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In about two years, 42 domestic aircraft have been grounded primarily due to a lack of foreign exchange to keep the airplanes flying or stringent regulatory actions in the country’s aviation sector, The PUNCH reports.
Findings showed that as of 2022, the number of aircraft plying domestic routes in Nigeria was 107. However, the challenges of forex and tough regulatory verdicts reduced this number to about 65, a 39 per cent plunge.
The crash in the number of operational domestic aircraft, among other industry challenges, contributed immensely to the very high airfares on local routes in the country, operators explained.
Checks by our correspondents showed that the average price for a one-way ticket to any destination has surged by approximately 180 per cent to over N150,000 in one year.
The average price of a one-way trip from Lagos to Abuja is now about N143,000, as against less than N51,000 that it was sold early last year, indicating a 180.4 per cent increase in price.
On the Abuja to Port Harcourt route, the average price of a flight ticket is N143,000 jumping from N45,000 in the corresponding period of 2023.
Similarly, a one-way trip ticket from Abuja to Enugu, which used to be N90,000 in 2023, now costs about N152,000 depending on the date chosen and how short the booking notice is.
This came as airline operators told our correspondents that they could not retrieve their planes which had gone on checks at different maintenance organisations outside the country over the non-availability of forex to pay for services and spare parts. Transactions regarding aircraft maintenance are largely done in foreign currencies.
This has caused a shortage of available aircraft amid the increasing number of air travellers in the country. The reduced number of aircraft has prompted a hike in airfares, making passengers lament.
Stakeholders called on the Federal Government to ease foreign exchange scarcity to prevent the further collapse of businesses in the sector.
Findings showed that aside from Rano Air, 12 scheduled airlines are operating across various airports in the country, using different brands of airplanes.
These airplanes include Airbus A320-300, A220-300, ATR, Embraer CRJ, Boeing 737 series, Embraer E2, Embraer ERJ-145, Dash 8, MD 83, and Bombardier CRJ 100/900, among others.
It was gathered that between 2022 and 2024, about 63 aircraft were reduced from the number of airplanes that operated on the domestic routes earlier.
Some affected airlines include Max Air, Overland Airways, United Nigeria, Air Peace, Aero Contractors, Arik Air, Dana Air, Azman Air, Green Africa, Ibom Air, ValueJet, and NG Eagle.
Findings from the sector indicated that Max Air at its peak operated six Boeing 737 aircraft but the fleet has depleted to just two airplanes as of the time of filing this report.
Also, United Nigeria Airlines with six aircraft at its peak; Embraer ERJ 145 (four) and Airbus 320-300 aircraft (two wet-leased aircraft), currently operates two ERJ 145 and two A320 wet-leased aircraft.
Findings showed the firm had expected the delivery of an aircraft in June. But up till the time of this report, the airline has yet to take the delivery.
Further checks showed that Aero Contractors currently operates three aircraft; two B737 (Cally Air operated by Aero), a Dash 8 aircraft, and one rotary wing. The airline had five aircraft in its fleet about two years ago.
Arik Air’s fleet depleted from 10, comprising B737, Bombardier CRJ-900, Fokker 50/60, and Dash 8, to the current four serviceable aircraft in its fleet including a B737.
An official of the airline who pleaded not to be named due to the ownership and debt crisis rocking the airline told the PUNCH that out of the remaining four serviceable aircraft, two were already out of the country for maintenance and would soon be joined by another one leaving the airline with just one surviving airplane.
The Federal Government through the Nigeria Airspace Management Agency grounded the aircraft recently and lifted the ban after a few days.
For Dana Air, before it was grounded in April, the airline operated two aircraft – MD 82 and B737. About two years ago, the airlines had a fleet of six aircraft, consisting of MD and Boeing fleet.
The Nigerian Civil Aviation Authority waded the big stick against the airline following an incident involving one of Dana’s aircraft at the Lagos airport on April 23, 2024, after the aircraft veered off the Lagos airport runway.
The decision to ground the airline was greeted by stiff criticism from aviation stakeholders. But the Minister of Aviation, Festus Keyamo, insisted that the issues with the airline had to do with safety concerns and could not be taken with levity.
Former commandant of the Murtala Mohammed International Airport, Lagos, Group Captain, John Ojikutu, tackled the minister for ordering the grounding of Dana airline, adding that skidding off the runway was not peculiar to the airline.
“What is the big deal in skidding? Is that the first time we would be experiencing such an incident in the aviation industry? What is the matter? And also, the minister has no right to ask the NCAA to ground the airline, not at all,” he stated.
The airline that is most hit by the economic crunch and dollar scarcity is Azman Air. For almost a year now it has not operated.
At its peak, the airline had seven aircraft, including leased airplanes, which were Airbus A320 and A330, while the remaining five were Boeing 737 aircraft, but it suffered gradual depletion till it no longer had an airplane to operate with.
The airline, which commenced scheduled flight services in 2014, had last August, sent its staff on compulsory leave due to its failure to return its aircraft that is on maintenance aboard.
Two out of the four aircraft were taken to Turkey for C-checks in a Maintenance, Repair, and Overhaul facility recognised by NCAA while the other two remained in an MRO facility in Nigeria.
While the leased aircraft had been returned to their original owners, the other aircraft owned by the airline were due for maintenance at different times, but the management could not raise funds to conduct checks on them.
This was largely because of the high dollar-to-naira exchange rate and the shortage of the currency available, sources at the carrier told one of our correspondents.
Also, Green Africa Airways operates a fleet of ATR 72/42 aircraft. At its peak, the airline had three aircraft but currently operates two airplanes as the third has also gone on maintenance checks.
Operators said ValueJet has three operational aircraft including Bombardier, CRJ 100, and CRJ-900LR. The PUNCH gathered that the airline will take delivery of an aircraft soon to swell its number of planes to four.
In the same vein NG Eagle, which commenced operations in December 2023 with three B737, now operates two wet-leased aircraft.
Our correspondent gathered that Overland Airways fleet, consisting of seven aircraft of ATR 42/47 and Embraer E175, had depleted to five aircraft.
A state-owned Ibom Air with about six aircraft of A320 and Bombardier CRJ-900 currently operates four airplanes: A220 and CRJ-900.
It is understood that Valuejet has its three aircraft-CRJ 900-currently flying.
Recent research by nairametrics, an online media outfit, revealed that every year Nigerian airlines and private aircraft owners spend at least $1bn on the maintenance of their aircraft fleets.
But this huge amount is spent outside the country as Nigeria is believed not to have a major aircraft maintenance, repair, or overhaul facility, where comprehensive checks of airplanes can be conducted.
Although there are Aero MRO, 7 Star Global Hanger, and Overland Airways Maintenance Hangar facilities, including the Ibom Air aircraft maintenance facility, which is yet to be completed, Nigerian airlines still take the majority of their fleet overseas because existing hangars in Nigeria do not have capacity and cannot attend to many aircraft at the same time.
Unconfirmed industry sources said Air Peace currently has about nine aircraft undergoing maintenance overseas. Earlier, several months earlier, the carrier had said it had about 15 aircraft undergoing maintenance overseas.
While delivering a paper at the Nigerian Bar Association conference recently, the Chairman/CEO of Air Peace, Allen Onyema, said the airline had about 15 aircraft in maintenance facilities overseas.
He also said the airline had about $14m stranded in the Central Bank Nigeria.
“Do you know the amount this country spends on aircraft maintenance through its airlines? Air Peace alone in 2022, spent N78bn on maintenance and these funds went to foreign countries,” he stated.
Operators, experts react
Industry experts attributed the major challenges confronting the airlines to the forex crisis, the continuous rise in importation levy by the Central Bank of Nigeria, and tough regulations in the aviation business.
A renowned aviation expert, Olumide Ohunayo, asked the Federal Government to be technical in approaching issues concerning the aviation sector.
Ohunayo frowned at giving money to the airline operators to salvage the challenges facing them. He advised that practical solutions such as resolving specific issues rather than giving money to resolve contending issues should be explored.
He also called for the relaxation of hurdles barring interested persons from joining the industry.
He noted, “Firstly, I do not support throwing money at every issue in the aviation sector because the same has been done several times and there haven’t been commensurate achievements to show for it. I won’t support giving any round of money to the airlines. Rather, their issues should be investigated.
“Maybe issues of their partners, special windows even as it concerns forex and so on. Airlines can’t live in isolation of the economy, and we must consider that. When issues of the economy and forex are addressed, we will all smile.
“Also in regulation, people are willing to join the industry, but the hurdle is so high. In America, for instance, there are two categories of scheduled operators – Party 135 and Party 121. Those of 135 have a lower standard for computer aircraft and this can be operating smaller aircraft and by doing that, we are creating more employment. The standard computer aircraft can greatly relieve the other scheduled aircraft. Also, licenses in other climes are done between two to three months.”
Also commenting on the development, the Chief Executive Officer of Aero Contractors, Capt Ado Sanusi, said the industry’s capacity had been on the decline in recent months due to various challenges.
Sanusi observed that some of the aircraft taken out of the country for maintenance checks in the past two to five months had yet to return because of the naira exchange rate to the dollar.
He regretted that the exchange rate had increased probably by 30 per cent in recent months, while the costs of spare parts had also increased by about 20 per cent within the same period.
To address the challenges, Sanusi proposed the domestication of leasing companies and the stability of the naira-to-dollar exchange rate.
He said, “We are facing the greatest economic challenge in my lifetime. The naira is still falling. Inflation is still high, food insecurity is still there, and disposable income is dwindling.
“It is going low. The airlines are looking for business and leisure travel. Companies need to be prosperous to travel for meetings, but that is being reduced because of the economic activities in the country.”
High insurance premium
Airline operators also said the rise in the cost of insurance coupled with the insufficient operational capacity of insurance companies are pushing up airfares and necessitating double insurance for airplanes.
In an interview with one of our correspondents, the Chief Operating Officer of United Nigeria Airlines, Osita Okonkwo, elaborated on the challenges faced by airlines due to these insurance limitations.
“It is about the capacity of the insurance companies because aircraft prices are big, and most of the insurance companies require $350m to $600m on Combined Single Liability.
“So they want you to carry that kind of insurance, and by their judgment, they feel that there is no insurance company that has the capacity to do it locally,” Okonkwo explained.
He further noted that lessors often demand that risks be internationalised, requiring airlines to seek insurance coverage from markets in places like Dubai and New York.
“There is a regulation here by the National Insurance Commission that says insurance must be placed locally, but there’s no capacity,” he added.
“When you now go as a Nigerian operator, they increase the premium, and you are forced to take two insurance schemes, one local and one international if you must lease or buy a new aircraft,” he noted.
The Chief Executive Officer of Centurion Security Limited, John Ojikutu, highlighted the limitations of Nigerian insurance companies in covering airline risks.
“The air insurance in Nigeria is high. How many insurance companies in Nigeria have the capacity to insure airlines? This is because they can’t carry the burden,” he remarked.
Ojikutu also pointed to unresolved issues from past airline crashes, questioning, “Some of the people who died in the 2005, 2007 crash in domestic airlines, how many of them have gotten their compensation?
“We have to start from there. I do not know if they have finished paying the victims of the crash and even Dana Airline.”
Aviation expert, Ayo Obilana, echoed these concerns, attributing the surge in air ticket prices to the high insurance costs.
“I think the (aviation) minister is right to say that high insurance costs are responsible for the surge in air ticket prices. The underlying reasons stem from the fact that the insurance deals are in foreign currency,” Obilana stated.
Recall that Keyamo told journalists while attending a summit in Lagos that if an airline purchased an aircraft, it was an international requirement that the plane had to be insured, but no insurance company could do that in Nigeria.
He added that many lessors were not operating in Nigeria because of insurance, a situation he said was killing the business.
Keyamo said, “But then, I apologise to say that most of them don’t have the capacity. So when you give them, they go and reassure again and that is a double amount for them too. That is why you are seeing a rise in the cost of tickets. The cost is too much. That is what translated to these high fares, and ticket prices we are seeing.
“So, we apologise to Nigerians, but then, we have a lot to do so that prices can come down,” he noted.
Addressing the claims that insurance costs were driving up airfares, Ohunayo, who is a member of the Aviation Round Table, an aviation think tank, told our correspondent that the challenges were beyond just insurance.
“If countries in the continent are having their airlines and are making these mandatory requirements, how can Nigeria be different?” he asked.
Reflecting on past practices, he noted, “Before poor forex, Nigerian airlines were leasing aircraft. Dry lease, wet lease, buying new aircraft—our problem was the ability to manage it. But they were leasing aircraft to Nigerians, both public and private, and every aircraft you see must be insured by law.”
Ohunayo argued that the real issue lies in the economic environment, particularly the scarcity of foreign exchange, rather than the capacity of local insurance companies.
“If this was happening before the advent of the skyrocketing dollar to naira, then it shows that it is not about insurance companies, but there are other economic policies that are making it difficult for people to procure those dollars to pay for the insurance,” he explained.
“The problem is not about insuring those aircraft, but about having enough dollars to pay for maintenance, for purchase, lease, and also insurance.”
He further clarified the distinction between leased and purchased aircraft in terms of insurance responsibilities.
“For leased aircraft, it comes with insurance. The owner of the aircraft will not ask you to go and pay the insurance. The insurance is part of the leasing agreement. It is when you buy your own aircraft that you make your own arrangements,” Ohunayo said.
He highlighted the imbalance between supply and demand, which is also contributing to rising airfares. “Today, we have more passengers chasing the few seats available, and that’s why the fares are up,” he stated, urging a focus on addressing liquidity issues.
While acknowledging the limitations of Nigerian insurance companies, Ohunayo cautioned against undermining their role in the industry.
“Yes, our insurers are not strong enough for one of them to take it alone, but Nigerian insurance companies have been partaking in insuring Nigerian airlines in the past and are still doing so. They partner with some foreign organisations, but they still take the lead,” he said.
