Airline Operators of Nigeria (AON) is calling on Government to make provision for domestic airlines to access the finances they need for their operations at single digit rates, as the current rates are stifling their business. AON made this known on Wednesday during a press conference at the AON Secretariat at the domestic wing of the Murtala Muhammed Airport (MM2).
Barr. Allen Onyema, the Vice President of AON, Chairman of Air Peace and the Operators’ spokesperson for the day expressed deep regret that domestic airlines procure funding for their operations from financial institutions at astoundingly high rates; while foreign airlines operating in the country get much better deals.
He stated, “If you say we don’t have the capacity to ply some domestic routes, then look for ways to up our capacity. Allow us access finance at single digit rates, since right now, it doesn’t exist! We are operating under very harsh conditions, and we should be praised for sacrificing for this nation”, he said.
According to Onyema, domestic airlines borrow money for their operations at 15%, 18% and even 20%, while foreign airlines operating in Nigeria borrow at rates as low as 2% and are given as long as twenty (20) years to repay these loans. In his expert opinion, the Air Peace Chairman categorically stated that any foreign airline subjected to operate under the same harsh conditions as Nigerian domestic airlines do will not last seventy-two (72) hours.
The issue about access to finance was addressed by the Operators as a response to the rising trend of foreign airlines increasingly being allowed to ply domestic routes – a situation which AON denounces due to the negative consequences of such a move. Onyema shared his thoughts:
“AON objects very seriously to the multiple destinations given to foreign airlines in our nation, especially to Qatar Airways and Ethiopian Airways. The capital flight that follows this is unimaginable. It’s affecting our capacity and the number of passengers we carry locally. It depletes our national treasure and inhibits the growth of domestic airlines in the country.”
Commenting on the economic losses Nigerian domestic airlines have to bear as a result of bird strikes, the AON Vice President said, “The industry lost over $60 million in 2021 due to bird strikes alone, and has equally lost over $20 billion in one year, no thanks to delays/refunds/cancellations, for which the airlines are only 2% responsible.”
He lamented that despite meetings AON has held with the Federal Airports Authority of Nigeria (FAAN) to discuss and provide solutions to the problem, the bird strike situation has only gotten worse, costing the airlines a lot of money – money that is hard to recover due to the dollarized nature of the airline business.
