Aviation: Three more airlines may shut down in four months over industry challenges
…Open foreign exchange earnings account with CBN to address challenges — Ojikutu tells Operators
By Ogaga Ariemu
Nigeria’s aviation industry is set to witness more woes. This is as the National President, Aircraft Owners and Pilots Association, Aviation analyst, Capt. Alex Nwuba, revealed that three more airlines may go out of business before the end of the year following the current challenges facing the sector.
He also said the proposed Nigerian carrier, Nigeria Air, will not perform any magic in terms of addressing the depleting capacity of the domestic airlines.
Nwoba made this disclosure while featuring on Trust TV yesterday.
Recall that the Aero Contractors and Dana Air have been forced to shut down following economic constraints.
Nwuba called on the government to approve short term measures like downward review of taxes and charges like the ticket sale charge (TSC), Passenger Service Charge (PSC), fuel tax, among others to ameliorate the challenges of the airlines.
According to him, while the short term solutions help, they do not in any way eliminate the problems.
“The problems are much more fundamental and need to be addressed much more fundamentally.”
“Everything helps. The 5 percent helps, PSC reduction helps, removal of over-flight charges helps, removal of taxes on aviation fuel helps, government intervention in some matters, availability of foreign exchange helps. So, when we put these together, ultimately things become a lot easier.
“This industry faces serious problems and that problem is that a few more airlines are likely to go under if nothing is done because you can’t continue to spend and the environment is very challenging.
“Most of the airlines depend on money from ticket sales and bank borrowings… In the short term, if nothing is done, before the end of this year we would lose three more airlines.”
Also speaking on the development to Nigerian NewsDirect on Tuesday, an Aviation expert and Group Captain (Rtd), John Ojikutu, said operators should create a domiciliary account with Central Bank Of Nigeria(CBN) where foreign exchange earnings will be kept to address challenges.
“Operators should have envisaged irregular forex demands in their Business Plans and that CBN may not cope always with demands for forex if they are not making contributions in forex earnings into the Federation Account or have domiciliary forex account where such earnings are deposited possibly with interests in local or foreign currency.
“Without such a set up, aviation forex demands will put too much pressure on other social/economic development demands,” he said.
Nigerian NewsDirect reports that the airline industry is currently on the edge of the skyrocketing price of aviation fuel known as Jet A1 and the rise in foreign exchange rates. This has resulted in the hike in the cost of air fares across operators.
Nigerian NewsDirect gathered that an hour air fare from Abuja to Lagos that usually cost N16,000-N23,000 now goes for N130,000 to N150,000.
