Business

$3.6bn aviation debt: More local airlines may go under

Non ownership of national carrier costs Nigeria $1.5bn yearly loss

The takeover of the debt-ridden Arik Airline, and Aero Contractors by Assets Management Company of Nigeria (AMCON) may not be the last of government’s intervention in the sector.

The weight of accumulated debt burdens, totaling over $3.6 billion among other issues, is currently causing concerns among major operators, with fears that other indigenous airlines may not survive.

It would be recalled that Arik Airline was last Thursday taken over by AMCON over a number of issues including stoppage of its services, and debts owed both local and foreign creditors.

Government on announcing the takeover of the airline said it was aimed at saving the industry and guarantying safety as it was learnt that the embattled airline could not have been cleared to fly outside Nigeria’s airspace due to its mounting debts caused by harsh operating environment.

But stakeholders have expressed fears that Arik and Aero are not alone in this, as a number of local airlines have gone under in the past two years, for the same reasons.

Read also: Aviation workers threaten govt over Abuja Airport closure

The main reason being the heavy charges by the government agencies, including NCAA, NAMA and FAAN.

The former general manager of the defunct Nigeria Airways, Chris Aligbe, said the government is gradually taxing the operators out of business.

In a chat with Ripples Nigeria, Aligbe said: “This is the time for government to treat the industry as a baby-industry and by this approach the stakeholders will tell each other the truth, that there is nothing on the ground guarantying their remaining in business longer than a few years from now.

“Otherwise, things will be worse in the next few years as there is nothing showing that the airlines that are operating are breaking even.”

A Flight Captain with the Dana Airline, Sam Umanam, described the situation facing the industry as one in which the operators are sacrificing so much to ensure that Nigeria remains in the comity of nations still having indigenous airlines.

The Vice Chairman of Association of Airline Operators of Nigeria, Chief Adeleke Ayeni, in his comment said the NCAA should cease collecting five per cent revenue on every air ticket sold by the airlines.

“There is evidence of more than double taxation on us, in addition to the taxation on ticket, we pay for inspection services by NCAA, we pay certain percentage of our profit as government tax, and this is aside from the security charges from FAAN and clearing of flight by NAMA.

“Ironically, the foreign airlines, which are known for better turn-over advantage over their local counterparts, are exempted from paying most of the charges for reasons best known by the authorities,” he said.

But in what looks like a reaction to the complaints from the operators, the Director General, NCAA Muctar Usman, in a statement on Tuesday disclosed that a committee had been set up to advise government on how best to encourage the operators to remain afloat in business.

He said: “The committee will be turning in its report within two weeks after meeting with all stakeholders.”

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