Airline operators in Nigeria has started feeling the negative impact of the current foreign exchange (FX) policy of the Federal Government as they have an estimated build-up of $575 million held in the country, which they are unable to repatriate.

Experts say this development may result in fewer investments and loss of jobs in the country’s aviation sector, as many airlines may be faced with the option of laying-off staff.

The National Union of Air Transport Employees (NUATE) said last month, that about 2,000 Nigerian aviation workers may be sacked by foreign airlines.

This is because airlines are unable to transfer their earnings to their respective home countries to meet operational costs, in accordance with international aviation industry rules.

Olayinka Abioye, acting General Secretary of NUATE, called on the Federal Government to intervene in the situation and prevent the anticipated job losses in the sector.

In addition to this, many airlines operating in Nigeria may be tempted to cut corners in their maintenance schedules as scarcity of Forex makes it harder to buy and stock consumables for aircraft in reasonable quantities, some aviation experts say.

This is in view of the International Air Transport Association (IATA) rule that monies that are not repatriated within a period of two months should be considered as blocked.

checks reveal that it was this situation that informed the British Airways (BA) downgrade of its flight operations to Nigeria from B747 – 400 with capacity to carry 406 passengers to the B777-200ER which only carries 217 passengers.

“Airline operators are required to change their tyres on a weekly basis, pay for wear and tear on a monthly basis and fix old engines when the need arises, and this is often done outside the country and requires dollars to foot the bills,” Nogie Meggison, chairman, Airline Operators of Nigeria said.

Meggison said that these routine activities which are mandatory are becoming very difficult for the airlines, as the FX is not made available.

Some airline operators told our correspondent that the high exchange rate is also taking a toll on domestic airlines operation because major checks are carried out overseas and payments for such services made in foreign currency, whereas they earn their revenue in naira.

The slide in the value of the naira since last year, prompted airlines to vote more funds from their meagre earnings on maintenance.

Also, in order not to jolt the domestic market, the operators were said to be reluctant to increase fares, fearing it could further shrink the number of air travellers, as purchasing power shrinks, due to the economic crunch.

A recent report revealed that most Nigerians who hitherto travelled by air, now resort to other means of transportation.

Findings show that the huge cost of carrying out mandatory C and D checks has become a very big burden for the airlines, given that when an airline is able to carry out these checks and scales through, “it means it has come to stay.”

A and B checks, which are lighter level checks, are usually done in Nigeria and there are the daily line checks, which airlines do after daily service of the aircraft.

C-check maintenance of a Boeing 737, which cost between $500, 000 and $700,000 prior to the foreign exchange volatility has tripled because of the sliding value of the naira.

However, Benedict Adeyileka, director of Airworthiness Standards, of the Nigerian Civil Aviation Authority (NCAA) has said that there are structures put in place to monitor the airlines and that the structures are so foolproof and transparent that they cannot be compromised by the operators.

Adeyileka said NCAA officials carry out ramp inspection of aircraft operations; they check and review aircraft maintenance status, cockpit and cabin crew and overall airline service.

“We drive through the ramp to review the operations of airlines, so it is difficult to cut corners; in fact, this will be dangerous for them. When we carry out reviews, at the end of the review, if you are found to have compromised the given standard, you are fined or your license can even be withdrawn, depending on the gravity of what you have done,” Adeyileka said.

Aviation experts say the majority of aviation-friendly countries have low interest rates; stable and easily convertible currencies, and no draconian policies that adversely affect airline operations.

“Foreign exchange for our operations is sourced through the Central Bank, via our bankers. Airlines have to bid, same as every other industry, for available funds,” Obi Mbanuzuo, Dana Air’s Accountable Manager, said.

On the home front, Jean-Raoul Tauzin, general manager, Air France KLM Nigeria & Ghana explained that Air France has naira in Nigeria which they routinely transfer to Europe and when there are fewer available dollars, it becomes a problem.

http://www.financialwatchngr.com/2016/04/07/forex-shortage-hits-airlines-575m-stuck-nigeria/

this is called 'CHANGE'

modified:after all these years i finally made FTC without even expecting it and i also dedicate it to myself.

This by force buy Nigeria bullshit will dig our graves even faster!

These airlines may soon start accepting dollars as a mode of payment . All they will do to encourage payment in dollars will be to increase the cost of the ticket in naira but reduce it in dollars.

Jirate:
It is Painful that so many Nigerians are going to be laid off by these companies as a means of coping with the economic quagmire occasioned by APC ridiculous change.
To make matters Worst, they don’t ever accept responsibility for their errors rather they blame every other person including those that voted them in.
But one thing I know for sure is, if they will not govern well and they think Nigerians will get tired of talking, they are joking.

What willl happen is that companies will start accepting dollars as the mode of payment .

A sound economist should please explain Buhari's economic principle, because it doesn't seem to be working.
It is chasing investors rather than attracting them, or is this as a result of the dip in crude oil prices

TPAND:
A sound economist should please explain Buhari's economic principle, because it doesn't seem to be working.
It is chasing investors rather than attracting them, or is this as a result of the dip in crude oil prices

The bitter truth Nigerians must accept is that buhari and his team have lost control of the whole system and the economy ,they are just following the tide of things and hoping that oil prices will rise. They wont admit it but the silence of his ministers and major political backers proves the point that they are utterly disappointed in buhari. They alway have a ready excuse and the only excuse is that pdp ruled for 16 yra

DivaFiva:
This by force buy Nigeria bullshit will dig our graves even faster!

to buy Nigeria is now bullshit There are developed countries of the world today that made tougher sacrifices and their citizens are better for it today. Very soon we will see benefits of the forex policy. loosing some foreign investment today will ensure that we grow our local manufacturing industry that has a lot of potential tomorrow.

onatisi:

The bitter truth Nigerians must accept is that buhari and his team have lost control of the whole system and the economy ,they are just following the tide of things and hoping that oil prices will rise. They wont admit it but the silence of his ministers and major political backers proves the point that they are utterly disappointed in buhari. They spread have a ready excuse and the only excuse is that pdp ruled for 16 yra

I agree with you on this 100%.

D for Dutch disease http://www.nytimes.com/2012/03/11/opinion/sunday/friedman-pass-the-books-hold-the-oil.html?_r=0

onatisi:

The bitter truth Nigerians must accept is that buhari and his team have lost control of the whole system and the economy ,they are just following the tide of things and hoping that oil prices will rise. They wont admit it but the silence of his ministers and major political backers proves the point that they are utterly disappointed in buhari. They alway have a ready excuse and the only excuse is that pdp ruled for 16 yra

Your analysis is somewhat correct.....and yes...PDP does deserve some of the blame...because they talked a lot about power...and did not improve the supply much.

Still....the problem is diversification is not an instant thing. Take agric. Cotton is not a money spinner. Palm oil....we have fallen so far behind there....cocoa...we are no 5.

In my opinion,PMB should eventually stop running the country as if oil money is flowing in...and introduce austerity measures...ie increase fees, taxes,REMOVE FUEL SUBSIDY,cut excess spending in all arms of govt and put all new government spending in power, transport and education. We will have a hard initial ten years...but at the end of the day we will be in a position to become a manufacturer...so that we do not have to rely on oil again.

Its really Disheartening to see all these happening.

One Fool thinks her Opinion matter

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Thunder fire buhari and his useless economics.

Jirate:
It is Painful that so many Nigerians are going to be laid off by these companies as a means of coping with the economic quagmire occasioned by APC ridiculous change.
To make matters Worst, they don’t ever accept responsibility for their errors rather they blame every other person including those that voted them in.
But one thing I know for sure is, if they will not govern well and they think Nigerians will get tired of talking, they are joking.

If the zombies catch u eeh!!!!

Who u epp? Who u epp? Who u epp? U don baff? Who u serve? Don't slam my door what is wrong with you

Buhari why are u heartless and clueless? Pity the poor masses nah

Chai! Baba! With dere silly supporters.... Especially supporters with a red bar on phone, 0 Little of fuel in dere generator, and still chanting #i stand with him.. Your fada... #sai baba Jor, dakun fun miiiiiiii nina waka ti Kan...

Rubbishlascatical..

HERE WE GO AGAIN

APC needs to stop all this outdated textbook economy policies and face reality on ground.

rolchi:


I agree with you on this 100%.

Bros,how time flies .just over 2 years ago apc was criticizing gej and pdp that they have lost control of the whole system ,now within 12months in power buhari and apc look total silly following the tide of things instead of dictating the pace

http://dailypost.ng/2014/03/19/state-nation-jonathan-lost-control-nigeria-apc/

Chaii dere us God oooo buhari

This country needs deliverance by God himself... a country that shines light to other countries but can glow itself... just like 'Atupa'

mars123:
to buy Nigeria is now bullshit There are developed countries of the world today that made tougher sacrifices and their citizens are better for it today. Very soon we will see benefits of the forex policy. loosing some foreign investment today will ensure that we grow our local manufacturing industry that has a lot of potential tomorrow.

Bad choice of words but we need outside businesses to grow domestic ones. What is the gain in losing most investment and scaring investors due to losses and opaque policies of "wait and see". The intention is good but the regulations are too stringent and will definitely cost us.

mars123:
to buy Nigeria is now bullshit There are developed countries of the world today that made tougher sacrifices and their citizens are better for it today. Very soon we will see benefits of the forex policy. loosing some foreign investment today will ensure that we grow our local manufacturing industry that has a lot of potential tomorrow.

Keep deceiving urself. What facility has been put in place to grow our local manufacturing industry? Is it the 0MW or no fuel that will do this?
U need to understand that there must be an attempt to balance the economy in the country. But the so called 'technocrats' in the govt seems oblivious of this. They rather follow 'evans economics for senior secondary school'.
Nigeria is a dynamic economy. We need dynamic ideas not stringent policies

Please don't laugh at me oh!
See how I have been surviving fuel scarcity and lack of electricity:
1. I will go to my bank early enough
2. I will greet everyone with smiles plastered on my face,
3. I will plug my phone to charge, my power bank, and rechargeable lamp
4. I will drink water from dispenser,
5. I will sit for sometime to enjoy AC, while watching Buhari blab on CNN.
6. Then i will withdraw N1000
7. I will thank the bank staff and return home.
8. The next day i will go and join queue to pay back the N1000 into my account and repeat 3, 4, & 5.
Is not my fault, is CHANGE oh!

Things are horrendously bad right now, Boooohari needs to go! Simple!

How low are we going to fall before that incompetent buffoon is removed from that office he can't even run?

Nigeria will not survive another three years of this foolishness.

Cutting your cost and expenses and then maximising the little income you have is one of the basic economic principles. If this government is at all sincere which they ain't, first thing to do is to simply plug off all the unnecessary expenses that gulps the little income we generate, before applying other tasking and demanding policies like import substitution, not devaluing the naira and subsidy removal to the economy. But since they don't deem it fit to apply these basic principle to themselves for a start, they face the economy and increase everything that they can possibly increase in order to sustain their ridiculous cost of governance, all at the expense of you and I and the whole economy. The truth is that whatever these set of leaders are doing presently, YOUR INTEREST IS NOT THEIR MOTIVE, and that's why things are falling apart yet they are jerk bent on doing what they are doing. This has been the case with all our past leaders in various arms of government. The earlier Nigerians realise this, the better for us.
It's only the truth that will set us free.

A leader who doesn't think of the negative impact his policies have on the people and the economy is not fit to be a leader.
Buhari, I pray the doom of banning forex actualizes right now so these dunces know what they're doing is wrong. If it delays longer, it will spell worse