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.
WIA honours Dana Air as Airline wins CSR award
Dana Air has been honoured by the Women in Aviation for celebrating 15 years in Nigeria’s Aviation Industry at the Annual Conference of Women in Aviation Nigeria Chapter held recently in Kano.
According to the President of Women in Aviation Nigeria, Rejoice Ndudinachi, “this year’s conference is themed: Connect, Engage, Inspire, and the highlight is presentation of awards to persons and organisations who have distinguished themselves in the society.”
Similarly, Dana Air has bagged the Corporate Social Responsibility airline of the year Award 2023 at the City Business News Summit 2023, held recently in Lagos at Oriental Hotels.
Speaking on the double honours, Dana Air’s Chief Operating Officer, Ememobong Ettete, said, “Dana Air is committed to the theme of this year’s WIA conference as always and this is a well-deserved recognition for us and it just goes to show that people see and appreciate the little things we do to support not just our dear country but communities, youths, the women in aviation, our industry and even the entertainment industry.”
“As a responsible corporate citizen, we remain committed to supporting worthy causes across the country and contributing to her growth and development as we have no other option than to build our country and see it achieve its full potential,” he added.
Having flown over 36 million passengers in the last 15 years of its operation, Dana Air is one of Nigeria’s leading airlines with a mixed fleet of Boeing aircraft and daily flights to major cities in Nigeria.
NAHCON urges FAAN to provide facilities at departure centres
The National Hajj Commission of Nigeria (NAHCON), has urged the Federal Airports Authority of Nigeria (FAAN) to provide navigation equipment and facilities at Hajj departure centres across the country.
Deputy Director, Information and Publication, NAHCON, Malam Mousa Ubandawaki, in a statement, said the acting Chairman of the commission, Jalal Arabi, made the call when he hosted members of FAAN’s Hajj Committee.
Arabi noted that the provision of necessary navigational equipment and facilities at the hajj departure centres would facilitate a seamless transportation of the 2023 pilgrims to Saudi Arabia.
“You are a formidable partner in the Hajj operation. Though, there are certain considerations put in place during hajj transportation, we expect you to tell us the state of the various airports used for transportation of pilgrims.
“The committee should be time conscious as they would have limited time to carry out their assignments, going by the time line set by Saudi Arabia for all nations to conclude all Hajj arrangements.”
Earlier, the leader of the delegation and Director, Airport Operations, Capt. Mukhtar Muye, said that FAAN commenced preparations for the 2024 hajj about two months ago.
This, according to him, is with a view to achieving a hitch-free Hajj operation.
He assured that the exercise would be completed before the commencement of the transportation of pilgrims to Saudi Arabia from the 16 departure airports across the country.
Muye, however, urged the commission to persuade the Tour Operators companies to comply with the arrangements of transportation of their pilgrims through the international Terminals instead of the Hajj Terminal.
According to him, that can deny the authorities valuable revenue that they are supposed to generate for the purpose of providing the necessary infrastructural facilities at the airports.
He assured the commission of the authority’s commitments to discharge its duties diligently so that Nigerian Pilgrims could experience a hitch-free exercise.
Aviation yet to fully recover from pandemic losses – IATA
The International Air Transport Association said the aviation sector is still recovering from losses of the pandemic which crippled flight operations globally.
Africa lost an estimated $7.7 billion in the aviation sector in 2020 as restrictions were put in place by governments to combat the spread of COVID-19, leading to a drop in traffic.
IATA estimated that Nigeria lost about N21 billion monthly during the outbreak. Analysts said it would take until 2024 for the situation in the aviation sector to improve and return to 2019 levels.
AITA’s Regional Vice-President, Africa and Middle East, Kamil Alawadhi, at the 55th AFRAA Annual General Meeting, warned governments to desist from seeing the aviation sector as cash cows if the sector must harness its growth potential.
He said, “Africa’s aviation industry is still recovering from significant losses due to the pandemic.
“To make up for this shortfall, governments should avoid imposing higher fees, levies, carbon taxes or new taxes on air transport, trade or tourism.
“These measures would only make air travel more expensive and less accessible in Africa, where the average airfare is already 30 percent higher than the industry average and the jet fuel cost is 10-20 per cent higher than the global average.”
While the sector continues to recover, higher costs will discourage customers who are sensitive to prices, which will impact revenue,” he said.
“They would also hamper economic development and limit the opportunities for job creation and income generation. High cost leads to high price, which reduces demand and growth in a price-elastic market, and ultimately affects connectivity negatively.”
He advised the governments to follow the International Civil Aviation Organisation’s policies on charges and infrastructure and consult with airlines and industry to ensure a fair and cost-effective operational environment that benefits a more connected continent.
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