Aero, First Nation, United Airlines shutdown… how long before Nigeria does under PMB?

by Roqeebah Olaoniye

It’s only the 2nd of August, less than a two years into his administration, three airlines have ended operations in Nigeria. Is the current Buhari-led administration getting something sorely wrong with aviation policies as it seems to be doing in many other sectors? Or are the economic policies taken by this government so far-reaching in their unpopularity that the airline operators in Nigeria have chosen to clip their own wings rather than whether the storm like the rest of us?

The end of the only Lagos-Houston route

When United States of America’s United airlines announced its plan to end its Lagos-Houston daily route in Nigeria (and the USA), it was a tough pill for us to swallow. Nigerians cited the fact that Spain’s Iberia Limited had only just ended its operations in the country as reason for their fear.

United Airlines had stated that the route was no longer financially favourable for the airline and as such all flights to Nigeria from Houston were to end by the 29th of June and flights from Lagos to Houston, the next day.

The Federal Government’s foreign exchange policy.

Until June, the foreign exchange policy adopted by the Central bank of Nigeria had been a major problem for businesses both local and international operating in Nigeria. When United announced the end of its operations in Nigeria, the International International Air Transport Association confirmed the airline’s reason for its decision – which was cited as inability to repatriate profits- saying that as at March of this year, funds belonging to foreign airlines, which had been trapped in the country due to the Federal Government’s policy on foreign exchange, stood at 575 million USD.

“When they were not here, were we not flying?”

This was the Nigerian government’s reaction to the foreign airline’s decision to pack up and leave the unfavourable economic climate in Nigeria. The Minister of Transport and former governor of Rivers State., Rotimi Amaechi in response to plans by United to stop flights to and from Nigeria and Air France, Qatar and Etihad also issuing a two-month revenue warning on tickets sold in naira was dismissive.

All airlines cited the inability to repatriate funds as their reason but Rotimi Amaechi urged Nigerians to accept the fact that some foreign airlines may have to pull out of the country as a result of the government’s policies.

In his words: “The earlier Nigeria accepts this, the better for us. We’ll bounce back when we grow the economy? We are not going to die, when they were not there, were we not flying?

First-NationUpdated foreign exchange policy

The CBN has since updated the foreign exchange policy to make the Naira more market driven in a bid to harmonize the inflow and outflow of foreign currencies. Several banks have been granted the license to deal in foreign exchange on the inter-bank market, easing the problems a bit. But this doesn’t seem to be enough to keep the aviation sector afloat as two more airlines have announced and in fact stopped operations. This time they are local airlines and although as is usual with Nigerian owned entities, they have given reasons that make the decision to stop operations appear merely temporary, not many are fooled.

On the 31st of August, the first local carrier in Nigeria, Aero Contractors announced that it was suspending all its operations from the 1st of September, placing all of its staff on compulsory leave of absence.

We have analysed here how Aero shutting down was a long time coming but it has happened under Buhari’s administration and Nigerians are quick to peg any mishap on its government. It also doesn’t help that said government has not been forthcoming with proving that it understands what is going on.

Although Aero promises to return to business in a short while, this is very doubtful especially as another domestic carrier, First Nation Airlines, has suspended its operations in less than 24 hours after Aero Contractors announced this indefinite suspension of its scheduled flight services.

The unemployment crises.

Many analysts have poured all of this back on the government and its crippled spending attitude. “If the government had immediately engaged the airline in talks to put off this suspension of workers, it will be better. This is the time to start stimulus spending”, one analyst advised on the radio on the 1st of September.

The theory is that that by injecting some funds into the sector (or the particular airline, the case may be), the government can help to avoid the throngs of people who have been forced to join the already disappointingly high numbers of the unemployed in Nigeria.

Given this government’s track record, that remains an unlikely agenda. In any case, Aero Contractors is already neck-deep in debt.

The Director-General of the Nigerian Civil Aviation Authority, Capt. Muhtar Usman, explained that the decision by First Nation was taken in order to ensure that the airline carried out the required maintenance of its aircraft refuting claims that domestic airlines are winding down their operations.

Usman insisted that the domestic carriers had not wound down their operations, but were “merely suspending their operations temporarily to enable them undertake certain operational overhaul and strengthen their overall operational outlay.”

Though doubtful, we desperately hope this is just the case because at this rate, a recession might turn out to be the worst depression ever recorded in history seeing as we are already recording suicides blamed on the tough economy.

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