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 followed a request by the Federal Ministry of Aviation and Aerospace Development for proposals on a National “Ticket-for-Cash” Aviation Revenue Recovery Programme aimed to address the cash-flow challenges confronting domestic airlines as a result of high operating costs.

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

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.

It is however important to note that the debt-for-seat arrangement would have limited impact if airlines continued to accumulate fresh debts. Hence the need to adopt the “Pay-As-You-Issue” arrangement, under which future ticket sales would be automatically settled between the airlines and the relevant government agencies.

With about 70 per cent of domestic flight tickets sold online, it was proposed that an online platform code named ‘QuickAir’ can be 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.

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

The existing ticket distribution and settlement platform developed by QuickAir, shows that the system could connect with the servers of Nigerian airlines. A route search on the platform, produced results from all 14 active domestic. It also revealed the accounting backend where transactions and revenues generated to date were displayed alongside other relevant data.

The QuickAir platform according to sources, is ready to be deployed once the Airline Operators of Nigeria (AON)Airline Operators of Nigeria (AON) umbrella agrees to the implementation of the arrangement.

The platform will go a long way in resolving the long-standing financial disagreements between the government and domestic airlines. It is however interesting to note that the financial gains is not its immediate motivation of the company as they are willing to work with the ministry to accept whatever the Minister considered fair for its contribution towards resolving the debt-recovery challenge..