Nigerian airlines have implored the Central Bank of Nigeria (CBN) to allow them direct access to forex market in order to meet the demands of their creditors and be able to renew their aircraft leases.
The airlines said the limited access to foreign exchange, has made it difficult for them to pay for aircraft spares, carryout the routine maintain of their aircraft overseas and to also carry out simulator training for their pilots.
Asides the CBN’s foreign exchange policy, which limits foreign currency access most things about airline business are done in foreign currency, for instance payment for major maintenance, training and acquisition of spares.
Airline Operators of Nigeria (AON) met with the CBN recently on the need to allow airlines direct access to the forex market instead of allowing their banks to bid for them, which was largely unsuccessful as they usually bid alongside other customers who also need foreign currency for their business transactions.
A representative of one of the airlines, who was at the meeting told THISDAY that the meeting was successful and CBN responded positively to their request, adding that the inability of the airlines to meet their payment dates with their creditors had affected their credibility and made many of the foreign companies not take them seriously anymore.
“Many of these companies do not want to do business anymore with their Nigerian customers. The inability to secure foreign currency has forced us to owe our business partners; that after doing business and agreeing to pay them at certain date we fail because we cannot raise the money in foreign currency. We would have our Naira begging for dollars but we cannot get. This delay in payment has affected our operations severely and our image and good will. Many of these companies don’t want to do business with us anymore”, the source said.
The airline representative added: “It has been very tough for us but what is tougher now is how to rebuild our credibility with our foreign partners. They don’t care whether it was government policy or not; their interest is that you should do things as agreed. They are not known to brook excuses in their business transactions. So that is our quagmire now. But we are grateful to CBN for its understanding and I can tell you that without that leeway, some Nigerian airlines could ground their operations.”
The source also explained that some aircraft parts are replaced at given time because they have expired or have been fully utilised as recommended. He pointed out that “if the airline could not access funds to order these parts, it may be compelled to be managing them and this could result in incidents or accidents.”
“Many times in a year some airlines flight could suffer bird strike. When this happens the engine is damaged most of the time and you need to replace this engine and you need foreign currency to do this. If you don’t do it you lose money as the aircraft would be AOG (aircraft on ground). Everyday aircraft is on ground the airline loses money. What we want government to understand is that it should always grant forex waivers to airlines in order not to jeopardise safety. It is the same thing we are asking for on Customs duties. When you charge high duties on imported aircraft parts, you are persuading airlines to cut corners. Customs should restore the waiver because it helps to ensure we operate airworthy aircraft,” the source also said.
