By UCHE USIM
As various experts and government seek ways of keeping domestic airlines in business, 10 of the local carriers have accessed N86.7 billion out of the N300 billion intervention fund earmarked for the aviation and power sector by the Federal Government.
The airlines had for a long time lamented that part of the their challenges was commercial banks’ unwillingness to offer them credit facilities at lower interest rates, a development they said prevented them from operating optimally. Consequently, the airlines wrote several letters to the government for assistance and that forced government to come up with the intervention fund, which was packaged by the Central Bank and Bank of Industry.
The airlines also accused government of not coming to their aid, unlike what obtains in developed economies. Reacting to the damning allegation, the Senior Special Assistant to the President on Aviation, Capt Usman Shehu Iyal, while speaking at a recent Senate Committee on Aviation public hearing in Abuja, said 10 airlines, so far, have been given a total of N86.7 billion from the intervention fund at interest rates of between 2 and 7 per cent, while they have between 10 to 15 years to repay the loan.
Air Nigeria is the lead beneficiary with a total sum of N35.5 billion, followed by Aero with N20 billion. Arik Air has accessed N15 billion, Kabo Air N6.66 billion and Chanchangi Airlines N3.4 billion. Others are Dana Air N618 million, Caverton Helicopters, N1.348 billion, Overland Airways N805 million and FirstNation Airways N271.7 million. Iyal urged the Central Bank of Nigeria (CBN) and the Bank of Industry (BoI) to monitor the usage of the money accessed by the airlines, as their claims that the government has abandoned them to their fate was not true.
Out of the 10 carriers that benefited from the bail-out loan, Air Nigeria and Chanchangi have closed shops, leaving a backlog of unpaid debts in their trails. Other beneficiaries like Dana Air and FirstNation are not officially grounded but have temporarily vacated the scene and are eagerly awaited to get back into operation. What has become worrisome to Nigerians is that some domestic airlines have packed up, while others are limping, despite accessing the funds. Commenting on the development, an aviation consultant, Akin Olateru, said the problems of the airlines go beyond intervention fund, as most of them do not have a sound business plan.
“They do not have a workable business plan. Give each airline N500 billion, they will still collapse, with the type of plans they have. This is where I blame the NCAA. if the CBN can determine who appoints a bank MD and board, as a regulator, I see no reason why it cannot in a more sensitive industry like aviation. Moreso when they’re not prudent in their spending. Rather than ploughing it back into the business, they spend their proceeds on other matters. “There’s also the problem of owner-management syndrome, where an inexperienced owner unduly interferes with the plans of the professionals. Also, they do not do proper route/equipment analysis, before venturing into the skies. Some of them are plying routes with the wrong airplane. It’s like fetching water with a basket,” he said.
The carriers themselves claim their problem is beyond intervention. At the public hearing, the Managing Director of Arik Air, Chris Ndulue, and the Chairman of IRS Airlines, Ishaku Rabiu, maintained that the industry was being crippled by high operating costs. They cited fuel, navigational charges, import duties on aircraft and spares, Value Added Tax (VAT), among others as part of the factors militating against the stability of the domestic airline industry in Nigeria.
According to them, with all these in the face of short-term loans at high interest rates from Nigerian commercial banks, it was impossible for airlines to operate profitably. Investigations by Daily Sun reveal that the airlines have not applied the intervention fund judiciously, a development that made the status quo to remain. At a recent rally organized by workers of Air Nigeria, they indicted the Chairman of the airline, Sir Jimoh Ibrahim, of diverting the N35.5 billion intervention fund into his private estate. Also commenting on the development, an aviation analyst, Olumide Ohunayo said it was regrettable that the Nigeria has recorded close to 20 failed airlines within the last four decades.
“They come in boasting of excellent airplanes, strong financiers, well-trained crew/support staff, good technical partnership and sound business plan. They arrive amidst fanfare, glamour and glitz but within few years, they develop weak wings and in most cases fly into oblivion unceremoniously. That is the case of a typical Nigerian carrier whose life cycle hardly exceeds a decade. Today, Nigeria has recorded close to 20 failed domestic airlines in the last four decades and still counting.
The carcasses of some of their airplanes still litter many airports across the country”, he stated. Regrettably, analysts say the dead airlines have robbed the Nigerian economy about 1.2 million direct and indirect jobs worth trillions of naira. This is aside financial crunch workers, their families and dependants were exposed to because they often close shops without paying staff entitlements.
Their demise has also forced experienced professionals to eke out a livelihood in other fields after spending huge amount of money developing themselves in aviation. For the parastatal agencies that rely on the 5 per cent revenue from airlines Ticket Sales/Cargo Charges (TSC) for their operations, the failed airlines have made them lose billions of naira annually.
The worst hit is the Nigerian Civil Aviation Authority that relies strongly on the TSC. Each time an airline packs up, its revenue diminishes. Other losers are the Nigerian College of Aviation Technology (NCAT) and the Nigerian Meteorological Agency (NIMET). The list of the failed airlines is endless. From the national carrier, (Nigeria Airways Limited), Okada Air, Harco,
Harca to more recent ones like ADC, Sosoliso, Bellview, Capital, Albarka, Spaceworld and Dasab, Nigeria seems to have become a cemetery for short-life airlines. In the last 12 months, four Nigerian airlines have stopped operations either temporarily or permanently. They are FirstNation, Air Nigeria, Dana and Chanchangi.
That the surviving Nigerian carriers (Arik, Aero, IRS and Overland) are limping operationally speaking is stale and painful news.
The Sun
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