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New private jet policy traps $600m abroad

By on March 9, 2013

Individuals and corporates in Nigeria, seeking to purchase private aircraft may lose as much as $600 million in non-refundable deposits to foreign manufacturers in the weeks to come, as the aviation ministry’s review of private aircraft operations may cause buyers to miss payment deadlines and forfeit advance payments.

The aviation ministry is currently  reviewing the policy on the importation, operation and ownership of private jets in the country, with a view to ensuring proper registration, maintenance and monitoring of such aircraft.

Some industry watchers say there is a possibility that this will result in an outright ban on private aircraft in the country.

The policy review is said to have slowed down the approval of applicants seeking to purchase private jets, and BusinessDay learnt that there are over 60 pending applications  at the Federal Ministry of Aviation, which may be affected, since approvals are now on hold due to the anticipated policy.

For a private jet that is worth $50m, a buyer is expected to deposit between $10 million and $12million with the manufacturer, while the balance is expected to be paid within 60 to 70 days.

“Many of the agents have deposited funds with companies in countries such as South Africa and the United States of America (USA), but we expect government to be up and doing in the review of the policy which is causing the long delays,” one operator said.

“For instance, after 60 days, the non-refundable fee is lost to the manufacturers or the company and the jet might be sold to other interested parties,” an industry source told BusinessDay, adding that deposits are normally forfeited when there are delays in payment of the balance.

Industry operators say the policy review was prompted by the practice by private jet owners in Nigeria, of registering their aircraft in foreign countries in a bid to prevent the Nigerian Civil Aviation Authority (NCAA) from ascertaining their ownership and monitoring their movements and maintenance. The aviation ministry, it is said, is particular about aircraft maintenance, with a view to raising aviation safety standards in the country.

As part of the policy review, the  aviation ministry is also working to domesticate sections of the Chicago Convention, an international aviation protocol on mobile equipment acquisition, which has to do with documentation, supervision and monitoring of aircraft.

The current policy does not permit the Nigerian Civil Aviation Authority (NCAA) the regulatory agency, to monitor the movement and operations of about 150 private jets in the country.

Also, many of the private jets come with foreign registration numbers which prevent the NCAA from questioning suspicious movements or querying the jets’ maintenance.

Some analysts also expressed fears that many of the owners attempt to hide their identities through foreign registration, adding that “one of the things the ministry may be looking at reviewing is how to still put the maintenance structure and surveillance under the country’s civil aviation regulations.

“We are still working on the new policy but a lot of progress had been made. Yes, we are awaiting the new policy before further approvals are granted”, Joe Obi, special adviser to Aviation Minister on media said.

Speaking on the development, Noggie  Meggison, managing director of Jedair said “the move by the “ministry is a good one and might just be to fine-tune the policy and not an outright ban”.

Meggison said it is not proper that currently, the NCAA does not have full control of about 150 private jets in Nigeria, adding that  the Chicago Convention on mobile equipment gives Nigeria the power to regulate it. There is a need to know what is on board a jet, there is need to know who is who, there is need for NCAA to control for instance, their maintenance and how they operate within Nigeria.

“You cannot just come to Nigeria with foreign registration on the jet and say you are not answerable to the NCAA. So I think the ministry is trying to review the policy in order to balance and get better control of the system. It is a matter of just regulating the system”, he said.

On those who have paid non-refundable fees, Meggison observed that there are no hard and fast rules, adding that they should have waited to get the approval from the ministry before paying such money.

“This is a regulated sector and one needs ministerial approval to bring in an aircraft, they need to wait on the system”, he said.

John Ojikutu, a retired airport commandant said there are some items that need to be reviewed or expunged, even from the current regulations, as they relate to private jet registration.

About 80 per cent of the private jets carry foreign registration and most of them are registered in South Africa, the United States and some European countries. This means that many are being flown and maintained by expatriates.

“I think the registration issue will also be one of the areas to be reviewed because many of the jets are flown in Nigeria by expatriates and are not accountable to the NCAA. When the policy is reviewed and there is enforcement, it will limit the number of expatriates and hidden issues with private jets in Nigeria”, an analyst said.

 

 

[Business Day]