FG mulls cut in airfares, access to single digit financing

The Federal Government is seeking measures to force down the rising prices of airfare in Nigeria.

Speaking at the weekend in Abuja, Minister of Aviation and Aerospace Developnent, Festus Keyamo, said: “We will see what happens, I don’t want to predict doom but we will try all we have to do, not only the dollar issue or exchange issue but within the sector and other surrounding issues within the aviation sector to force down prices.

“Of course, we need to be competitive with those foreign rules and I have said before how competitive we should be or how we can be more competitive by allowing our local airlines have access to dry leases at single digit or loans at single digit.”

The minister explained “our banks cannot give loans to our operators at a single digit. In fact, there is no way our local airlines can compete with loans that are 26 percent.

“So how do we do it? We need to go out of this country to try and get extra for them to compete in those rules that our partners have allowed us to compete in. So, if for example the British Airways has 14 slots coming into Nigeria every week, we should have our local airlines reciprocate and have 14 slots going into UK every week and  that competition will force down the prices and all other factors we are looking at too.

Keyamo also cleared speculations that the Central Bank of Nigeria (CBN) is owing foreign airlines up to the tune of $100 million, saying that although the money was not up to the said amount, the CBN had cleared it.

“It is not $100 million, it is 700 and something originally, but of that money, 160 million or thereabout was being owed by the Central Bank of Nigeria. So that was the one the Federal Government was concerned about and government has cleared that backlog it owed foreign airlines.

“The others are the transactions they had with commercial banks; the airlines and commercial banks have not been able to give them the dollars equivalent. It is the naira component that they put in the commercial banks that the banks have not been able to give them the dollars equivalent and not the CBN”.

He said the one for CBN is actually the one they promised to pay during their normal weekly auction which they did two to three years” adding that CBN has been able to fulfil that obligation to foreign investors. Government has shown its capacity to fulfil its dollars obligation to foreign investors.

“In order to make local airlines compete with their foreign counterparts, government will have to go the extra length to help local airlines” he explained.