Experts in the aviation sector have said that with the current economic downturn which is directly affecting the airline business, more airlines in the country may stop operations.
Tayo Ojuri, Chief executive officer of Aglo Limited, an aviation support Service Company told BusinessDay there are still airlines that will reduce frequencies and there are airlines that will leave because the airline business is cyclical.
“Airline business goes in leaps and bounds and sometimes it goes through the valley before it goes to a mountain.
“At this point, we have to wait for the economy to pick up and unfortunately, airline business is the first to get hit when there is an economic crunch and it is the last to come up. When the economy pick up, people will start travelling again,” Ojuri added.
Ali Magaji, Aviation finance consultant said there are significant challenges for the industry as a whole to find finance for the new deliveries.
“Today, most of the airlines owe Asset Management Corporation of Nigeria (AMCON) substantial amount of money beyond the capacities of their balance sheets, which reveals that it is getting increasingly difficult for investors to source financing options,” Magaji said.
He explained that there is a very high interest rate regime from local commercial banks, poor credit rating to access foreign funding, over-regulated financial system impeding simple and genuine foreign currency transactions.
BusinessDay’s checks show that despite the economic downturn, domestic airlines are currently facing difficult times as a result of the increase in aviation fuel price, high exchange rate causing many to abandon aircrafts abroad and the N40billion debtsHadi Sirika, Minister of State, Aviation, ordered agencies to recover.
These is coming few weeks after two of Nigeria’s eight airlines, Aero Contractors and FirstNation airlines were grounded within a space of seven days.
Nogie Meggison, President, Airline Operators of Nigeria Industry watcher say the travails of domestic airlines include funding, the impact of economic downturn, the naira to dollar exchange rate, unfriendly regulations, cost of aviation fuel and poor infrastructures.
Meggison explained that these problems which have been there for long has caused several domestic airlines closing shop.
Some of these airlines include Tat Nigeria, Max Air, Discovery, Kabo Air, Harka Air, Doniar Aviation, Association Aviation, Allied Air and recently, FirstNation and Aero contractors.
He noted that if these challenges persist, more airlines will leave the country.
IFEOMA OKEKE
