As Nigerian airlines continue to suffer economic decline, as a result of growing challenges emanating from high price of aviation fuel, naira depreciation, high cost of maintenance and scarcity of forex, the Nigerian Civil Aviation Authority (NCAA) has moved to stabilise the airline sub-sector in order to ensure continuous safety.
The move, THISDAY gathered, would also help in sustaining the over nine years of safety record of zero accident involving scheduled airlines in the country.
Since February this year Nigerian carriers have been faced with growing challenges that are beginning to subject most airlines to financial distress.
This reality has forced NCAA to subject the airlines to safety and economic audit to ensure that they are safe to fly and also ensure that they operate airworthy aircraft.
The Director General of NCAA, Captain Musa Nuhu, said the airlines have to undergo the rigorous process of audit, knowing that many organisations are facing economic challenges and that financial distress in airlines could compromise air safety.
“The airlines have challenges, we have had discussions with some of them, and we have since discovered that some of them need injection of funds. For instance, Aero decided to shutdown on its own volition and they are reorganising, getting more aircraft, expecting some injection of funds so that their financial status can grow. So, we are still in discussions with most of the airlines on this matter.
“Financial distress in aviation if not managed properly could turn out to be safety issues because we don’t want airlines to start to cut corners. Those with financial difficulties if you notice, they are delaying flights, cancelling flights, but we need to work with them. We are all in this together, except where we have serious concerns in the continued existence of the airlines or serious violation. We will work hand-in-hand with them to help them get out of the financial challenges they found themselves,” Nuhu said.
On Dana Air, which was shut down by the regulatory authority last month, the Director General said: “NCAA is making sure that the airline returns to the sky safely. Once the operator meets the conditions to resume operations, we will approve its operations.
According to him, “Dana Air did not only have financial issues, there were other violations in conjunction with the weak financial position. We are working with Dana assiduously to see how the issue can be resolved. We had internal zoom meeting with the airline this week and a couple of things need to be completed and we will call our management; Dana will sit down with them, they will tell us what they have done and what they have put in place. If we are happy, we release them, but if not, we will tell them what they must do before they are released for safe operations. Safety of the industry is paramount and it will never be compromised.”
Due to the economic challenging facing the airlines and the aviation industry, the operators are hugely indebted to the agencies and the Director General gave ultimatum to the domestic carriers to sign payment plan for the payment of the debts.
He said, “We (airlines and aviation agencies) all agreed that there are challenges; everybody is having challenges, difficulties and this is not restricted to the industry stakeholders alone. The airlines, ground handlers and other service providers, even the agencies, all have the same challenges of funds. At a point in time during the Covid-19 pandemic when the airlines ran into troubles, a lot of the agencies too had the same challenges of paying the salaries of their workers. So we are all in the same boat. You can imagine FAAN running about 27 airports and the funds are not there, NAMA has facilities all over the country that they must maintain, equipment are imported and they must be maintained. I had to train my inspectors overseas. We are all in the same boat and we all need to work together, collaborate and get out of the problem. We need to stabilise the system and ensure there is improvement,” he said.
The Director General also said that airlines’ outstanding debts must be paid and must be done in a way that it would not hurt the finances of the airlines but insisted that the agencies needed the money to continue to provide service to the airlines.
“There are issues of the outstanding debts that need to be paid. So, we are working on the airlines, we know that if we tell them to give us all these monies at the same time, it is very difficult and not possible, so, what we have put in place in NCAA and to prevent the debts from growing, we have put in place a tripartite agreement; the NCAA, airlines and the airlines’ banks. So, once those funds go to the bank, the 5 per cent TSA/CSC (ticket sales charge and cargo sales charge) is automatically deducted and goes into the NCAA bank and NCAA will share it with the other sister agencies on a pre-determined ratio as entrenched in the 2006 Civil Aviation Act.
“For the legacy debts, what we have done is to enter an MoU with all the operators; we know they can’t pay all at a time, but they have to pay us a reasonable amount of money on a monthly basis at least. I think almost all the airlines are complying with this, except a few that we are working on. What we have said is that if they don’t pay this legacy debt, we are not going to renew their licenses; AOC (Air Operator’s Certificate), ATL (Air Transport Licence). That is one of the conditions and most of them have entered into the agreement. My account people are sitting with them so that they can make an arrangement on payment of a reasonable amount so that the debts can be cleared off over a short or middle time period,” Nuhu said.