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Nigeria Air plans to take off amid fuel and currency crises

Aviation industry stakeholders have raised concerns over why the Federal Government has approved the lease of three aircraft to flag carrier, Nigeria Air, at a time when local carriers are grappling with airline costs. high operating costs in the context of the fuel and foreign exchange crisis.

Along with taxes and surcharges, airlines pay for spare parts, planes and maintenance in dollars, with the naira falling to a record low of 710 to the dollar on the black market last week amid currency scarcity American.

The aviation fuel crisis, which began in late February and has since worsened, is currently threatening airlines’ ability to continue operations, with the price of the JetA1 rising from 200 naira in December 2021 to over 400 naira on liter in February. On Tuesday, the price soared to more than 800 naira per liter in most destinations in Nigeria.

Two major national carriers, Dana Air and Aero Contractors, had to cease operations due to high operating costs.

It is against this backdrop that stakeholders have expressed concerns about how the national carrier would operate profitably and compete with other national carriers struggling for survival.

The federal government last week approved the lease of three planes to Nigeria Air.

The three aircraft are manufactured by Airbus and Boeing. The government said the national carrier would begin operations with domestic routes.

Olumide Ohunayo, an aviation analyst, told BusinessDay that Nigeria Air’s dream was more like a personal desire than a national desire for Hadi Sirika, the aviation minister.

Ohunayo said the desire continued to drive the minister to push the project despite all the obvious obstacles and challenges.

He said: “What I see is that they are going to force this airline to start. When the government in power leaves, it will start to calm down and blame it on Nigeria. I wonder why the Federal Executive Council would approve a wet lease aircraft for a supposedly independent airline, 5% owned by the government.

“Why would we start with a wet lease of an Airbus and a Boeing? This comes at a time when airlines are struggling. We want to rent such expensive equipment. The purpose of a national carrier is to have national airlines on international routes. We are leasing planes that would not create jobs, but the operating costs will be so high. »

Ohunayo suggested it was time for the minister to put the project on hold, adding that the timing was wrong and there was no indication the carrier would survive.

“At a time when the country is facing an economic downturn, we may not even have real investors,” he added.

Sindy Foster, senior managing partner at Avaero Capital Partners, described plans to launch a national carrier at a time when the industry faces life-threatening challenges for airlines as “a disaster”.

“It is not too late to avoid disaster. Launching now will have a significant negative impact on the domestic aviation industry. Unless the intention is to totally destabilize the industry, postponing is the best option,” Foster said.

She said it was not in the industry’s interest to create a national carrier at a time when there is more competition for aviation fuel and scarce currencies.

Also Read: Explainer: How rising costs are pushing Nigerian airlines to the brink of collapse

Foster said: “They’ll probably get preferential treatment because they can do bulk orders. How does this help the industry right now? They should focus on problem solving. You don’t just launch something like this and hope for the best. The least you should do is an impact assessment to understand the implications of launching now.

“There may be advantages, but what if the disadvantages outweigh the advantages. A sensible government would stop until the launch benefits the industry. No one will be impressed if no other airline can compete for aviation fuel or foreign currency, thereby tying up other airlines or increasing their costs.

The federal government plans to launch the carrier using a wet lease aircraft. This means that the organization owning the aircraft will provide the aircraft, pilots, crew and engineers.

Ibrahim Mshelia, owner of West Link Airlines Nigeria and Mish Aviation Flying School, said he had no problem with the carrier boarding now as there is no good time for a carrier to start. .

According to Mshelia, there are advantages to having a national carrier because the government has the right to do certain things, as long as there is justice and fairness, but if the plane was wet leased, it means that all jobs would be exported.

He said that a government that prides itself on creating jobs should not take jobs overseas.

He said: “Secondly, the Civil Aviation Authority of Nigeria Act prohibits you from starting an airline with wet lease aircraft because a wet lease can only work between two already existing operators. with an air operator certificate (AOC).

“The airline doesn’t have an AOC yet, so why will they be wet lease aircraft? It’s against the law and the government shouldn’t break the law. If they do, what priority If the government provided currency to Nigeria Air transparently and did not do the same for other operators, it would be unfair and not fair.

He stressed that there should be a level playing field and that if other airlines are turning to the black market for dollars, government carriers must do the same.

Megamillions

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