Six airlines risk collapse over bad policies, multiple taxation

Aero Contractors signs revival pact

Barring a quick intervention by the Federal Government and other authorities concerned, at least six out of the eight operating airlines may cease to exist in the next 12 months.

Managing Director of Air Peace airlines, Allen Onyema, gave the verdict yesterday, saying the current “harsh environment” fueled by bad policies, bureaucracy and multiple taxation have put the airlines more at dire straits with six unable to meet obligation.

And should the prediction come to pass, the air travel capacity will drop by about 60 per cent, with gross effects on passenger travel within the country and revenue loss to the government.

Onyema, at the breakfast meeting of the Aviation Safety Round Table Initiative (ASRTI) in Lagos, said the economic odds were so skewed against the airlines that it is impossible for any airline to survive.

He said besides the “double taxation” that regulatory agencies were deducting as five per cent Passengers Service Charge (PSC) and five per cent Value Added Tax (VAT), there are other 35 charges that often leave operators with nothing in terms of revenue.

According to him, “On a N20, 000 air ticket, minus the 37 levies and charges, all that is left for the airlines is N9, 500 to buy fuel, do maintenance, pay personnel and other costs. That is why out of the eight airlines we have now, only two can pay salary. The truth is that virtually all the eight may go out of existence in the next one year. The challenges are just enormous and unbearable.”

Meanwhile, Aero Contractors yesterday signed a partnership deal with AJW Group, a market leader in global management of aircraft spares, to revive the airline.

The foreign partners will assist in restructuring and upgrading of Aero Contractors’ Maintenance, Repair and Operations (MRO) facility and acquisition of new aircraft.

The Guardian gathered that the AJW Group, based in United Kingdom, will upgrade the MRO services to C-check capabilities for Boeing 737 Classic and others in its fleet. The upgrade will ensure that maintenance is carried out to a very high standard, thus providing added quality assurance to customers.

The 58-year-old airline was last year taken over by the Asset Management Corporation of Nigeria (AMCON), but has lately been struggling with limited capacity.

President and Chief Executive Officer (CEO) of AJW Group, Christopher Whiteside, said they are highly regarded for their expertise and excellence across a broad range of MRO services, including repairs and inventory management, and “we look forward to working in partnership with Aero Contractors going forward.”

CEO of Aero Contractors, Capt. Ado Sanusi, said: “We are very excited to work with AJW Group on this project and feel that it will have a marked effect on our operations going forward. Having been in the business for 58 years, I am confident we have found the right partner to work with.”