Nigeria Air plans to take off amid fuel, currency crises – Businessday | Omd Cialis

Aviation stakeholders have raised concerns about why the federal government has approved the leasing of three planes for national carrier Nigeria Air at a time when local carriers are grappling with high operating costs amid fuel and foreign exchange crises.

Taxes and surcharges aside, airlines pay for parts, aircraft and maintenance in dollars, with the naira falling to a record low of 710 per $1 on the black market last week amid the US currency’s shortage.

The aviation fuel crisis, which began in late February and has since worsened, is currently threatening airlines’ ability to continue operations as the price of JetA1 rises from N200 in December 2021 to over N400 per liter in February. On Tuesday, the price rose to over N800 per liter in most Nigerian destinations.

Two major domestic airlines, Dana Air and Aero Contractors, were forced to halt operations due to high operating costs.

Against this backdrop, stakeholders have raised concerns about how the national airline would operate profitably and compete with other domestic carriers struggling to survive.

The federal government approved the leasing of three aircraft for Nigeria Air last week.

The three aircraft are manufactured by Airbus and Boeing. The government said the national airline would start operations with domestic routes.

Olumide Ohunayo, an aviation analyst, told BusinessDay that Nigeria Air’s dream appeared to be more of a personal than a national wish for Aviation Minister Hadi Sirika.

Ohunayo said the desire pushed the minister to keep moving forward with the project against all odds and obvious challenges.

He said: “What I see is they are going to force this airline to launch. When the government goes to power they will start to relax and throw the responsibility onto Nigeria. I wonder why the federal executive board would approve wet-lease aircraft for an airline that is supposed to be independent and five percent state-owned.

“Why should we start with a wet lease of an Airbus and Boeing aircraft? This comes at a time when airlines are struggling. We want to lease such expensive devices. The reason for a national carrier is to use domestic carriers on international routes. We lease planes that would not create jobs, but the operating costs will be so high.”

Ohunayo suggested it was time the minister suspended the project, adding that the timing was wrong and there were no signs the airline would survive.

“At a time when the country is facing an economic downturn, we may not even get real investors,” he added.

Sindy Foster, principal managing partner at Avaero Capital Partners, described the plan as “a disaster” to launch a national airline at a time when the sector is facing challenges that threaten the existence of airlines.

“It is not too late to avert the catastrophe. The launch now will have a significant negative impact on the domestic aviation sector. Unless there is an intention to completely destabilize the sector, delay is the best option,” Foster said.

She said it was not in the industry’s best interest to create a national airline at a time when there was more competition for scarce jet fuel and foreign exchange.

Also Read: Explainer: How Rising Costs Are Bringing Nigerian Airlines to Near Collapse

Foster said: “They will likely be given preferential treatment as they will be able to place bulk orders. How is this helping the industry right now? You should focus on solving the problems. You don’t just start something like this and hope for the best. The least you should do is an impact assessment to understand the implications of launching now.

“There might be some pros, but what if the cons outweigh the pros? A sensible government would pause until the rollout benefits the industry. No one will be impressed if no other airline can compete for jet fuel or foreign exchange, leaving other airlines grounded or increasing their costs.”

The federal government plans to launch the airline with a wet-lease aircraft. This means that the organization that owns the aircraft provides the aircraft, pilots, crew and engineers.

Ibrahim Mshelia, owner of West Link Airlines Nigeria and Mish Aviation Flying School, said he had no problem with the airline boarding now as there is no right time for an airline to launch.

According to Mshelia, there are advantages to having a national airline as the government has the right to do certain things as there is justice and fairness, but if the aircraft were wet leased it means all the jobs would be exported.

He said a government that prides itself on creating jobs shouldn’t move jobs abroad.

He said: “Secondly, Nigerian Civil Aviation Authority law prohibits you from establishing an airline with wet leased aircraft as a wet lease can only be done between two pre-existing operators with an Air Operating Certificate (AOC).

“The airline doesn’t have an AOC yet, so why are they going to wet lease aircraft? It is against the law and the government should not be breaking the law. If so, what are their priorities? If the government provided foreign exchange seamlessly to Nigeria Air and did not do the same for other operators, it would be unfair and not right.”

He stressed that there should be a level playing field and if other airlines go to the black market to get dollars, state-owned airlines must do the same.

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