Aviation Crisis Looms As Functional Aircraft Owned By Airlines Drop Over Forex Scarcity, Others

Nigeria’s aviation industry is facing an imminent crisis as the number of functioning aircraft in the aviation industry has drastically dropped due to the scarcity of foreign exchange which they require for maintenance of their aircraft abroad and the high cost of aviation fuel.

Airline operators have since 2020 decried the impact of foreign exchange on their operations but the condition has become worse.

The likes of Emirates Airline in November 2022 suspended flight operations in Nigeria due to its inability to repatriate over $85m revenue trapped with the Central Bank of Nigeria.

A stakeholder in the aviation industry Mike Ojonugwa who spoke to THE WHISTLER confirmed that the looming crisis is influenced by the fact that airline operators go to the black market to source for dollars to maintain their fleet, which a lot of the operators are unable to afford.

As of Thursday, October 19, the dollar traded N1,155 at the parallel market thereby worsening the predicaments of the airline operators.

Ojonugwa told THE WHISTLER that Nigerian airline operators have their aircrafts grounded due to faults that needs to be fixed abroad. Specifically, some airlines are unable to bring back their planes which they took for maintenance abroad due to the lack of forex to pay for the service.

Recall that JP Morgan had estimated that the CBN’s net forex reserves fell to $3.7bn at the end of 2022, compared to $14bn in 2021, which makes it almost impossible for the CBN to settle the backlogs of dollars belonging to airlines in the short run.

Ojonugwa said, “The aviation sector is facing a downtime because of the scarcity of forex in the economic system, scarcity of aviation fuel is affecting the mode of service and it is forcing a lot of airlines to pack up.

“Currently Azman, Arik, Max Air, and Dana Air do not have more than two operating airlines in Nigeria today, aside from Air Peace and Ibom Air which are the major operating airlines in Nigeria.”

Air Peace Chairman and Chief Executive Officer Allen Onyema had earlier revealed that in 2015 he applied to have a maintenance hangar of which he paid over N100m to lease land at the Lagos Airport to the Federal Airport Authority of Nigeria (FAAN), eight years after nothing was approved.

Onyema said the airline wouldn’t have spent such an amount on maintenance and repairs outside the country if FAAN had allocated the land it paid for in 2015 to build an MRO hangar at the Murtala Muhammed Airport, Lagos.

The aviation stakeholder said the industry needs urgent palliative to save the sector from the crisis, adding that Nigeria does not have a maintenance hangar which the government must fix.

He said, “The exorbitant cost of maintenance of fleets due to forex scarcity, has contributed to the folding up of most airlines. Also, there is no support from the government to all these airlines, the FG is not subsidizing them to aid business and lift the burden for most airline operators. This in turn is affecting the aviation industry where job creation and revenue generation is exported abroad.

“The government can help the operators by giving them soft loans, this is because the more they fold up, there will be no provision for their staff any longer which will result in job loss.

“Also, it will increase the unemployment rate in the country. So, if the FG provides soft loans for these operators to acquire at least three air fleets and also map out a mode of payment, it will go a long way.”