Airline operators in Nigeria has started feeling the negative impact of the current foreign exchange (FX) policy of the Federal Government as they have an estimated build-up of $575 million held in the country, which they are unable to repatriate.
Experts say this development may result in fewer investments and loss of jobs in the country’s aviation sector, as many airlines may be faced with the option of laying-off staff.
The National Union of Air Transport Employees (NUATE) said last month, that about 2,000 Nigerian aviation workers may be sacked by foreign airlines.
This is because airlines are unable to transfer their earnings to their respective home countries to meet operational costs, in accordance with international aviation industry rules.
Olayinka Abioye, acting General Secretary of NUATE, called on the Federal Government to intervene in the situation and prevent the anticipated job losses in the sector.
In addition to this, many airlines operating in Nigeria may be tempted to cut corners in their maintenance schedules as scarcity of Forex makes it harder to buy and stock consumables for aircraft in reasonable quantities, some aviation experts say.
This is in view of the International Air Transport Association (IATA) rule that monies that are not repatriated within a period of two months should be considered as blocked.
checks reveal that it was this situation that informed the British Airways (BA) downgrade of its flight operations to Nigeria from B747 – 400 with capacity to carry 406 passengers to the B777-200ER which only carries 217 passengers.
“Airline operators are required to change their tyres on a weekly basis, pay for wear and tear on a monthly basis and fix old engines when the need arises, and this is often done outside the country and requires dollars to foot the bills,” Nogie Meggison, chairman, Airline Operators of Nigeria said.
Meggison said that these routine activities which are mandatory are becoming very difficult for the airlines, as the FX is not made available.
Some airline operators told our correspondent that the high exchange rate is also taking a toll on domestic airlines operation because major checks are carried out overseas and payments for such services made in foreign currency, whereas they earn their revenue in naira.
The slide in the value of the naira since last year, prompted airlines to vote more funds from their meagre earnings on maintenance.
Also, in order not to jolt the domestic market, the operators were said to be reluctant to increase fares, fearing it could further shrink the number of air travellers, as purchasing power shrinks, due to the economic crunch.
A recent report revealed that most Nigerians who hitherto travelled by air, now resort to other means of transportation.
Findings show that the huge cost of carrying out mandatory C and D checks has become a very big burden for the airlines, given that when an airline is able to carry out these checks and scales through, “it means it has come to stay.”
A and B checks, which are lighter level checks, are usually done in Nigeria and there are the daily line checks, which airlines do after daily service of the aircraft.
C-check maintenance of a Boeing 737, which cost between $500, 000 and $700,000 prior to the foreign exchange volatility has tripled because of the sliding value of the naira.
However, Benedict Adeyileka, director of Airworthiness Standards, of the Nigerian Civil Aviation Authority (NCAA) has said that there are structures put in place to monitor the airlines and that the structures are so foolproof and transparent that they cannot be compromised by the operators.
Adeyileka said NCAA officials carry out ramp inspection of aircraft operations; they check and review aircraft maintenance status, cockpit and cabin crew and overall airline service.
“We drive through the ramp to review the operations of airlines, so it is difficult to cut corners; in fact, this will be dangerous for them. When we carry out reviews, at the end of the review, if you are found to have compromised the given standard, you are fined or your license can even be withdrawn, depending on the gravity of what you have done,” Adeyileka said.
Aviation experts say the majority of aviation-friendly countries have low interest rates; stable and easily convertible currencies, and no draconian policies that adversely affect airline operations.
“Foreign exchange for our operations is sourced through the Central Bank, via our bankers. Airlines have to bid, same as every other industry, for available funds,” Obi Mbanuzuo, Dana Air’s Accountable Manager, said.
On the home front, Jean-Raoul Tauzin, general manager, Air France KLM Nigeria & Ghana explained that Air France has naira in Nigeria which they routinely transfer to Europe and when there are fewer available dollars, it becomes a problem.