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    Wednesday, October 4, 2023

    Nigerian Airlines Race To Meet 6 Aircraft Requirement

    Musa Nuhu, director-general of the Nigeria Civil Aviation Authority (NCAA), says airlines must have strong financial capacity and a minimum of six aircraft to be allowed to operate in the country.

    Nuhu spoke during a virtual meeting with aviation correspondents recently.

    He said the major problems facing domestic airline operation is due to lack of capacity to overcome challenges.

    The director-general said the new policy is not only for new startups but also for existing operators, adding that existing operators have been given a deadline to comply with the policy.

    Nigerian domestic airlines are now in a race to meet the January 2025 deadline set by the Nigerian Civil Aviation Authority (NCAA) to raise their minimum aircraft to six.

    Amidst the opposition trailing the move by the NCAA which has been inculcated in the recently amended Nigerian Civil Aviation Regulations (NigCAR), the regulatory authority said there is no going back on the requirement.

    This is just as experts and stakeholders are now calling on the airlines to explore the possibility of merger to remain in business.

    According to the Director-General of NCAA, Capt. Musa Nuhu, the new requirement will help the airlines to be on a strong financial footing to provide services to the passengers.

    The new rule

    The amendment provides a minimum of six aircraft for a start-up carrier.

    Part Nine of the NigCAR 2023 that deals with Air Operator Certification and Administration explicitly makes provision for the new aircraft requirement.

    The existing airlines have, however, been given the grace of January 2025 to embark on a fleet expansion programme to have at least a minimum of six operating aircraft for their AOC to remain valid.

    The provision reads: “The Authority may deny an application for an AOC if it determines that:

    “The applicant is not adequately equipped or is not capable of conducting safe commercial air transport operations or unable to maintain its aircraft.

    “The applicant does not have: (i) for scheduled operation, at least Six (6) Nigerian registered airworthy aircraft capable of servicing its approved routes on commencement of operations provided that no AOC holder in scheduled operations will have a minimum of 4 Nigerian registered airworthy aircraft at any given time.

    “(ii) For non-scheduled operation, one (1) Nigerian registered airworthy aircraft. The applicant previously held an AOC that was revoked; or a person who contributed to the circumstances causing the revocation process of an AOC obtains a substantial ownership in the applicant or is employed by the applicant in a position required by this part.

    “The provisions of 9.1.1.6(b)(i) shall become effective on 1st July 2023 for all new applicants except as provided in (d); (d) The provisions of 9.1.1.6(b)(i) shall become effective on 1st January 2025 for all existing AOC holders and new AOC applicants who have submitted an acceptable formal AOC application package to the Authority before 1st July, 2023 for scheduled CAT.”

    Active and not so active airlines in Nigeria

    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.

    Checks by our correspondent indicated that Ibom Air, for instance, has five Nigerian registered aircraft, Green Africa has three, Rano Air, 3; ValueJet, 3. Azman is currently not operating as none of its aircraft for domestic operations is active.

    Dana Air has eight aircraft, but less than six are currently operating. However, the airline has embarked on expansion plans that would see it take delivery of more aircraft.

    Overland also has less than six aircraft active, but is banking on its pending order for more aircraft, especially the Embraer E175 with the first received last week.

    Max Air also has fewer aircraft for domestic operation but has a fleet of seven aircraft comprising its Jumbo 747 jets for Hajj operations.

    Air Peace has the biggest fleet in the industry with over 30 aircraft and several others on order.

    Our correspondent learnt that despite the opposition, the carriers have strategised on their expansion plans in order to meet the 2025 deadline as many of them have pending aircraft order while some recently made fresh order.

    However, given that aircraft acquisition is not something to be purchased off the shelf, many of the airlines have up to 15 months to meet the new requirements.

    Air Peace had, in 2019, ordered for 13 aircraft, but only six have been received even as Ibom Air in November, 2021 ordered 10 A220 aircraft valued at $905m while none has been received. Overland Air at the same time ordered six Embraer E175 jets while only one was received early this month.

    No going back on new regulations – NCAA

    The Director-General of NCAA, in a chat with our correspondent, gave the rationale for the new regulations, saying it was to help the airlines improve on their efficiency and service delivery.

    He said, “For now, we are not reviewing it. We have to implement it. It is all about generating adequate revenue to operate. An airline that has three aircraft, an airline that has six aircraft, their overhead cost, the difference is not much because you have to open your station, you have to do this, you have to do that.

    “But an airline that has six aircraft over an airline that has three aircraft, the revenue generation is huge, is different, so their likelihood for survival is much higher. We have to look at it. If you look at the airlines that have been giving issues, they are airlines with two, three aircraft. They are not even generating adequate revenue to deal with their current liabilities. It is unfortunate but aviation is a very expensive business, it requires a lot of investments. But it is our responsibility to ensure that an airline is in a strong financial position to run. If we don’t, they are going to start cutting corners and safety issues might crop up.”

    A member of the Airline Operators of Nigeria (AON), Mr Roland Iyayi, said the new provision is strange.

    He said, “We have been told that before you can set up an airline, you must have six airplanes. I, sitting here, will tell you that if you are going to set up an airline and you are starting with six airplanes, you have failed.

    “Emirates Airline has about 242 aircraft today; they started with two aircraft, which were leased. Airlines in different parts of the world start with one aircraft. So when you set up a system that says, oh we have been having too many delays in the industry and therefore, you must have six aircraft, have we bothered to find out what the issues are with the delays? So a lot of issues are intertwined.”

    The Secretary-General of the Aviation Roundtable, Olumide Ohunayo, backed the NCAA for the move, saying Nigerian airlines needed to consolidate.

    “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 NCAA, rather we should rather 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 advise is that the NCAA needs to create a new class of AOCs…,” he added.

    Another analyst, Babatunde Adeniji, said the challenge with airline mergers was due to the absence of corporate governance among the operators.

    “Many of them lack proper corporate governance structure…They run them like one man businesses. So, trust is a real issue…Also many of them seem to have other motives aside from economics…like politics,” he said.

    A former General Secretary of the Nigerian Union of Air Transport Employees (NUATE), Comrade Olayinka Abioye, said despite the egoistic tendencies of some businesses to mergers and alliances, this might soon be inevitable in the aviation industry.

    He said, “For a fact, mergers and acquisitions have been the in-thing in some climes but I do know for a fact that our ego as Africans may not permit such; yet it seems the most acceptable option given the hurdles prospective airline operators may go through; except also unless the fellow has a very big pocket.

    “These days of politics and with some of our politicians having amassed huge funds from politics, some of them may be advised to offload such funds into aviation being a very lucrative venture if properly managed and well run like Ibom, which is good for us but for how long will that last, depending on their hunger to have fast profits. By and large, we may be seeing the era of mergers soon.

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