MINISTER of Aviation, Senator Hadi Sirika has blamed bad business plan on the part of airlines as one reason why hundreds of airlines have become defunct in Nigeria in the past 20 years.
The Minister was reacting to a statement credited to the managing director of Overland Airways, Captain Edward Boyo who said over 100 domestic airlines have died in the last 20 years due to unfavorable business environment and charges.
These submissions were part of the debate at the ongoing three day public hearing for the repeal and reenactment of Bills in the aviation agencies.
Captain Boyo asked for most of the charges including Corporate interest tax, educational tax, Federal Inland Revenue Service Tax, local government charges, PSC, TSC/CSC which he said were close to thirty-five (35) to be abolished as his airline has survived this far because of his business model.
Buttressing his point further, AON through its lawyer, Mrs Chinasa Unaegbunam from Stream Sowers & Kohn further went on to say there were charges from Access fees, to premium and possessing fee stating that they were unclear charges and would add to the cost of flying hence making it difficult for more
people to fly.
Reacting however, the Minister listed a number of reasons why airlines in the country have gone defunct over the years including the use of wrong equipment to fly the route, bad business plans, inability to carry out checks and other regulatory issues.
Sirika said,” we are partly to blame because we don’t carry out enough economic regulation on airlines but that is changing. The business plans submitted by almost all these airlines are the same.If you have 100 airlines, only three of them have a different business plan, the rest just copied and are enacting what they copied.
” One of our airlines had yet cause to buy a four-engine aircraft that has been rejected all over the world because it came cheap and it has been imported here. As a policy for me, anyone who wants to bring in equipment I approve it because it is for the good of the industry but I had cause to reject the file three(3) times
” I called the Permanent Secretary to advise them on the implications of that aircraft but here we are.”
“Most of these airlines when you look at their business plan, I think maybe at this point I need to say where we have come from and how far we have come. These airlines Albaka, so solids, Bellview etch F you go to their business plan they are all the same. Maybe out of one hundred airlines maybe only three. When you talk of Aero , Aero has been very consistent for decades but when they decided to change their operations to something else and they didn’t change their business plan, what happened? We see what has happened to them.”
“The ownership, the business plan. So Mr. Chairman it’s not something debatable it’s clear to every civil aviator. I think we should ensure business plan, governance issues, the finance are captured. Many people with due respect then simply calculate N33,000 time 126 passengers and make money. They see that they get billions and billions coming into their account every week and then go in there but when they do D-check for 10 million dollars or a C-check or an engine change. There was an airline that was going for a C-check, an engine change and a landing gear change at the same time, same year. Even the maintenance proper is a problem.”
“A few airlines are driven by people with knowledge but most of them deviate from the business plan, the governance function, the finance.”
Captain Boyo had earlier said that airline operators were suffering,” why are airlines dying in Nigeria? Over 100 have died In the last few years. What is the effectiveness of some of these agencies? Are we to pay for the ineffectiveness of the agencies?
He attributed the success of Overland to endurance and understanding the system which has marginal profit which is not sustenance in the long run.
Also reacting to the allegations of certain charges by FAAN, Managing Director of the agency Captain Rabiu Yadudu explained that it was mere misconception to think that some of the charges which are one-off are mistaken for a regular charge.
” The truth is, we have nothing to hide. We are open and some of those charges claimed by airlines are put there in the constitution and we cannot go against the constitution. Others however are one off, take premium for example, that is a one off charge on when you enter agreements and is not charged twice same with access and so sometimes it seems as if we are charging.”