Wednesday , 25 November 2020
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Nil corporate governance, high maintenance; others: reasons for Nigerian airlines failure

Visible are the following aircraft: 5N-BEY NICON Airways, 5N-TUE Capital Airlines, 5N-BGU Fresh Air, 5N-BFX Untitled ex Bellview Airlines, 5N-SPM Shell Aviation and F-GHXL Bellview Airlines. [Nikon D300].
NON-EXISTENT corporate governance and poor business plans, high maintenance cost and interest on loans as well as choice of operational equipment are some of the linking factors identified as the bane to Nigerian airline survival according to the minister of aviation, Senator Hadi Sirika.

Sirika who was responding to the senate committee on aviation during the three-day public hearing last week said it was a no brainier and every civil aviator knows the problems but that government is taking well orchestrated steps to resolve these.

On business plans, Sirika said most of the airlines that have gone down did so because they just duplicated existing business labs of failed models.

He said, “Most of these airlines, when you look at their business plan I gave to say at this point, where we have come from and how far we have come. These airlines, when I call their names many people would have forgotten they hold trade We have Albarka, we have do concord, we have ADC, Okada,Bellview,Kabo, Sosoliso… And eventually Mr. Chairman, if you go to their business plans they are all the same thing.

“They are all the same. Maybe out of 100 airlines in the country, maybe only three of them are different. When you talk of aero, aero has been very consistent for decades, almost 50 years but when they decide to change their operations to something else and they did not change their business plan, you see what had happened?

“The ownership. The business plan, the arrangement … So in that I think it’s something not even debatable, it’s something very clear to every civil aviator and I think we should do everything to ensure, the business plan, the governance issues, the funding, the finance.

The minister also identified access to finance as a challenge bedeviling domestic airlines stressing that the fact that airlines in Nigeria  access loans at double digit interest rates as much as 24% is already a red flag to their survival.

“I remember a time when ( I don’t want to call his name) he started his airline. He had found finance at below five(5%) percent using US EXIM bank and some other financial institutions and that is why he was able to leverage acquiring finance into his operations. So the reason why others fail in Nigeria is in investment and we understand this and are trying to go something about it,” the minister said.

He also attributed the failure of airlines to lack of a Maintenance Repair Overhaul Centre in the country to service the airlines as well as a lack of aircraft leasing company to enable airlines access equipment at cheap rates.

According to him, other regions in the continent which have MRO facilities would rather gave priority to their own and so it is difficult for Nigerian airlines to get slots and they spend more on actually ferrying aircraft for maintenance.

He said, “The reason why we are here is because we want a better civil aviation and the reason why we need an MRO is to ensure that these maintenance, as heavy as they are are done here in Nigeria and it’s possible. AeroContractors has done a C-check in- house on the 737 and Nigeria has the manpower to do it , they need the training so setting up a private sector led MRO with all kinds of maintenance  will certainly reduce cost because ferrying the aircraft alone, Mr. Chairman, is around $700,000 dollars alone and to even get the slot is an issue.

“There is an Ethiopian Airline MRO, which is used by Ethiopian and so you’d struggle to get a slot there, the one in Morocco us owned by Royal Air Maroc established by Air France and they fly in their and maintain their aircraft so thud hardly give you a slot. The one in Egypt  services Egypt Air which are buying more planes so certainly the MRO will not have space to enter. So when we establish one here, it will serve and it’s not the kind of small shades that people do, that can also serve its own purpose and it doesn’t have to be just one. It should be as many as possible so you have choices…and that also includes the cost of ferrying the airline.

Also operational equipment used by airlines was identified, although the minister a,so said the Nigerian flying clime is now adept to using jets but explained that turbo prop aircraft were now more sophisticated and efficient.

He said government was looking at the multiple ways to ensure the industry gets its footing right and takes its place in the continent and the world and it all starts with getting the laws right.

 

About NigerianFlightDeck

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Nigerianflightdeck is an online news and magazine platform reporting business stories with a bias for aviation and travel. It is borne out of the intention to inform, educate as well as alter perceptions with balanced reportage.

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