Omololu Ogunmade in Abuja
Airline operators in Nigeria have told the Senate Committee on Aviation that unless the federal government promptly pumped intervention funds into the aviation sector, all domestic airlines operating in the country will die.
The operators stated this last Wednesday during an emergency interactive session convened by the Senate Committee on Aviation.
Speaking on behalf of Airline Operators’ Association of Nigeria, the Chief Executive Officer (CEO) of Arik Airline, Mr. Chris Ndule, said the economic state of the aviation industry had largely deteriorated. “The economic situation as it is today, is suffocating us out of operation,” he said.
Ndule said some other airlines besides Aero Contractors would collapse unless the federal government promptly intervened in the aviation sector.
He listed high interest rate of 24 per cent on bank loans, worsening exchange rate and multiple charges from various regulatory agencies as the factors militating against sustenance of aviation business in Nigeria.
“There are a lot of economic indicators that have made business more difficult which are now manifesting in the inability of the airlines to continue to operate,” he said, explaining that the airlines were operating in an industry that had very little (profit) margin.
According to him, “If you have to borrow money and you have to pay 24 per cent, and you don’t make a margin of 24 per cent, it means that you will find it very difficult to pay back the debt. And there is a limit to what you can do in terms of being able to manage the debt. These fundamentals are the things we need to address.
“The last time we were here (the Senate), the Central Bank of Nigeria (CBN) was here (too) and it was the CBN that made it clear to everybody that the intervention fund earlier granted, was not for the airlines. In effect, what this meant was that the loans we took from some banks were transferred to the Bank of Industry and there was a reduction in the interest rate. To that extent, there was a little trickle down effect on the airlines.
“But, there hasn’t been a bailout targeted at salvaging the airlines or addressing the finances of the airlines. I think that is where the committee could assist us by interfacing on our behalf with the federal government. The airlines did not get as much as they wanted in the first place, even for that little reduction in the interest rate. But now, the economic situation has moved from being bad to worse. I think the intervention needs to take place to avoid total collapse of the industry. Two airlines have closed shop; there could be more airlines if the trend continues.”
He advised the committee to collaborate with the federal government and bring Aero Contractors back to operation, noting that the extinction of the airline would send a wrong signal to other airlines, bearing in mind that the airline had operated in Nigeria for 59 years.
However, the Director General of Nigerian Civil Aviation Authority (NCAA), Mr. Muktar Usman, assured the committee that the federal government was already taking steps aimed at salvaging the sector.
Responding, the Committee Chairman, Senator Adamu Aliero, said the government must be fast in the steps it is taking to address the situation.
Present at the meeting besides the Arik boss were the chief executive officers of Aero Contractors and First Nation Airlines.