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Business & Finance

Operators: 47 Airlines Have Folded Up in Nigeria

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Airline operators on Wednesday blamed the dwindling fortunes of some airlines in the country on the harsh operating environment.

They told the House of Representatives Committee on Aviation that 47 airlines had folded up in the last 30 years owing to the unfavourable operating environment.

The Secretary General, Airline Operators of Nigeria, Capt. Mohammed Joji, who spoke on behalf of his colleagues, attributed the development to “policy formulation, policy deviation and policy contradictions on the part of the executive arm of government.”

The committee, which is chaired by Mrs. Nkiruka Onyejeocha, held a public hearing at the National Assembly on the need to rescue the airlines from imminent collapse.

“Forty-seven airlines have gone under due to policy somersault and high operating costs,” Joji said.

He stated that the Federal Government tried to address the situation in 2006 through the Presidential Task Force set up by former President Olusegun Obasanjo.

However, he noted that there had been no remarkable change in the way government agencies in the aviation sector churned out policies because the report of the task force was not implemented.

Joji said, “These include high operation costs, leading to unstable operating environment such as the Nigerian Airspace Management Agency charging dollars for domestic operators flying within the Nigerian airspace.

“It was for that reason the Presidential Task Force set up by the then President Olusegun Obasanjo submitted its report in March 2006. The published white paper approved among other things the following: government accepted the recommendation to grant zero tariff and Value Added Tax on aircraft, aircraft spare parts and ground equipment.

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“Government also approved the removal of the five per cent VAT on ticket sales and cargo charges. The task force also noted that VAT is never charged on transportation in any part of the world because transportation is a basic service, which drives the economy. The task force’s recommendation can be collaborated by the VAT Decree No. 102 of 1993.”

The operators also complained that foreign airlines were enjoying certain incentives that were denied local carriers.

One of such is the approval of multiple destinations to foreign airlines, which they said had adversely affected their own operations.

Joji explained, “The Nigerian Civil Aviation Authority policy of levying operators flying on scheduled flights out of Nigeria is a punitive measure devoid of any economic sense to the airlines.

“The Federal Airports Authority of Nigeria charges the most expensive land rate in the world at N60,000 per square metre. That is more expensive than choice land in Victoria Island, Lagos, and Asokoro in Abuja.”

The Managing Director, Medview Airline, Mr. Olanrewaju Lukman, told the committee that Joji’s presentation adequately captured the feelings of the operators.

He said while the government’s plan to concede four major airports to private operators might sound appealing, it could be distorted if the process was not made transparent.

“If anything meaningful must be achieved in the proposed plan to rescue the aviation sector, then transparency must be the watchword,” he argued.


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