Fleet expansion, route development, panacea to airlines’ problems-Analysts

Airline capitalisation should no longer be based on monetary terms but must be factored on fleet expansion, equipment and route development, analysts have said.

One of them, John Ojikutu, a consultant to the International Civil Aviation Organisation (ICAO) and former commandant, Lagos airport, said the era of asking airlines to recapitalise with certain amount of money in bank accounts without result should be over adding that they should also no longer be made to depend on government subventions.

According to him, a new policy that should evolve under the current government should be that: for any airline to be eligible for Airline Operating License [AOL] and operate scheduled domestic routes only, it must have minimum of 5 aircraft and operate not more than three domestic routes.

“An airline wishing to operate regional, continental or international routes in addition to operating domestic routes should have minimum of 10 aircraft and should operate not more than six routes including the domestic routes. Airlines wishing to operate domestic, regional, continental and international routes should have minimum 20 aircraft and could operate as much as 10 routes or more including the domestic routes.

“For any domestic airline operator to benefit from government intervention fund, it must raise fund from the capital market and therefore be a member of the Nigerian Stock Exchange. Furthermore, to compete with the foreign airlines on the international routes and benefit from the huge market they offer, the Nigeria Domestic Airlines must multiply or improve their fleet capacity. Alternatively, they should merge and not always depend on concession from debt owe to service providers and intervention funds from government”, he said.

Ojikutu, who noted that the model of airline business shows they sell lots of tickets which are usually paid for in cash and not on credit, wondered what should be the justification for their indebtedness to the service providers in the sector.

“Why are they not meeting their tax obligations to the Federal Inland Revenue Service? Why are they not meeting necessary insurance premium on their fleets? Why do they rarely pay compensation to aircraft accident victims and many at times, owe in arrears several months of staff salaries?

“The policy review therefore, should determine if there should be justification for government to continue to give concession to airlines on debts they owe to government service providers in the sector, apart from this, government should ensure that, the Airlines subject their financial books regularly to the responsible government agency for financial auditing in accordance with the Nigerian Civil Aviation Authority (NCAA) Commercial Regulations”, he added.

Also speaking, Lateef Aderoba, a travel consultant noted that the facilities that an airline has to show for its business go a long way in stablising company finances adding that once an operator lacks necessary equipment such the right aircraft for the right route, maintenance base, among others, there will be less crisis.

Sade Williams