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Economic crunch: Nigerian airlines abandon aircraft at maintenance facilities overseas

By on June 10, 2016

Checks by THISDAY have revealed that some Nigerian airlines are unable to bring back their aircraft taken abroad for routine maintenance due to their inability to pay outrageous maintenance bills, which have tripled because of the low value of Naira.
THISDAY learnt that some aircraft have been in different maintenance facilities in Europe, South Africa, Middle East and the US. Some of the airplanes, according to source, had spent more than one year in these facilities.
It was reliably gathered that an airline abandoned about five of its planes in a maintenance hangar due to lack of funds to pay for the services and ferry them back in Nigeria.

Sources at the Nigerian Civil Aviation Authority (NCAA) confirmed this development, adding that about 25 percent of existing aircraft owned by commercial airlines are on maintenance or AOG (aircraft on ground) either because they are no more airworthy or are due for maintenance.

A major challenge facing the airlines is that they generate revenues in Naira whereas they carry out maintenance and purchase major aircraft parts in foreign currency.
so with the low value of the Naira, the airlines are paying more than twice the maintenance cost they used to pay to carry out C-Check on their aircraft.

Recently the Chairman of Airlines Operators of Nigeria (AON), Captain Nogie Meggison called on the federal government to make dollars available for the airlines and warned of the dire consequences if airlines are unable to access forex to carry out critical activities like aircraft maintenance.

The consequence is safety breach, which may lead to air crashes, as the airlines may resort to cutting corners in order to keep their aircraft in the air.

“It is no longer news that airlines in Nigeria charge very competitive fares in local currency but have to carry out numerous operational activities including maintenance and purchase of spare parts in foreign currency (Dollars) thereby adding to the already unbearable burden the airlines have to carry on a regular basis. And the current forex constraint being faced by airlines has further exacerbated the situation and threatening to cripple airline operations in the country,” Meggison said.

Airlines, according the checks, pay a minimum of $500, 000 to $700, 000 for engine overhaul and about the same amount of money for C-Check maintenance on a Boeing 737 aircraft.

At N361 per $1 in the parallel market this will amount to N180.5 million and N252.7 million respectively.

Because of the huge cost of overseas maintenance and frequency for recurrent training, industry operators fear that Nigeria cannot get perfect safety standard that could be obtained in more advanced countries because it costs a Nigerian airline almost four times what it would cost similar airline in the US, for example, to change nose-wheel of an aircraft.

The airline industry in Nigeria is described as precarious and worldwide it has very little profit margin. High charges from government agencies, multiple taxes and arbitrarily high cost of aviation fuel make it almost impossible for Nigerian airlines to make profits.

So with limited load factor (passenger patronage) occasioned by the nation’s poor economy, it will be extremely difficult for Nigerian airlines to raise such fund for the maintenance of one aircraft.

To make matters worse, Nigerian banks are not enthused about lending money to airlines and at the high interest rate and short-term pay back demand, it is almost impossible for airlines to obtain such loans, pay them off and still sustain their business.

 

[ThisDay]