Poor legal frameworks cripple local airlines’ revenue, growth

Lack of proper legal frameworks in the operations of local airlines has been blamed for slow growth of the industry despite huge market potentials.

Stakeholders made the observation in Lagos yesterday at a seminar organised by the Aviation Committee of the Nigerian Bar Association Section on Business Law.

They said the development was due to the low priority operators give to legal backings, coupled with a shortage of aviation lawyers in the country.

Consequently, the situation has caused some airlines to abandon stuck aircraft overseas, enter into controversial agreements, governed by conflicting regulations of agencies, and even faced several unresolved issues between consumers and service providers.

Managing Director of Landover Company Limited, Capt. Edward Boyo, said the aviation industry in Nigeria was yet to takeoff, especially with deficiency in legal backing for the mode of transportation.

Boyo noted that the structure of civil aviation had several players that included the government, regulatory agencies, private operators, unions, foreign partners and consumers, and should be guided by a broad system of rules that regulates decision making, agreements and laws.

He said: “But in the absence of correct legal system, it has led to airlines running into bad maintenance programmes overseas and the loss of several aircraft in the process. The Bi-Courtney and FAAN issue with the Murtala Muhammed Airport II (MMA2) is also because of improper legal framework. There are a lot of concessions around the airports today that are not working, and millions of consumer that have issues are not getting redress.”

Chief Executive Officer of Maevis Nigeria Limited, Tunde Fagbemi, added that the norm in the industry was for airlines’ owners to only involve lawyers when they run into problems, advising them instead to co-opt legal practitioners right from the planning stage, given the high risk involved in the business.

Receiver Manager of Arik Air, Oluseye Opasanya, said it amounted to gross indiscipline to enter into deals worth several millions on a mere two-page agreement paper.

“Unfortunately, that is what we have been seeing in our airlines. But that cannot be called an agreement, but an offer letter. That is what is happening with Arik and the consequence is there for all to see. I have no sympathy for creditors that are coming to me because they helped in creating the monster,” Opasanya said.

The CEO of Air Peace, Allen Onyema, noted that the industry would not grow until lawyers fully got their hearts together and became involved in day-to-day operations of the airlines.

Onyema, himself a lawyer, said: “You (lawyers) must fight for it. Insurance people did and they got into the system, despite the fact that all of them, put together, cannot insure one Boeing 737 aircraft. But Nigerian airlines do it all alone and burn their fingers too because they cannot find lawyers with specialisation in the area of aviation.”