviation Conference in Abuja (FNAC) when he disclosed that three airlines were on the verge of extinction before the end of the year.

Onyema however did not disclose the name of the three carriers that are on the verge of extinction as there are indications that many of the country’s airlines are ailing.

The combination of the high cost of aviation fuel otherwise known as Jet A1, over 37 charges by various agencies in the aviation industry, scarcity of foreign exchange, and the harsh operating environment, he posited could lead to the collapse of the three Nigerian airlines in the next few weeks.

For months now, the Airline Operators of Nigeria (AON) have sounded the alarm bell that aviation fuel has skyrocketed to N700 per litre in some airports in the country, thus compounding the woes of the operators, with 40 percent of the revenue used to purchase the commodity.

Other ancillary companies in the Nigerian aviation industry – aviation fuel marketers, airline operators, ground handling companies, and catering services among others are also not immune from the paucity of foreign exchange among other challenges in the aviation industry.

AON said in order to address the challenge, the Federal Government had approved 10,000 metric tonnes of aviation fuel to the airlines, but said the carriers were yet to access it.

 

Aircraft positioning for take-off

Meanwhile, the Director-General of the International Air Transport Association (IATA), Willie Walsh said the high cost and the scarcity of jet fuel, were a result of shifting the refining of aviation fuel to other products which led to little demand during the pandemic.

Walsh said there was little demand for Jet A1 during the pandemic obviously because the value of activities by airlines had reduced, adding that it was not easy to switch back to the refining of crude for aviation fuel overnight.

He however stated that there was the need to see a return to refining capacity to stave off the serious impact the shortage and high costs have on the airlines.

 

Wole Shadare

COMMENTS

  • Dr Gabriel O Olowo. President ART

    SELL WHAT YOU BUY !!! This is my candid opinion to Airlines, given these uncontrollable factors of production in the Airline Industry sector. Demand will definitely drop but much better than cut corners and plan an accident.
    If a trip fuel is 4000lts for 1 hour on jet ( LOS ABV) for example @ N800 per lt which gives N3,200,000 and a load factor of 100 passengers, This means fuel cost per pax is N32.000 and this is approx 30% of Total Cost. This will translate to N107.000 tariff for a one way journey QED.Phcn has introduced Premium Tariff on power and those who can afford it are settling for it. This is not the time for frivolous and reckless competition nor uneconomic patriotism. Operators should intensify cooperation,collaboration ,consolidation, prune schedules to minimize perishable seats and maximize load factor.The spirit of Spring Alliance must me strengthened.
    The sector must not negotiate an accident. NCAA is encouraged to be more vigilant to watch cutting corners.

  • Dr Gabriel O Olowo. President ART

    SELL WHAT YOU BUY !!! This is my candid opinion to Airlines, given these uncontrollable factors of production in the Airline Industry sector. Demand will definitely drop but much better than cut corners and plan an accident.
    If a trip fuel is 4000lts for 1 hour on jet ( LOS ABV) for example @ N800 per lt which gives N3,200,000 and a load factor of 100 passengers, This means fuel cost per pax is N32.000 and this is approx 30% of Total Cost. This will translate to N107.000 tariff for a one way journey QED.Phcn has introduced Premium Tariff on power and those who can afford it are settling for it. This is not the time for frivolous and reckless competition nor uneconomic patriotism. Operators should intensify cooperation,collaboration ,consolidation, prune schedules to minimize perishable seats and maximize load factor.The spirit of Spring Alliance must me strengthened.
    The sector must not negotiate an accident. NCAA is encouraged to be more vigilant to watch cutting corners.

Comments are closed.