Aviation
Nigerian airlines operating within harsh economic realities — NCAA
Nigerian airlines are in dire financial straits and this is as a reflection of the difficult economy under which they find themselves operating.
Director, General Nigeria Civil Aviation Authority, Captain Musa Nuhu who made this known in an interview at the sidelines of the just concluded 7th Aviation Summit in Abuja while responding to whether indigenous carriers are making profit, explained in clear terms how difficult it is for the airline where all their costs are dollar denominated and their interest rates are double digits.
The DG-CA who gave a breakdown on the cutthroat environment for airlines said Nigeria carriers are paying humongous amounts for cost of financing at 25 per cent averagely and paying quarterly for insurance to defray the huge burden of doing so annually especially for airlines with many aircraft.
Nuhu said, “Nigerian airlines are operating in a very difficult environment. An airline cannot operate in isolation of the economy it is operating in and the Nigerian economy is in very difficult times. The cost of financing is 25 per cent. That is killing to start with. You take a loan and you are paying 25 per cent of whatever you make to the bank.
“You are not talking of your expenses, your cost, your current and long-term liabilities. Quite a few of them are in financial straits and some are okay. So, that is the way it is. It is a very difficult environment for the airlines and we also sincerely sympathise with them and we will try and see where we have flexibility to make life easy for them.”
On how the CAA is trying to mitigate some of the airlines’ challenges Captain Nuhu said, “Like the issue of insurance, the insurance is from Lloyds of London, from another country, and it requires a huge amount of foreign exchange. Normally, insurance they pay is for one year, but we know an airline that has 20, 30 aircraft like Air Peace. For it to pay insurance is a huge task, that is why we say pay quarterly, at least to reduce the financial burden, especially on the requirement of getting foreign exchange at a time.
“So, we try to assist the airlines in that area, and those who have debts, we reach an agreement with them. If I have N1 billion with you, I am not asking you to pay that N1 billion to me, because if I do that, I am going to kill your business. So, we reach a Memorandum of Understanding (MoU) and they pay an amount that will not cripple their operation.
“But also, they have to pay a reasonable amount to clear those outstanding debts. Those are the areas where we have flexibility with the industry.”
On recent declaration by the International Air Transport Association ( IATA) that Abuja and Lagos airports are the most expensive airports in the world with about 27 revenue charges imposed on airlines he said most of those charges came from other organisation within the airport.
He said, “What we need to understand is that a lot of these charges are not from the aviation agencies, but are more in the cargo area. All sorts of people, some are illegally making these charges. So, aviation will start, at least we will consolidate and see where we can streamline and merge those charges and see what can be done. But there are a lot of people and lots of charges have nothing to do with aviation aeronautical charges. It is other organisations that are in the airport that put these charges. But, sometimes as Nigerians, we need to all sit down as a team and see the damage we are doing to our country.
He continued, “Like in Lagos, there are so many charges, you want to export your cargo, there are so many charges. By the time you pay those charges, your products are not even competitive anymore. That is why you see a lot of planes bringing in cargo, and they leave empty out of Nigeria, because exports are not viable and lots of these are charged by plethora of these agencies. It is really hurting us.”
He however said the Ministry of Aviation and Aerospace Development has established a committee to look at the multitude of charges to see how they can be streamlined.
Vice President Kashim Shettima, Governor Nasir Idris of Kebbi State, and Sultan Muhammad Sa’ad Abubakar, alongside Minister of Aviation Festus Keyamo, convened at the Sir Ahmadu Bello International Airport in Kebbi State.
They were accompanied by Olubunmi Kuku, Managing Director of FAAN, and Alhaji Umar Faruk, Managing Director of NAMA. Together, they symbolised the start of the 2024 Hajj Operations.
SA Media and Communications, Mr. Tunde Moshood, emphasised that Keyamo’s presence at the event underscored the collaborative spirit among government agencies and stakeholders in ensuring the successful airlifting of pilgrims from Kebbi State. This departure marked the beginning of a profound spiritual journey for many.
Additionally, Keyamo personally witnessed the lifting of Abuja/Nasarawa pilgrims at the Nnamdi Azikiwe International Airport, highlighting the government’s unwavering dedication to facilitating a seamless pilgrimage experience for all participants.
Expressing gratitude to all stakeholders involved, Keyamo reaffirmed the government’s steadfast commitment to providing the necessary support and infrastructure for a triumphant hajj operation.
This demonstration of unity and dedication was pivotal in the flag-off of the Kebbi State 2024 Hajj Operations, marking a significant milestone in Nigeria’s aviation history.
Aviation is set to be part of key economic drivers that will benefit from President Bola Tinubu’s proposed Renewed Hope Infrastructure Development Fund (RIDF).
In a statement by Ajuri Ngelale, the fund targets strategic sectors like agriculture, transportation, ports, energy, healthcare, and education along with aviation.
The initiative plans to inject funds into vital national projects to foster growth, bolster local value addition, generate jobs, and spur innovation.
Efficient use of low-interest loans and financing options will secure advantageous arrangements for project financing and operation.
The focus on aviation enhancement involves modernising major airports nationwide with targeted investments and infrastructure upgrades.
The statement reads, “On aviation enhancement, the focus is on the revitalization and modernization of major airports nationwide. Through targeted investments and infrastructure upgrades, major airports will undergo comprehensive refurbishment, including improvement in terminal facilities, runway expansions, and the implementation of cutting-edge technologies to enhance safety and operational efficiency.”
For agricultural infrastructure, the focus includes developing robust networks like storage facilities and irrigation systems.
In port revitalisation, the goal is to modernise facilities and attract investments to enhance Nigeria’s regional trade hub status.
“By modernizing port facilities and implementing advanced monitoring systems, the goal is to optimize efficiency, attract investments, and bolster Nigeria’s position as a regional trade hub,” the statement read.
Key road projects like Lagos-Calabar Coastal Road aim to enhance connectivity and stimulate economic growth.
Rail projects like Lagos-Kano and Eastern lines will modernise transportation networks for speed and reliability.
President Tinubu’s approval of the RHIDF absorbs the PIDF, expediting project delivery for Nigerians’ benefit.
Projects funded under the RHIDF will have a national spread, reflecting the commitment to equitable development.
The Team Lead of ICAO Security Audit Programme, Callum Vine, announced Nigeria’s strong performance during a debrief after its Audit.
Nigeria recently concluded the International Civil Aviation Organization (ICAO) Security Audit Programme the continuous Monitoring Approach (USAP-CMA) according to a statement emanating from Director, Public Affairs and Consumer Protection, FAAN, Obiageli Orah.
The USAP-CMA aims to improve aviation security compliance by analysing Member States’ performance and implementation of security standards. It focuses on Annex 17: Security Standards and Annex 9: facilitation compliance, along with associated procedures and security practices.
The event held at NCAA Headquarters saw Vine praise Nigeria’s robust policies and agencies, acknowledging their speed in addressing identified deficiencies without complaints.
He mentioned that the full audit report would be available within 60 days, followed by a 30-day period for comments.
FAAN’s Managing Director, Mrs. Olubunmi Kuku, affirmed using the audit results as a roadmap for continuous improvement.
She urged stakeholders to collaborate closely, share best practices, and uphold the highest security standards in the industry.
The debrief was attended by Dr. Emmanuel Meribole, representing the Minister, and Captain Chris Najomo, Acting Director General of NCAA.
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