Saturday, February 24, 2024

New Fleet Requirement Threatens Nigerian Airlines

Domestic carriers in Nigeria 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.

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“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.

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.

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