Economic meltdown hits Nigerian airlines, may fold up
By Wole Shadare

THE global economic recession seems to be taking a toll on domestic airline operators, as many of the carriers are in deep financial crisis.



There are strong indications that many of the airlines may go under before the end of the year, as they can no longer pay salaries and meet up with their obligations of operating profitably.

To remain afloat, Airline Operators of Nigeria (AON), the umbrella body for domestic airlines in Nigeria has decided to approach the Federal Government for stimulus package and a waiver, or reduction on some of the charges it pays to the Federal Airports Authority of Nigeria (FAAN).

This is coming at a time the International Air Transport Association (IATA) in its report stated that cumulatively, African Airlines might lose over $600 million to the economic recession.

The operators cited the example of countries, particularly the United States (U.S.) and the United Kingdom (UK) as helping their carriers to overcome the economic crisis and reduce unemployment, which they feared could lead to social crisis.

In the UK, members of parliament (MPs) recently

called on the government to reinstate plans to replace Air Passenger Duty (APD) with a per-plane tax to make airlines fill flights more efficiently.

The problem is not unconnected with the drop in air traffic as many Nigerians who hitherto travel by air now prefer to travel by road to save cost.

Also worrisome is the sharp decline in patronage of the business class seats, which cost thrice the fare of an economy class on the domestic route, depending on the destination.

An airline operator who spoke to The Guardian yesterday under anonymity, painted a very gloomy picture of the domestic airline industry, saying that most of them are seriously indebted to banks, FAAN, the Nigerian Airspace Management Agency (NAMA), the Nigerian Civil Aviation Authority (NCAA) and Bi-Courtney Aviation Services, the operators of the new domestic Murtala Mohammed airport (MMA2), and as a result may wind up their operations.

The source disclosed that most of the airline operators owe their workers over four months' salaries, a situation he described as "not too healthy for airline operation."

He disclosed that even the few strong ones are feeling the pinch.

According to the source who works for a popular domestic airline owned by a northerner, stated that capacity on the domestic route is shrinking seriously, coupled with high cost of maintenance and airport charges, which are regarded as the highest in the world.

He noted that even with the retrenchment of some airline workers by virtually all the carriers, the airlines are still facing hard time.

Speaking to The Guardian, the Director, Corporate Communications, Afrijet Airlines, Alhaji Muhammed Tukur described the situation with airlines as "critical", adding that the situation is more serious than it is being taken by government.

According to Tukur, who is also the Assistant Secretary-General of AON, government's intervention is needed at this point in time. He noted that many carriers fly less than 30 passengers from Lagos to Abuja with the situation being worse on other routes.

He hinted that the only way out to prevent unprofitability was for airlines to interline their operations to save cost.

Interlining is a voluntary commercial agreement between individual airlines to handle passengers travelling on itineraries that require multiple airlines.

When a ticket is issued for an interline itinerary, one of the carriers marketing flights in that itinerary will be selected by the ticketing agent as the "plating carrier".

The plating carrier collects the entire fare from the customers and is responsible for distributing the proceeds to other carriers in that itinerary only as those carriers carry the passenger. A plating carrier therefore gets the benefit of cash flow.