How can domestics airlines operation be saved from going insolvent? It is by providing them low interest loans from foreign lenders, some operators have said
The Chief Executive Officer of Overland Airways, Captain Edward Boyo and the Managing Director of Aero Airlines, Captain Akin George said high interest rates by local lenders were killing airlines.
Boyo and George lamented the low funding of the sector, which they affirmed is hampering aircraft acquisition
Boyo said until operators are able to manage the right equipment, in terms of aircraft suitable for some routes, the industry would continue to struggle.
The airlines, he said would only experience organic growth if the relevant agencies, including the Nigeria Civil Aviation Authority (NCAA), carry out due diligence on would-be airline operators before commencement of flight operations.
Most operators, he said, often ran into problems because they do not do an analysis of the expected yield in their operations, arguing that the inability of operators to understand the cost benefit analysis in the sector, has led to the collapse of many airlines.
He said: “Airline operators must get their economics right before venturing into services and ensure that issues such as maintenance, personnel, market capacity and revenue management must be taken into consideration.
On government’s role to grow the industry, Boyo said: “Government should continue to invest in improving security and ensure that there is improvement in oversight capacity and regulatory services. Government should implement waivers on taxes and import duties on aircraft’s spares.
“Government should also consider the establishment of aircraft hangar, and ensure that there is a deliberate policy aimed at growing the domestic market. The government must implement the domestication of the Cape Town Convention, which ought to make it easier for lessors of aircraft to repossess their airplanes and also facilitate the acquisition of modern ones less cumbersome for Nigerian airlines.”
On his part, George said: “Without trying to make the issues complicated, airlines need to have access to funding. It is pure and simple. If government could do that, the problems will soon be over for domestic carriers and their managers.
“If you have access to funding to sort out your problems, you need to reduce your costs. The main costs are the government taxes. Once that is taken out, government could go a step further by improving infrastructure at the airports. Infrastructure itself is cost to the airlines; if government could improve that it takes out the other costs.
“If we have access to funding to do our business, we make more money, reduce the cost of operations, and then the equation is balanced. The idea is that everybody wants this to happen overnight, it is not going to work that way.
“What government needs to do is to ensure that measures put in place to improve the business and operating environment for airlines must be long lasting. Not quick fixes. That will not solve the problems of the aviation sector.
“In Nigeria, we like to do things over and done with, when we rush for quick fixes we tend to forget that whatever we do affects our neighbours. And that is why the ministry of aviation must take a holistic look at how to generally improve the industry,” he stated.
He said everybody would wish that aircraft maintenance is done in Nigeria, because of the cost implications, which also allows operators to bring in the expertise into the country. And when you get technically minded-people, when you go back home, it not only affects aviation, it also affects the country as a whole. Our aim is to increase the pool of Nigerian airlines with the required technical expertise to carry out aircraft maintenance locally.
“But, it will always remain a high cost business, because aviation is not cheap, and we should not be looking at everybody doing aircraft maintenance at home. That is not to mean that it should also be made unnecessarily expensive and that is what we are doing at this time. Make it relatively not too expensive, but the business the airlines that have the capacity could make some profit from.
