Over the last year, airlines operating in Nigeria have been hit hard by the fall in passenger numbers, the high price of aviation fuel and the collapse in the economy brought about by low oil prices. Many of them are also struggling to upgrade their fleet and bring their operations in line with international safety standards.
Testifying before the Senate Committee on Aviation yesterday, Chris Ndule, the chief executive of the Airline Operators’ Association of Nigeria, said the economic state of the aviation industry had largely deteriorated. He added that 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% on bank loans, worsening exchange rates and multiple charges from various regulatory agencies as the factors militating against sustenance of aviation business in Nigeria. According to Mr Ndule, airlines were operating in an industry that had very little profit margins.
Mr Ndule added: "The economic situation as it is today, is suffocating us out of operation. 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.
“If you have to borrow money and you have to pay 24% and you don’t make a margin of 24%, it means that you will find it very difficult to pay back the debt. There is a limit to what you can do in terms of being able to manage the debt, so these fundamentals are the things we need to address."
He pointed out that the last time they visited the Senate, the Central Bank of Nigeria made it clear to everybody that the intervention fund earlier granted, was not for the airlines. According to Mr Ndule, in effect, what this meant was that the loans airlines operators took from some banks were transferred to the Bank of Industry and there was a reduction in the interest rate.
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 others, bearing in mind that the airline had operated in Nigeria for 59 years. Muktar Usman, the director-general of the Nigerian Civil Aviation Authority, 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 Mr Ndule, the Arik boss were the chief executives of Aero Contractors and First Nation Airlines.
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