Forex Crisis: Stakeholders lament over dwindling fortunes as Nigerian airlines aircraft shrink to 44 from 107

 

 

Joseph Irikefe

 

Current operating aircraft of Nigerian carriers have dropped to 44 from about 107 a few years ago following the debilitat­ing foreign exchange crisis, investigation has revealed.

The current statistics show that 63 aircraft of the scheduled operators are either grounded in the country or are in the various maintenance organisations outside Nigeria for checks, reports Daily Independent.

The figure represents a 58 percent drop in recent years, despite the growth in the number of scheduled airline oper­ators in the country.

This is as stakeholders in the sector have also called on the federal govern­ment to ease foreign exchange scarcity for investors across the nation’s economy to prevent collapse of businesses.

Presently, there are 12 sched­uled airlines operating into vari­ous airports in the country, using different brands of airplanes from Boeing 737 series, Airbus A320-300, A220-300, ATR, Embraer CRJ, Em­braer E2, Embraer ERJ-145, Dash 8, MD 83 and Bombardier CRJ 100/900, among others.

The current scheduled airlines are Max Air, Overland Airways, United Nigeria, Air Peace, Aero Contractors, Arik Air, Dana Air, Azman Air, Green Africa, Ibom Air, Value Jet and NG Eagle.

Checks by this paper revealed that for instance, Max Air at its peak operated six Boeing 737 aircraft, but the fleet has depleted to just two aircraft.

United Nigeria Airlines with six aircraft at its peak, Embraer ERJ 145 (four) and Airbus 320-300 aircraft (wet-leased), currently operates two ERJ 145 and the two A320 wet-leased aircraft.

Prof. Ifeanyi Okonkwo, the Chairman, United Nigeria Air­lines (UNA), had promised about a year ago to regularly upgrade the fleet of the airline every quar­ter, but the forex scarcity and the poor economy may have derailed the plans.

But a source close to the airline told our correspondent recently that the airline may take delivery of a new aircraft in March, this year.

Besides, checks showed that Aero Contractors airline current­ly operates three aircraft, two B737 (Cally Air operated by Aero) and a Dash 8 aircraft and one rotary wing. The airline about a few years ago had seven aircraft in its fleet.

Arik Air’s fleet has depleted from 14, comprising B737, Bom­bardier CRJ-900, Fokker 50/60, Dash 8, to current two aircraft in its fleet, including a B737.

For Dana Air, the airline cur­rently operates two aircraft, MD 82 and B737. Dana about two years ago had a fleet of six aircraft, con­sisting of MD and Boeing fleet.

The most hit of the econom­ic crunch and dollar scarcity is Azman Airlines, which for almost a year now, has not operated.

At its peak, the airline had sev­en aircraft, including leased air­planes, which were Airbus A320 and A330, while the remaining five were Boeing 737 aircraft, but suffered gradual depletion until it no longer has an airplane to oper­ate with.

The airline, which commenced scheduled flight services in 2014, had last August sent its staff on compulsory leave due to its fail­ure to return its aircraft on main­tenance aboard.

Two out of the four aircraft were taken out to Turkey for C-checks in a maintenance, re­pair and overhaul (MRO) facility recognised by the Nigeria Civil Aviation Authority (NCAA), while the other two remained in an MRO facility in Nigeria.

While the leased aircraft had been returned to their original owners, the other aircraft owned by the airline were due for main­tenance at different times, but the management could not raise funds to conduct checks on them.

The airline had attributed the fluctuating Nigerian currency and its crash in recent times to the failure of the airline to raise the necessary funds to bring back the aircraft to operation.

Also Green Africa Airways op­erates a fleet of ATR 72/42 aircraft. At its peak, the airline had three aircraft, but currently operates two airplanes as the third is on maintenance checks.

Our correspondent also gath­ered that Overland Airways fleet, comprising seven aircraft of ATR 42/47 and Embraer E175, had de­pleted to five aircraft.

Ibom Air with about six air­craft at its peak of A320 and Bom­bardier CRJ-900), currently oper­ates about four airplanes, A220 and CRJ-900.

Also, Value Jet with four air­craft of Bombardier CRJ 100, CRJ-900LR) at its peak, currently operates three aircraft in its fleet, while the controversial NG Eagle, which commenced operations in December 2023 with three B737, now operates just one wet-leased aircraft.

Commenting on the develop­ment, Capt. Ado Sanusi, the Chief Executive Officer (CEO) of Aero Contractors, said that the Nige­rian aviation industry capacity had been on the declined in recent months due to various challenges.

Sanusi observed that some of the aircraft taken out for mainte­nance checks out of the country in the past two to five months were yet to return because of the naira exchange rate to a dollar.

He regretted that the exchange rate had increased probably by 30 percent in recent months, while the costs of spare parts had also increased by about 20 percent within the same period.

To address the challenges, Sa­nusi proposed domestication of leasing companies, stable curren­cy and economy.

He said, “We are facing the greatest economic challenge in my lifetime. The naira is still falling. Inflation is still high and food security is still there and the disposable incoming is dwindling. It is going really low. The airlines are looking for business and lei­sure travels. Companies need to be prosperous to travel for meetings, but that is being reduced because of the economic activities in the country.

“One of the things we should be looking at as an industry is how we can domesticate leasing com­panies. What are the hindrances stopping leasing companies from coming in? How can we give them the leeway to flourish? Whatever it is, we must identify it. We must get the leasing companies to come in.

“Why are the Nigerian air­lines finding it difficult to do dry lease of aircraft, instead of wet-lease? Wet-lease is supposed to be stopgap and we can’t develop aviation industry and human cap­ital and the economy with that. We are just a dumping ground. We are just getting some small commissions and give the rest to the companies that we leased the aircraft from.”

He, however, assured that the fixed wing of Aero Contractors fleet would increase from present three to five before the end of June as another aircraft is expected to join the growing fleet in the com­ing month.

Besides, Mr. Simon Tumba, avi­ation analyst, attributed the major challenges confronting the airlines to the forex crisis and the continu­ous rise on importation levy by the Central Bank of Nigeria (CBN).

According to Tumba, the cur­rent sordid situation had made fleet retainer by airlines impossi­ble, while depletion had continued non-stop.

Tumba also lamented that the forex scarcity and the unstable economy had virtually collapsed every business organisation in the country, while the government seemed helpless in addressing the challenges.

He said, “The forex issue has affected the airlines not only in fleet expansion, but fleet retainer. Most of the airlines can no longer retain their fleets. This is difficult and I am not sure if anyone can maintain his or her current fleets, not to talk of fleet expansion.

“It is a macro issue and not just a sectorial challenge. Every sector of the country is affected and the only people probably smiling to the banks are the banks them­selves. Whether you are talking about the petroleum and gas sec­tor, manufacturing, agriculture and others, everyone is bleeding. Unfortunately, for agriculture, the security challenge has further compounded it. The government is helpless, the airlines are help­less.

“Government cannot do much for the aviation sector, even the public sector players are crying because the value of naira is dwin­dling every day. You can look at the value of the dollar yesterday and see the value again today. It chang­es daily.”

Tumba explained that at the current airfares, the airlines are subsidising the airfares for air travellers, stressing that the cur­rent return economy tickets are still less than $150, despite the fact that the sector is about 80 percent dollarised for airlines.

Tumba feared that the current situation would affect the purchas­ing power of air travellers, argu­ing that passenger traffic was also bound to drop.

“The airlines are going through a very difficult task. Probably they are the hardest hit among the in­vestors in the country. It is just terrible,” he said.

Besides, one of the airline op­erators who didn’t want his name in print, bemoaned the present un­favourably business environment for operators.

The airline source lamented that despite charging airfares in naira, the operators carry out maintenance, acquisition of air­craft and spare parts in dollars.

He also decried the persistent review of import tariff by the Central Bank of Nigeria (CBN) as unnecessary, thereby leading to more uncertainties on the busi­ness environment.

“Everything in the industry is dollar-based. It is a real problem for the industry. It is really a pain in the neck.

“Also, the Customs tariff has increased about three times this year. A report said last week that it has increased by 2.2 percent in recent times. What that means is that if an importer is bringing in cargo and it’s on the high sea, be­fore it gets to the port, the cost has increased,” the source said.