Don't Miss


Home   >   Market - Finance   >   Finance   >   NCAA Wades Into Airlines, Oil Marketers Debt Crisis

NCAA Wades Into Airlines, Oil Marketers Debt Crisis

By on April 15, 2011

The Nigeria Civil Aviation Authority (NCAA) has waded into the debt crisis between oil marketers and domestic airlines as the latter insisted that they  would not sell  aviation fuel, known as Jet A1 to airlines except on cash and carry basis.

Confirming the reconciliation moves, spokesman of the NCAA,  Sam Adurogboye, said  a meeting was held with Airline Operators of Nigeria (AON), which were represented by its Secretary-General, Captain Mohammed Joji and its chairman, Dr Steve Mahonwu, the Director of Petroleum Resources (DPR) and the marketers.

“All the parties were asked to submit detailed reports to the Director-General, Dr Harold Demuren, following which, the Director-General  would do a report to the Federal Government and suggest considered areas in which government can step in and assist,” Adurogboye said.

The marketers lamented that the debt owed them by these airlines amounted to over N2 billion and therefore would only sell their products on cash and carry, which seems to hinder the operations of some of the airlines.

Passengers have suffered undue delays due to the fact that airlines do not have fuel to fly their aircraft and sometimes these delays last up to two or more hours while the airline is negotiating with the marketers, humbly requesting for credit, “even for this one flight.”

THISDAY learnt that because many of the domestic airlines obtained credit facilities from the banks they pay their revenues direct to these banks as the customer is paying for his ticket.

This leads to cash squeeze as some of the airlines may not have the immediate cash to pay for the fuel purchase, so rallying the cash causes delay and this affects the passengers and the whole airport operations.

One of the major airlines  expends about 600,000 litres of aviation fuel every day at the cost of N76.2 million and it has been facing the challenge of fuelling its aircraft after   landings before it would take passengers to the next destinations.

THISDAY learnt that almost on daily basis, passengers have to wait for up to three hours after the initial morning flights because at that period oil marketers and the airline are negotiating on how to pay for the fuel that would be purchased.

Inside source at  NCAA noted that it  was easier and better to do credit transactions on fuel purchase because it was not every time that an airline will have disposable cash to immediately pay for fuel .

The regulatory body also noted that an agreement must be reached to end that crisis because it was affecting the airline business.

“This has caused a lot of problem so the Director-General has decided to wade into the matter to resolve it because you don’t expect an airline that expends 600, 000 litres of fuel every day to pay in cash.”

Acknowledging the cash and carry scenario, a senior official of one of the major airlines said that for a long time Nigerian airlines have been buying their fuel in cash “because the marketers said that the airlines defaulted when they were selling to them on credit, but I agree with you, it causes a lot of delays. It is the major contributor to flight delays and it is affecting our operation.”

Source : Thisday