TheCable

Musa Nuhu, director-general of the Nigeria Civil Aviation Authority (NCAA), says domestic airlines are facing a challenging operating environment, characterised by numerous obstacles that hinder their profitability.

In an interview with Punch on Monday, Nuhu said the economy is affecting the productivity of airlines in Nigeria and threatening their long-term viability.

“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,” he said.

“The cost of financing is 25 per cent. That is killing to start with. You take a loan and you are paying 25 per cent of whatever you make to the bank. You are not talking of your expenses, your cost, your current and long-term liabilities.

“Quite a few of them are in financial strait 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 sympathise with them and we will try and see where we have flexibility to make life easy for them.

“Like the issue of insurance, the insurance is from Lloyds of London, from another country, while it requires a huge amount of foreign exchange.”

According to Nuhu, NCAA has tried to assist airlines with flexible insurance fees and debt payments.

He said: “Normally, insurance they say is for one year, but we know an airline that has 20, 30 aircraft like Air Peace for it to pay insurance is a huge task, 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 those who have debts, we reach an agreement with them.

“If I have N1 billion with you, I am not asking you to pay that N1 billion to me, because if I do that, I am going to kill your business.”

Nuhu said a memorandum of understanding (MoU) is reached with the airlines to pay an amount that will not cripple their operation.

But to clear outstanding debts, Nuhu said the airlines have to pay a reasonable amount.