Air Peace, Aero, Other Nigerian Airlines to Spend $3bn on Oversees Aircraft Checks in 2024
- Currency depreciation has forced Nigerian airlines to allocate $3 billion for overseas aircraft checks in 2024
- In order to meet up with the imminent expenses, some airlines are considering the closure of unpopular routes
- They also advocate the need for aviation stakeholders to establish centres where aircraft fleets can undergo maintenance locally
Legit.ng journalist Victor Enengedi has over a decade's experience covering Energy, MSMEs, Technology and the stock market.
Due to the rapid depletion of aviation resources and a shortage of foreign exchange, Nigerian airlines might incur expenditures exceeding $3 billion for the overseas inspection of their aircraft in 2024.
As of the previous week, the operational aircraft count has diminished to approximately 43.
This decline is attributed to some aircraft undergoing maintenance abroad, as they await repatriation to Nigeria, hampered by insufficient foreign exchange resources.
Source: UGC
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The ongoing foreign exchange crisis has resulted in the grounding of aircraft scheduled for maintenance.
Airlines contemplate route closures over forex woes
According to ThisDay, several operational airlines are considering closing certain routes to focus on more profitable ones as they grapple with a continual reduction in active aircraft.
The depreciation of the naira has significantly escalated maintenance costs, compelling airlines that generate revenue in the local currency to allocate over 200% more funds than what was spent in 2015 for equivalent overseas aircraft maintenance expenses.
According to James Ominyi, Head of Aero Contractors Maintenance, Repair, and Overhaul (MRO) Division, airlines are grappling with a significant hurdle related to the substantial expenses incurred in aircraft maintenance abroad.
He highlighted that the depreciation of the naira and the scarcity of foreign exchange have rendered it exceptionally challenging to afford the costs of conducting extensive checks outside the country.
Omoniyi said:
“It is really difficult because an airline may budget about $300, 000 for C-check but when the aircraft is opened up, there could be more work to be done and the cost of maintaining will skyrocket to about $1 million, which is equivalent to about N1.3 billion at the moment and about N350 million in 2015.”
Nigeria currently has two maintenance facilities for scheduled commercial aircraft: Aero Contractors and 7Star.
However, these facilities face limitations in maintaining all categories of aircraft within the country's airline fleet, encompassing Bombardier, Embraer, Boeing, Airbus, and others.
Ominyi noted that numerous airlines have downsized their fleets because the grounded aircraft cannot undergo maintenance locally, primarily due to the absence of foreign exchange to facilitate their removal and cover the costs of necessary checks.
The need to undergo maintenance locally
Every airline, including Max Air, Allied Air, United Nigeria Airlines, and Rano Air, faces a common challenge regarding determining suitable locations to maintain their aircraft.
They explore avenues such as sourcing foreign exchange through banks to address this issue. Ominyi mentioned that some airlines have made payments in naira to the Central Bank of Nigeria (CBN) through their banks, awaiting the allocation of foreign exchange.
Also speaking on the matter, Haruna Abdullahi, told Legit.ng that Nigerian airlines stand to benefit significantly if a majority of the aircraft in their fleet undergo maintenance locally.
He said:
If the equipment and facilities were available in Nigeria, this would have saved airlines the cost of going abroad for these services.
This approach would not only result in cost savings in logistics but, more importantly, alleviate the pressure on them to acquire dollars before conducting necessary maintenance on their aircraft.
FG moves to slash airlines' airfares by 50%
In related news, Legit.ng reported that the government is actively pursuing measures to alleviate the financial burden on airlines in the country by considering subsidies to reduce the soaring costs of air travel.
In a meeting held on Friday, December 15, 2023, Festus Keyamo, the Minister of Aviation and Aerospace Development, engaged with the Airline Operators of Nigeria (AON) to discuss potential strategies.
According to reports, a proposal was outlined where the airline would provide passengers with a form during travel, and other processes would follow.
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Source: Legit.ng
