Domestic carriers are weighing sustainability models to adopt to beat the deadline set by the Nigerian Civil Aviation Authority (NCAA), which requires them to have a minimum of six airplanes in their fleet before January 2025.
Experts said the new requirement could create some upset in the recapitalisation limits for carriers.
Some carriers that have crossed the minimum airplanes may not be perturbed over the new civil aviation regime expected to foster strength through enhanced equipment profile, but prospective investors in airline business consider it a huge disincentive to join the fray in the low-yield venture.
Though the Federal Government has since 2007 fixed N500 million as the minimum capital base for carriers involved in scheduled domestic operations, N1 billion for those involved in regional flight operations and N2 billion for operators involved in intercontinental flight operations, the new fleet requirement may disrupt the equation.
Experts said the cost of getting a minimum of six airplanes, either through purchase, wet or dry lease, would put operators in dire financial straits, in an industry where there is frustratingly low returns on investment.
To navigate the hurdle, experts and stakeholders have raised the possibility of merger to remain afloat.
In an interview, The Secretary-General of the Aviation Roundtable, Olumide Ohunayo, backed the NCAA on the move, saying airlines needed to consolidate.
“If you compare us with other countries, even Mexico still has the highest number of domestic airlines. If we put our domestic airlines together, they are not even up to one airline in Mexico,” he said.
He, however, advised the NCAA to create a new class of AOCs where smaller aircraft like 20 or 30-seater would be registered for domestic operation.
“We should not bully the NCAA; rather, we should see how we can work around it and see how we can pull through. I don’t have any objection to it. I am in support. What I will only advice is that the NCAA needs to create a new class of AOCs…,” he added.
Latching on to the new arrangement, one of the local carriers Value Jets Airlines, said it is already exploring avenues for collaboration, which could manifest in pooling of fleet and other areas of cooperation.
Its Managing Director, Capt. Omololu Majekodunmi while describing the new regulation as healthy for airline business said it will push carriers to start initiating interline agreements.
He said: “This new arrangement could trigger different forms of partnerships, including code-sharing. Such an alliance is healthy for the industry, but first things should be put in place. Airlines clearing house and others are needful. This will help to strengthen and expand the airline’s presence and reduce wastage on seats.”
But, a member of the Airline Operators of Nigeria (AON), Mr Roland Iyayi, said the new provision is strange.
He said, “We have been told that before you can set up an airline, you must have six airplanes. I, sitting here, will tell you that if you are going to set up an airline and you are starting with six airplanes, you have failed.
“Emirates Airline has about 242 aircraft today; they started with two aircraft, which were leased. Airlines in different parts of the world start with one aircraft. So when you set up a system that says, oh we have been having too many delays in the industry and therefore, you must have six aircraft, have we bothered to find out what the issues are with the delays? So a lot of issues are intertwined.”
But, Director-General of NCAA, Capt. Musa Nuhu, said the new requirement will help the airlines to be on a strong financial footing to provide services to the passengers.
The new minimum fleet regime, he said has been inculcated in the recently amended Nigerian Civil Aviation Regulations (NigCAR).
He said there was no going back on the requirement.
Currently, Nigeria has 12 scheduled airlines: Air Peace, Aero Contractors, Arik Air, Max Air, Azman, Dana Air, Ibom Air, Green Africa, Overland, Rano Air, ValueJet and United Nigeria Airlines (UNA).
If the new regulations are to be implemented, only about five of the airlines would remain in operation as most of them have less than six active Nigerian registered aircraft.
Currently, Ibom Air, for instance, has five Nigerian registered aircraft, Green Africa has three, Rano Air, 3; ValueJet, 3. Azman is currently not operating as none of its aircraft for domestic operations is active.
Dana Air has eight aircraft, but less than six are currently operating. However, the airline has embarked on expansion plans that would see it take delivery of more aircraft.
Overland also has less than six aircraft active, but is banking on its pending order for more aircraft, especially the Embraer E175 with the first received last week.
Max Air also has fewer aircraft for domestic operation but has a fleet of seven aircraft comprising its Jumbo 747 jets for Hajj operations.
Air Peace has the biggest fleet in the industry with over 30 aircraft, but some of the airplanes are in maintenance facilities overseas.
Nonetheless, some of the carriers have in the last few years embarked on fleet expansion.
Air Peace had, in 2019, ordered for 13 aircraft, but only six have been received even as Ibom Air in November, 2021 ordered 10 A220 aircraft valued at $905m while none has been received. Overland Air at the same time ordered six Embraer E175 jets while only one was received early this month.
