Domestic crisis may force more airlines to shutdown

AN air of apprehension has continued to sweep across the country’s aviation sector, particularly its airlines’ domestic scene, as indications are pointing to the fact that more domestic airlines may pack up.

This is coming after two of the existing domestic carriers, Aero Contractors and Dana Air are already down within a week.

Indications have equally emerged that the domestic airlines may have hiked their fares with a one hour flight now costing as high as N120,000.

The adjustment according to information gathered may however come in the form of fuel tax or surcharge to cushion the effects of high cost of Jet fuel on their operations.

The increase in the fares by the domestic carriers is not peculiar to Nigeria as other carriers around the world, including the foreign carriers operating into Nigeria, have since adjusted their fares to keep them in business following the hike in the prices of aviation fuel and other sundry issues.

Efforts made to confirm the fare hike from the airlines yielded no result as many of their spokesperson failed to respond to messages sent to them for clarification.

Reasons attributed to the challenges being faced by the carriers included: the unavailability of foreign exchange, exorbitant price of aviation fuel and the recent shutdown of the runway at the domestic airport under a very short notice by the Federal Airports Authority of Nigeria (FAAN) among other factors.

As at February this year, a litre of aviation fuel was sold for N200 which has in the past weeks increased more than three times to between N780 and now N860 putting the local carriers in a tight corner with all of them either canceling, delaying or rescheduling their flights to the discomfort of passengers.

As the price of the commodity continues to increase daily, the inability of the airlines to access the forex market has further complicated issues for them since most of their transactions are done in foreign currencies.

Aero Contractors was the first to announce the temporarily shutdown of its scheduled operations owing to what the management described as the challenging operating environment.

“The past few months has been very challenging for the Aviation industry and the airline operators in particular following the high cost of maintenance, skyrocketing fuel prices, inflation, and forex scarcity resulting in high foreign exchange rates which are amongst the major components of airline operations, the airline declared”.

For Dana Air which was grounded by the Nigerian Civil Aviation Authority (NCAA) over what the regulatory agency termed financial incapacity, the management equally pointed to similar reasons given by the Aero management to be responsible for their financial predicaments.

The NCAA, while speaking on why Dana Air was grounded, cited unhealthy financial books discovered during an audit conducted on the airline and the findings of an investigation conducted on the airline’s flight operations which revealed that Dana Airlines was no longer in a position to meet its financial obligations and to conduct safe flight operations.

Dana Air, like Aero had equally identified the skyrocketing cost of Jet A1 at N860 per litre, unavailability of forex and inflation as contributory factors to its predicaments craving the understanding and patience of customers, travel and business partners.

Some stakeholders who spoke to the Nigerian Tribune Aviation have called for the total audit of the airlines and the service providers including FAAN, the Nigerian Airspace Management Agency (NAMA) and others.

The stakeholders have equally raised the fears that the crisis if not urgently tackled by government may lead to the collapse of more domestic airlines.

According to the Managing Director of Centurion Aviation Security, Group Captain John Ojikutu, retired, “Aero Contractors is out of commercial flight operations so now is Dana Air and I know for sure that Arik is getting choked; these are among the big ones; what do you think is happening to the lesser ones especially the new comers? I saw this coming in 2020 when COVID-19 got into the flight operations; go to cargo operations is what I advised our domestic airlines but it fell into deaf ears. But here we are today.

While welcoming the grounding of Dana Air and its ongoing audit, Ojikutu said: “This is the first time am hearing of the report of an economic audit of a Nigeria domestic airline. We need more of this on all the operators and not only on the airlines to effectively be complying with the Nigeria Civil Aviation Regulations (CARs) Part 18.17.1.1 on operations. I am hoping this Audit will be extended to other operators especially the services providers like FAAN, NAMA, Met, and ground handling and maintenance services. That is what the Nig CARs demands of the NCAA annually and not knee jack operation.”

The domestic carriers that had hitherto lamented how the unfavourable environment had negatively impacted their cost of productions had recently unanimously increased fares with a one hour flight that used to sell for between N20 and N25,000 depending on the booking system and the aircraft type, jerked up to between N50,000 and N100,000 and more.

Supporting the airlines plans to adjust their fares in the face of the challenges, an airline who spoke at a forum told the airline operators “Sell what you buy!!! This is my candid opinion to Airlines, given these uncontrollable factors of production in the Airline Industry sector. Demand will definitely drop but much better than cut corners and plan an accident. If a trip fuel is 4000 liters for 1 hour on jet (LOS ABV) for example at N800 per liter which gives N3,200,000 and a load factor of 100 passengers, This means fuel cost per passenger is N32.000 and this is approximately 30 per cent of total Cost. This will translate to N107.000 tariff for one way journey period.

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