NCAA To Bail Out Airlines

The Nigerian Civil Aviation Authority (NCAA) may bail out airlines that got into financial difficulties, on the advice of a presidential committee that examined the Nigerian aviation sector. The NCAA has audited five banks to manage a N200 billion fund. The so-called National Airline Financing Fund (NAFF) has to prevent airlines going bankrupt.

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5 responses to “NCAA To Bail Out Airlines”

  1. Ken Iwelumo says :

    A commendable first step, but the amount is too little and may have come too late to prudently and efficiently save airlines in need. For the airline industry in Nigeria to thrive and prosper, there has to be credible domestic competition. To survive and give Arik Air some credible competition, Nigerian Eagle Airlines would need the entire N200 billion as a minimum. To survive as a credible and profitable domestic carrier, Chanchangi Airlines would need N100 billion. Bellview will need N150 billion just to pretend to be a global airline.

    The Federal Government or NCAA should create a separate financial agency to manage the fund directly as a self replenishing, proactive entity, rather than use the funds to prop up the balance sheets of 5 lucky banks. Make this financial entity the NEMA of the Aviation industry and get the local banks to match whatever loans it grants to the airlines. Like NDIC, the entity should also have the powers to guarantee some of the loans to be provided by the local banks using the full faith and credit of the Federal Government.

    To assist the weak airlines, the Federal Government should contract them to ferry members of the Nigerian Armed Forces, Nigeria Police and NDLEA on official assignment (rank and file) around the country at cost plus 10%. You can not bring travel weary troops or Policemen into action. The days of our Policemen traveling 24 hours from Lagos to Maiduguri on top of open trucks in our bad and treacherous highways should stop.

  2. Skywalker says :

    Welcome Mr Ken, Biggest fan of yours on Airliners.net glad to read your thoughts on the Nigerian aviation scene. My thoughts are

    If Bellview and others bailed out by the NCAA and eventually go bankrupt again then what next, sell the airlines to get back their money? I believe the NCAA should put that money into the Aviation structure of Nigeria. Pilot’s can’t communicate with controllers, no radar in 80% of our airspace, runways are in a sorry state, staff at the NCAA and other agencies need training on MODERN aviation practices and a whole lot of other very important things that need to be done in Nigeria.

    I believe the Nigerian aviation sector is healthy in terms of passenger traffic, so airlines with proper management and strategy will get a significant share to make profits. Some state governments pay some airlines to come to their airports and subsidize prices for passengers just to build passenger traffic.

    I hope airlines like Nigerian Eagle, chanchangi and other airlines that really need help get the cash.

  3. Ken Iwelumo says :

    My dear Skywalker, I share many of your sentiments. Our goal should be to move forward and try to undo the damages made in the past. This fund is dedicated to saving airlines in trouble. With out the airlines there will be no need for the development of airport and aviation related infrastructure. Healthy and profitable airlines will force the Government to invest in infrastructure. It is not a surprise that infrastructural development of Nigerian airports declined after the demise of Nigeria Airways. Loans from the fund will be for the acquisition of aircraft and equipment and not for working capital. Commercial banks are specifically designed to provide short term working capital.

    The aircraft and equipment purchased will act as collateral for any loans given. For example Chanchangi and Bellview had very high operating costs because of the very old and inefficient aircraft they operate. Newer aircraft will reduce their operating costs significantly. I used to see a poor technician in red uniform, coated in hydraulic oil sitting under the Chanchangi B727 ensuring that there was adequate oil in the landing gears for each flight. Comparing Chanchangi’s or Bellview’s B732s to Arik Air’s B738 is like comparing old Lagos Molues or Bole Ka Jas to a brand new Ekene Dili Chukwu luxurious Mercedes Benz coach. It will take time for us to recover from the economic and social mayhem inflicted on Nigeria by the combined Babangida and Abacha regimes as well as poor choices in Aviation Ministers made in the Obasanjo regime. The silver lining in all this is that there is now awareness and moves are finally being made towards undoing the damages of the past. It is easy to break a bone. Repairing it is another thing.

  4. Bayo Odunsi says :

    I doubt that the fund will suffice in anyway, I don’t think we should consider bailing out domestic airlines,the airline business is a rather expensive one, we should instead concentrate on making the market itself viable in terms of passenger traffic and operational logistics.I am also a big fan of Mr.Iwelumos photos, but I must add humorously that he is kind of biased about Arik air,I have flown them several times, I think they have very poor customer service and act as though they do the country a favor by being in the air.I also think that All the airlines should do alot more to improve service to encourage people to fly, long ques and rude staff are not a progressive attitude, the government ferry’s are a fraction of the total revenue flights,get more people flying and stop looking for government ferries,troops and personnel can travel in more luxurious vehicles instead of open trucks.The Airforce have a number of operational C130H that can transport troops at half the cost of any airline.

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