The Federal Government is considering a new “Seat-for-Debt” arrangement to recover outstanding debts owed by domestic airlines to aviation agencies, a senior source within the Ministry of Aviation and Aerospace Development has disclosed.

Under the proposed framework, airlines would be allowed to offset their existing debts through the sale of flight tickets rather than making outright cash payments to the government and its agencies.

The initiative is expected to provide government with a continuous debt-recovery mechanism while enabling airlines to preserve cash needed for critical operations.

The proposal is also being considered as an alternative to aggressive debt-enforcement measures that could disrupt airline operations and affect passengers.

The proposal was submitted by an aviation technology expert, Dr Segun Oyebolu, following a request by the Federal Ministry of Aviation and Aerospace Development for proposals on a National “Ticket-for-Cash” Aviation Revenue Recovery Programme.

Oyebolu, who led a six-man team to the ministry, said the proposal was designed to address the cash-flow challenges confronting domestic airlines as a result of high operating costs.

He said the arrangement would allow airlines to repay their debts through a flexible seat-sale mechanism, describing it as a more reasonable and attractive option for airlines.

According to him, each participating airline would create a centralised digital wallet equivalent to the amount it owes the various aviation agencies as at an agreed date.

He explained that the digital wallet would be accessible to the ministry or its designated distributor, QuickAir, from where the QuickAir Network distribution platform would distribute the assigned ticket inventory to large agencies, corporate organisations and interested government agencies at discounted rates.

Oyebolu, however, warned that the debt-for-seat arrangement would have limited impact if airlines continued to accumulate fresh debts.

To prevent this, he proposed a “Pay-As-You-Issue” arrangement, under which future ticket sales would be automatically settled between the airlines and the relevant government agencies.

He said that with about 70 per cent of domestic flight tickets sold online, QuickAir could deploy a settlement engine that would automatically remit the five per cent Ticket Sales Charge to the designated account of the Nigerian Civil Aviation Authority (NCAA), while the remaining 95 per cent would be remitted immediately to the airline.

Oyebolu said the settlement system operates in microseconds, ensuring that there would be no significant delay in the remittance of funds that could disrupt airline operations.

During the technical session, he demonstrated the existing ticket distribution and settlement platform developed by QuickAir, showing that the system could connect with the servers of Nigerian airlines.

He conducted a route search on the platform, which produced results from all 14 active domestic airlines, before demonstrating the accounting backend where transactions and revenues generated to date were displayed alongside other relevant data.

Oyebolu said QuickAir was ready to deploy the infrastructure immediately once the airlines under the Airline Operators of Nigeria (AON) umbrella agreed to the implementation of the arrangement.

He also said the company was prepared to work with the ministry to resolve the long-standing financial disagreements between the government and domestic airlines.

According to him, when the QuickAir team was asked twice about the financial implications of implementing the proposed solution, the company indicated that financial gain was not its immediate motivation.

He said the company was willing to work with the ministry and would accept whatever the Minister considered fair for its contribution towards resolving the debt-recovery challenge.

At the end of the presentation, the Chairman of QuickAir Networks Ltd., Engr. Suleiman Ibrahim, thanked the Minister, the Permanent Secretary, directors in the ministry and representatives of various aviation agencies for the opportunity to present the proposal.

Ibrahim said the company remained committed to helping resolve the financial conflicts between the government and domestic airlines.