Twenty-Two Commercial Airlines Close Shop In Nigeria In 24 Years
No fewer than 22 commercial airlines have collapsed in the Nigerian aviation industry in the last 24 years, research by Daily Independent revealed.
Some of the airlines like HAK Air, which acquired five Boeing 737 aircraft for its operations, closed shop within the period without operating a single flight after obtaining the Airline Operator Certificate (AOC) from the Nigeria Civil Aviation Authority (NCAA), while a few of them flew for about a year.
Also, some of the defunct airlines were affected by the policy change of the Federal Government, paucity of funds, while others folded their wings either immediately after an air accident or a few years later.
Some of the defunct airlines within the millennium are Nigeria Airways, Albarka Air, Azman Air, Discovery Air, Air Midwest, Okada Air, EAS Airlines, NICON Airways, Med-View Airline, Space World Airlines, and First Nation.
Others are Hak Air, Slok Air, IRS Airlines, Air Nigeria, Nigerian Eagle, ADC Airlines, Associated Aviation, Chanchangi Airlines, Sosoliso Airlines, Bellview Airlines and Virgin Nigeria.
For instance, Nigeria Airways, the former national carrier, 1958 – 2003, was liquidated by former President Olusegun Obasanjo in 2003 after he was piqued with the condition of the airline in his second coming to power as president.
Obasanjo had claimed that when he was leaving office in 1979, the airline had 29 airworthy aircraft, but expressed dismay that 20 years later, the carrier had “just two aircraft that were managing to fly.”
Though, its liquidation brought a gale of criticism as its existing staff were not paid their terminal benefits until 2009 when the late President Umaru Yar’Adua paid about five years of their severance packages with a promise to pay the rest in the future.
But the severance packages were never paid again until December 2018 when former President Muhammadu Buhari through Sen. Hadi Sirika, the then Minister of Aviation, paid another 50 percent of the total severance packages.
Besides, some of the airlines that closed shop due to crashes were ADC Airlines (1988-2006), Sosoliso Airlines (1994-2006) and Associated Aviation (1996 – 2019), while Bellview Airlines (1992– 2010), which crashed on October 22, 2005, also changed name to First Nation Airways after the crisis that riddled the crash.
Also, some of the airlines died due to the recapitalisation exercise of the Federal Government, which compelled them to increase their capitals, based on the type of operations they operate: domestic, regional and international.
April 30, 2007 was set as the deadline for the compliance of the policy by the government.
An airline like Air Midwest, which was formed in 2002 by two former employees of Kabo Air, received its AOC from NCAA in late 2006, but never flew for one day till the promoters withdrew from the business as they were affected by the recapitalisation exercise.
Others caught in the web of change in government policy were Albarka Air (1999 –2005), Okada Air (1982–2002) and Space World Airlines (2007), which did not equally operate a single flight before it went under.
Also, airlines like Chanchangi (1994–2012), Discovery (2014–2015), First Nation (2010–2018), IRS (2002– 2013), Med-View (2007 to 2019), Slok Air (2006-2007), all ceased operations due to their inability to secure aircraft for operations or return their aircraft in maintenance yards outside the country.
Besides, Virgin Nigeria (2004 to 2009) with Sir Richard Branson of Virgin Atlantic Airways with 49 percent shares and the remaining 51 percent shares by other Nigerian investors, closed shop when the Federal Government in 2009, relocated its domestic operations from the two international airports of Nigeria – Lagos and Abuja.
Branson in annoyance withdrew his 49 percent shares, which prompted the airline to change name to Nigerian Eagle (2009-2010), before the new brand was bought over by Mr. Jimoh Ibrahim.
Ibrahim immediately after the acquisition of the airline, once again changed its name to Air Nigeria (2010-2012), but could only remain in business for only two years as he declared the staff “redundant” thereafter.
Ibrahim had earlier acquired EAS Airlines (1993–2006) from Capt. Idris Wada and changed its name to NICON Airways (2006- 2007). The airline operated for less than one year before it was shut by the new owner.
Just last year, Azman Air (2014–March 2023) owned by the Kano-based businessman, Abdulmunaf Yunusa, suspended operations due to lack of operating aircraft.
Two of its four airplanes had gone on C-check maintenance in Turkey, while the other two were left in Nigeria, but as at the time of filing this report, the airline was yet to return to operations.
Commenting on the development, Capt. Samuel Caulcrick, the former Rector of the Nigerian College of Aviation Technology (NCAT), Zaria, said that in a bid to curb the high mortality rate among the nation’s airlines, it was necessary for the government to skew its policies in favour of the operators.
According to Caulcrick, civil aviation had a slim margin profit because of the stiff regulatory checks and other attendant costs, advocating that for the airlines to remain in business, the government should introduce single-digit interest rates for them like their counterparts in Europe and America.
He also explained that the current air travel was low and could not support the current 12 scheduled airlines in the country.
He mentioned lack of corporate governance among the airlines, foreign exchange scarcity and high taxes as some of the factors militating the continued stay in business of the airlines.
He said: “For a sustainable commercial aviation business, the cost of capital must, among other things, be single-digit. Civil aviation, traditionally, has a slim profit margin because of regulatory checks and their attendant costs, such as the mandated periodic recalibration of aircraft, aircraft equipment and crew.
“The volume of air travel in Nigeria is very low and cannot economically support the high number of air operators. The government in the past tried to help with financial interventions, but got their fingers burnt because of the lack of corporate governance of the beneficiary airlines.
“I believe if we can separate ownership from the management of these airlines, corporate governance as a criterion for issuance of AOC, the government and the financial institutions can revisit a single-digit cost of capital for commercial airline operations in Nigeria.”
Also, Mr. Amos Akpan, the Chief Executive Officer (CEO), Flight & Logistics Solutions Ltd, emphasised that the only way to curb the high mortality rate among the airlines was for the industry and the government to deliberately and intentionally change the way the business is being conducted.
This, he argued, could be achieved by stopping investment that could not grow and sustain the business, stressing that a wide range of odds were stacked against business survival in the country.
He also opined that the government could design a programme that would show how the aviation industry could key into the national economic development agenda in the next 50 years, noting that the Ministry of Aviation and Aerospace Development could further break such into each 10 years development programme covering the suggested 50 years period.
Akpan suggested that this would guide intending investors to tailor their investment portfolios or programmes to situate in the national development programme.
He added: “The profit margins in airline business are very thin, the gestation period for the investment is between three to five years with zero tolerance on errors. Therefore, clarity of purpose and rationale of investment must be clear to the investors.
“Security of investment and sustainability of investment should be obvious to the knowledge of investors. Every potential investor must not focus on commercial scheduled passenger flights. Each business idea should be encouraged provided it fits into the national agenda. Nigeria has ignored various other investible business potential in aviation for a long time.”
On the current domestic airline operators, Akpan posited that the industry needed more airlines and aircraft with different modes of operations like General Aviation, which could be used for agriculture, mining, games, oil, marine, tourism and security.
He also appealed to the government to continuously improve on the ease-of-doing-business in the sector, lamenting that it was difficult for the operators to compete with their counterparts in other countries.
Akpan insisted that the aviation industry has universal standards.
“Government should see through the implementation of its policies by ensuring that it is happening in the field as directed. What operators experience in the field of operations is at variance with government pronouncements.
“Operators want to see the policies pronounced be effected in their daily business activities,” he said.
