The Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Musa Nuhu, has disclosed that it is difficult for Nigerian airlines to make a profit because of their difficult operating environment where access to funding is very challenging.
The NCAA boss has also debunked claims in some quarters that the Ministry of Aviation was interfering in its affairs in a way that erodes its regulatory autonomy.
Nuhu, who spoke to aviation journalists in Abuja at the weekend, said his agency and the Ministry of Aviation and Aerospace Development were doing everything possible to support the airlines, adding that some of them are currently not in good financial state.
“Nigerian airlines are operating in a very difficult environment. An airline cannot operate in isolation of the economy it is operating in and the Nigerian economy is in very difficult times. The cost of financing is 25 per cent (interest rate); that is killing to start with. You take a loan and you pay 25 per cent of whatever you make to the bank. You are not talking about your expenses, your costs, your current and long-term liabilities. Quite a few of them are in financial difficulties and some are okay. So that is the way it is. It is a very difficult environment for the airlines and we also do sincerely sympathize with them and we will try and see where we have flexibility to make life easy for them,” he said.
Nuhu further stated that Nigerian airlines pay high insurance premiums compared to their counterparts in other parts of the world.
According to him, these high charges are digging deep into their operating funds; so, the regulatory authority is supporting them in various ways by allowing them to adjust their payment of insurance in ways that will enable them to survive.
“Like the issue of insurance, the insurance is from Lloyds of London while it requires a huge amount of foreign exchange. Normally, insurance they say, is for one year, but we know an airline that has 20, or 30 aircraft like Air Peace, to pay insurance for all the aircraft in one year will be difficult; that is why we say ‘pay quarterly,’ at least to reduce the financial burden, especially on the requirement of getting foreign exchange at a time. So, we try to assist the airlines in that area, and for those who have debts, we reach an agreement with them. If I have one billion with you, I am not asking you to pay that one billion to me, because if I do that, I am going to kill your business. So, we reach a Memorandum of Understanding (MoU) and they pay an amount that will not cripple their operation. But also, they have to pay a reasonable amount to clear those outstanding debts. Those are the areas we have flexibility with the airlines,” he added.
On the allegation that the Ministry of Aviation interferes in the affairs of the NCAA in a way that erodes its regulatory autonomy, Nuhu said the NCAA still takes those critical decisions that ensure that Nigeria’s airspace is safe.
He insisted that the NCAA is a government agency that implements policies of the government.
He said: “Interference in the affairs of NCAA by the minister is not my experience as the DG NCAA. I cannot speak on what happened before me and we have to determine and understand what is the autonomy of the NCAA. NCAA is a government organisation, NCAA cannot exist in the absence of government. The autonomy of the NCAA is on its regulatory functions, our safety regulatory function, that is where we have our autonomy. But there are other government regulations, financial regulations, and all that, the NCAA must comply with. The NCAA cannot exist on its own and we say nobody in the government talks to us. There is no civil aviation authority like that. But when we make safety decisions, like grounding an airline X, then somebody will intervene and say we should reverse that action. Such never happens and that is interference with the regulatory function.”
Chinedu Eze
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