The House of Representatives has kicked off plan to make the Central Bank of Nigeria (CBN) earmark more foreign exchange to the domestic airlines to enhance the sustainability of their operation.
The House said the inability to access foreign exchange is the root cause of the problem of domestic airlines in addition to the high cost of aviation fuel, adding that it would not want another Nigerian carrier to go under again after the grounding of schedule operations by Aero Contractors.
House Committee on Aviation on oversight tour of facilities at the Murtala Muhammed International Airport (MMIA), Lagos on Wednesday met with the Director General of the Nigeria Civil Aviation Authority (NCAA), Captain Usman Murtar to deliberate on how to safe Nigerian carriers and insisted that a window should be created for the airlines to access forex from CBN.
The Chairman of the Committee, Hon. Nkiru Onyejeocha said the House would assist NCAA to take deliberate action to alleviate the pain occasioned by the current recession on the airlines, noting that if such action was not taken the airlines might collapse and requested from the Director-General if any measures had been adopted already to support the domestic carriers.
“We want to help the airlines overcome this recession period. We do not want any other airline to go under. Now that Aero Contractors has stopped scheduled service many people will be out of jobs if it does not resume and the industry will be adversely affected if another airline is allowed to go under,” Onyejeocha said.
The House also expressed worry about the pulling out of foreign airlines from Nigerian routes.
The Director-General of NCAA, Captain Murtar admitted that the major challenge facing domestic airlines was their inability to secure forex because practically everything about airline business is imported, except aviation fuel, which is paid for in local currency but maintenance, aircraft leasing, acquisition of equipment and spares are paid for in dollars. Therefore, it would go a long way if a window is opened for the operators to access forex from the CBN.
“So government should allocate foreign exchange to the industry because that is what the airlines need for the maintenance, training, leasing and importation of spares. The scarcity of foreign currency also affects activities of NCAA because airlines will not be able to pay the five percent charge when they are not able to operate. To make sure that the airlines operate safely there should be effective economic regulation,” Murtar said.
Members of the House Committee on Aviation said the they expected that special effort should have been made to create special window for airlines to access forex and for the aviation industry, but NCAA Director-General explained that such move was made by the Minister of State, Aviation, Senator Hadi Sirika who was able to secure zero tariff on aircraft importation and spares.
On why some foreign airlines left Nigeria, Murtar explained that it was due to the scarcity of forex, as Bilateral Air Service Agreement (BASA) Nigeria has with the host countries of the airlines stipulate that they must repatriate money earned from ticket sales.
He said that Sirika was able to negotiate with CBN so that 50 percent of the foreign airlines funds were repatriated while the rest was being taken away instalmentally.
The House also raised issues about the high fares charges by foreign airlines and the Director General explained that fares are denominated in dollars so as the exchange rate is high, it is expected that the cost of the ticket in local currency would be very high.
