By Kelvin Osa Okunbor, Tony Akowe, Abuja and Faith Yahaya, Abuja
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Disruption dangerous for economy, says Reps Minority Leader
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Ibom Airlines opts out
Minister of Aviation, Sen. Hadi Sirika, has urged airline operators to reconsider their decision to shut down operations on Monday, May 9, 2022.
The airline operators on Friday announced their decision to shut down operations due to the cost of JetA1 and other operating costs.
The Minority caucus of the House of Representatives on Saturday said the imminent shut down of flight operation in the country will have adverse negative effects on the Nigerian economy, leading to flight of investment from the country.
The Minority Leader, Rep. Ndudi Elumelu, on Saturday asked President Muhammadu Buhari to take immediate steps to avert the imminent shutdown of flight operations in the country as threatened by airline operators.
The agreement to shut down the operation was jointly signed by the President of the operators, Alhaji (Dr.) Abdulmunaf Yunusa Sarina and nine others.
The nine operators are; Alhaji Shehu Wada – Executive Director, Max Air, Dr. Obiora Okonkwo – Chairman, United Nigeria Airlines, Capt. Mfon Udom – CEO, Ibom Air, Capt. Roy Ilegbodu – CEO, Arik Air, Capt. Abdullahi Mahmood – CEO, Aero Contractors, Alhaji Faisal Abdulmunaf – MD, Azman Air, Capt. Edward Boyo – CEO, Overland Airways, Mr. Sukh Mann – Deputy CEO, Dana Air and Barr. Allen Onyema, Chairman Air Peace.
The statement reads: “It is with a great sense of responsibility and patriotism that the Airline Operators of Nigeria (AON) have carried on deploying and subsidizing their services to our highly esteemed Nigerian flying public in the last four months despite the steady and astronomical hike in the price of JetA1 and other operating costs.
“Over time, aviation fuel price (JetA1) has risen from N190 per litre to N700 currently. No airline in the world can absorb this kind of sudden shock from such an astronomical rise over a short period. While aviation fuel worldwide is said to cost about 40% of an airline’s operating cost globally, the present hike has shot up Nigeria’s operating cost to about 95%.
“In the face of this, airlines have engaged the Federal Government, the National Assembly, NNPC and Oil Marketers with the view to bringing the cost of JetA1 down which has currently made the unit cost per seat for a one hour flight in Nigeria today to an average of N120,000. The latter cannot be fully passed to passengers who are already experiencing a lot of difficulties.”
The statement continues: “While AON appreciates the efforts of the current government under the leadership of President Muhammadu Buhari to ensure air transport in Nigeria grows, unfortunately, the cost of aviation fuel has continued to rise unabated thereby creating huge pressure on the sustainability of operations and financial viability of the airlines. This is unsustainable and the airlines can no longer absorb the pressure.
“To this end, therefore, the Airline Operators of Nigeria (AON) hereby wishes to regrettably inform the general public that member airlines will discontinue operations nationwide with effect from Monday, May 9, 2022, until further notice.
“AON uses this medium to humbly state that we regret any inconveniences this very difficult decision might cause and appeal to travellers to kindly reconsider their travel itinerary and make alternative arrangements.”
Reacting to the proposed plan, the minister on Saturday in a statement in Abuja by his Special Assistant on Public Affairs, James Odaudu, said the issue of fuel supply was not within the purview of the ministry.
The minister however said the much the ministry can do in the present situation is to engage with agencies, institutions and individuals in positions to provide succour to the airlines.
He added that he is already leading teams to engage with relevant authorities.
The statement reads: “The attention of the Honourable Minister of Aviation, Senator Hadi Sirika, has been drawn to reports that the nation’s air transportation system will be disrupted from Monday, May 9th, 2022,
“As the Ministry charged with the management of the industry, we are greatly concerned about the difficulties being faced by the airline operators in the country in procuring aviation fuel which has resulted in spiralling costs in Air transportation in the immediate past.
“We also acknowledge that the airline operators are in the business to make profits while servicing the very critical sector that is not only the preferred mode of transport for most Nigerians but also the main international gateway to the nation.
“Unfortunately the issue of fuel supply is not within the purview of the Ministry and so the much it can do in the present situation is to engage with agencies, institutions and individuals in positions to provide succour to the airlines. This is already being done by the relevant team led by the Honourable Minister.
“While the efforts to assuage the situation are on, we wish to appeal to the airline operators, even in the difficult situation, to consider the multiplier effect of shutting down operations, on Nigerians and global travellers, in taking their business-informed decisions and actions.”
The minister assured Nigerians, especially stakeholders in the sector, that the Buhari administration remains stoic in its commitment to the creation and sustenance of an environment that promotes the growth of the aviation industry where major players like the airlines can operate in a profitable and competitive market.
Disruption dangerous for economy
The Minority caucus of the House of Representatives on Saturday said the imminent shut down of flight operation in the country will have adverse negative effects on the Nigerian economy, leading to flight of investment from the country.
The caucus said the consequences of the action will also include job losses, increase in the spate of insecurity in the country and a huge threat to the nation’s integrity.
In a statement in Abuja, signed by the Minority Leader, Rep. Ndudi Elumelu, asked President Muhammadu Buhari to take immediate steps to avert the imminent shutdown of flight operations in the country as threatened by airline operators.
This is the second time this year that the airline owners and operators have threatened to shut down their operation due to the high cost of aviation fuel.
Following an intervention by the House of Representatives earlier on March 14, 2022, Aviation fuel marketers agreed to reduce the cost of the product to about N500 per litre, while the regulatory bodies agreed to grant them license to import their own aviation fuel.
However, the Minority caucus is worried that about two months after the intervention, the Airline operators have again threaten to shut down operations as a result of the hike in the price.
The statement said “This worrisome development in Nigeria, a major producer of oil, is another very sad commentary on the unpardonable failure, corruption, incompetence, negative policies and lack of capacity of the All Progressives Congress (APC)-led administration to effectively manage our national economy.
“As representatives of the people, the Minority Caucus is concerned because aviation is pivotal to the operation, sustenance and survival of other key sectors of the economy and any shutdown of flight operations will have devastating spiral effect and worsen the excruciating economic hardship and further escalate insecurity in the country.
“This is because apart from the direct disabling of thousands of aviation related jobs and ancillary businesses, a shutdown of the sector will also have grave negative impact on critical government and public sector activities which are sustained by air travelling.
“It is instructive to note that the aviation sector is no longer an exclusive reserve of the elite, but plays central role in the movement of personnel and equipment that drive and sustain services and operations which benefit the masses in healthcare, manufacturing, education, food production, telecommunication, retailing, banking and finance, hospitality, entertainment, power, security and other key sectors.
“A shutdown of the aviation sector will therefore cripple millions of businesses as well as economic and commercial activities thereby increasing unemployment, worsen the economic hardship, put pressure on our already ailing roads and exacerbate insecurity in our country.
“Moreover, the situation is a huge threat to our national integrity as it erodes the confidence of the International Community and foreign investors in our country thereby encouraging the movement of investments to neigbouring countries.
“The Minority Caucus therefore calls on President Buhari to wake up, note the grave import of the situation and save the aviation sector from imminent collapse by immediately addressing the fuel crisis and other challenges in the industry.
“Mr. President should critically address the crisis in the petroleum industry by reviewing the counter-productive policies and curbing the corruption in his administration so as to save our national economy from collapse under his watch.”
Ibom Airlines opts out of planned shutdown
Meanwhile, the management of Ibom Airlines Limited on Saturday said it will not take part in the withdrawal of services by other domestic carriers operating under the aegis of the Airline Operators of Nigeria (AON).
The decision of the airline, calculated as a crack in the AON, came just as the carrier while admitting the excruciating difficulty in sourcing aviation fuel at exorbitant costs which is not sustainable for the airline business.
The carrier attributed its reasons for not shutting down services to its financial obligations to suppliers, financiers, and workers who depend on an uninterrupted flow of revenue to service.
Significantly, the airline management in a statement said because it has been paid by passengers in advance for flight bookings it is bound by contract to deliver the services already paid for to avoid exposing the airline to the risk of avoidable litigation.
The statement reads: “Ibom Air acknowledges the existential threat that these runaway fuel price increases pose for the air transport industry in Nigeria. We agree that this out-of-control situation is simply unsustainable.
“However, every airline has its unique business model and pressures. We believe that in spite of the escalating fuel prices, airlines volunteering to stop operations would rather exacerbate an already bad situation.”
“Ibom Air has financial obligations to suppliers, financiers, and staff, which depend on an uninterrupted flow of revenue to service.
“More importantly is the fact that having been paid by customers in advance for flight bookings we are bound by contract to deliver the services already paid for, to avoid exposing the airline to the risk of avoidable litigation”.
The carrier said it has been inundated with inquiries about what will happen on May 9, 2022, following the public statement issued by the Airline Operators of Nigeria (AON) Executive on May 6, 2022, and it has become necessary for us to make the following clarifications:
It noted that apart from the above factors, Ibom Air is currently the only airline serving Akwa Ibom State directly and as such, any voluntary stoppage of operations would completely cut off access by air into and out of the state.
It said it would continue normal operations on Monday 09 May 2022 and beyond. Ibom Air’s inclusion as “signatory” to the statement released by AON must have derived from its active and committed member of the AON.
Notwithstanding, the carrier said it identifies strongly with the AON and will participate in every effort to resolve this frightening situation as soon as possible in the interest of its business, customers, stakeholders, and the country.