By Chinelo Obogo
Year 2021 was so challenging for the aviation industry that struggled to recover from the COVID-19 pandemic and begin new year on sound footing. This was as the industry would have to contend with issues like the concession of four major international airports, the establishment of a national carrier that is expected to commence operation this year as well as the setting up of a leasing company and a Maintenance, Repair and Overhaul (MRO) facility to help curtail capital flight, ease the leasing process for domestic airlines, improve aircraft maintenance turnaround time and generally develop the sector among others.
New ground handling charges
Among the issues that would run its course this year is the increase in ground handling charges which is expected to take effect on January 1, 2022.
Coming after 35 years of the last amendment of handling charges, the Nigeria Civil Aviation Authority (NCAA) approved new safety threshold charges for air cargo companies. The amendment was last made in 1986 but the new rates commenced from October 2021 for international airlines and January 1, 2022 for domestic operators.
The NCAA approved between $1,500 and $5,000 (passenger and cargo flights) for handlers for a narrow and wide body aircraft respectively, while domestic operators will now pay between N20,000 and N70,000, depending on the aircraft type. Narrow body aircraft are Boeing B737, Airbus A320, ER 135 and ATR, while wide body aircraft are B767, A330, B777, B747 and B787.
Chairman, Association of Ground Handlers (AGHAN), Mr. Olaniyi Adigun, said while other African countries charge $4,000, they remit 5 per cent of about $200 to their governments, the Nigerian government is getting just $20 stressing that the disparity was miles apart and is a lot of capital flight out of the country.
Concession is a key issue that could dominate discussions this year which if not handled well, may even lead to litigation between the Ministry of Aviation and labour unions. When the bid for the concession of airports was opened last year, Daily Sun exclusively reported that the Federal Airport Authority of Nigeria (FAAN) was in deep financial crisis largely caused by a huge debt of over N140 billion such that the Nigerian Union of Pensioners (NUP), FAAN branch, warned bidders to be wary of the indebtedness of the agency.
Bidders were warned that the agency has over 60 pending litigations arising from several faulty concession agreements that are yet to be resolved including the unresolved BI- Courtney concession of Murtala Muhammed Airport (MM2). The NUP noted that FAAN was indebted to contractors who have completed their obligations to it to the tune of over N15 billion even as sources within the agency told Daily Sun that the figure does not include uncompleted contracts. NUP urged bidders to investigate not only their claims, but should clarify from the Minister of Aviation, Hadi Sirika, how the over $1 billion loan from China for the construction of the same terminals earmarked for concession would be repaid.
But Sirika in a zoom meeting insisted that concession is the only way that the airports would be maximised and allayed the fears of the unions that there would be job losses. “The airports in Nigeria are currently operating in a suboptimal environment as there is relatively low asset utilisation due to the limited opening hours of other smaller Nigerian airports; lack of terminal capacity as the airports fall short of gates, stands and check-in desks. An overstretched facility is the Murtala Muhammed International Airport, Lagos terminal, built in 1979 for 200,000 passengers, but currently processes nearly eight million flyers,” Sirika said.
Launch of MRO, leasing company
The establishment of an MRO and aviation leasing company this year would be one of the most crucial achievements of the President Muhammadu Buhari administration and would be a huge boost for the industry.
According to Sirika, the establishment of both facilities would curtail capital flight, ease the leasing process for domestic airlines, encourage foreign investment, enhance technology transfer to Nigerians, improve aircraft maintenance turnaround time and generally develop the aviation sector. The Ministry said that there is presently no aviation leasing company in the entire African continent and the existing ones are controlled by major international lessors who are usually reluctant to lease aircraft to African airlines because of the risks involved.
For the MRO, the Minister said the plan is to have an independent facility which would be sited at the Nnamdi Azikiwe International Airport, Abuja and would cater to the West and Central African market and will also service the proposed national carrier and the leasing company. It said most airlines take their aircraft oversees for maintenance and the cost is ernomous.
The leasing company would be structured as a joint venture between the FG and the private investor, where in the short term, aircraft would be leased from international lessors and sub-leased to African airlines but the long term plan is to acquire, own and lease aircraft directly to African airlines. The MRO would have the capacity to service narrow and wide body aircraft and the government would support this venture by establishing a free zone at the airports.
The Consortium of A J Walters Leasing Limited and Glovesly Pro-Project Limited was announced last year as the preferred bidder to establish the leasing company; while the Consortium of A J Walters Aviation Limited, EgyptAir Maintenance & Engineering (EGME) and Glovesly Pro-Project Limited as the preferred bidder to establish the MRO.
A J Walters Leasing (AJW Leasing) is the leasing subsidiary of A J Walter Group. The company optimises airline fleet strategies by leasing aircraft engines and spare parts. It manages a substantial portfolio of leases and has a customer base of 22 airlines in more than 20 countries.
Glovesly Pro-Project Limited is an indigenous and integrated company incorporated under the laws of Nigeria. The company has the capacity to contribute to the challenging and growing requirements in the Aviation industry, communication, power sector, building construction, civil engineering, Road Construction and General procurement.
EgyptAir Maintenance & Engineering (EGME) is a leading MRO in the Middle East and Africa offering MRO services to commercial aircraft, engines and components, with a customer base of over 81 airlines. Glovesly Pro-Project Limited is an indigenous and integrated company incorporated under the laws of the Federal Republic of Nigeria.
Three years after the Federal Government announced plans to establish a new national carrier after the liquidation of the Nigerian Airways in 2003, Sirika announced recently that the proposed carrier would begin operations in April 2022.
He told House correspondents at the end of a virtual Federal Executive Council meeting that the Federal Government would own not more than five per cent equity stake in the carrier and that the airline would be capable of providing 70,000 jobs. He said Nigerian investors would own 46 per cent shares while international strategic partners would own 49 per cent stake and that the outline business case has been approved by the Council
The minister explained that the airline would start operations with three wet-leased aircraft and then continue to expand, place orders and then get deliveries. He assured the nation that the MRO facility for the carrier and others would begin in Abuja next year and that partners for the MRO had been approached and once approved by the Federal Executive Council, work would start in April 2022.
Fleet, route expansion for airlines
Domestic airlines are expected to expand their fleet and open routes this year. Operators like Ibom Air inked a deal last year with Airbus, to buy 10 A220 jets and there are indications that the airline could spend over $915 million for the purchase. The two A220 which were wet-leased from Egypt Air last year would be returned at the expiration of the lease agreement in June 2022 and the airline would dry lease two planes to replace the two that would be returned in June and operate them till the first two out of the 10 Airbus planes are delivered in 2023.
Air Peace, Nigeria’s largest carrier fully paid for 13 new Embraer 195-E2 aircraft from the Embraer Facility in Sao Jose Dos Campos and made purchase rights of additional 17 more which will be activated by 2023. The airline received four of the aircraft last year and more are expected to be delivered this year.
Speaking while receiving one of the jets last year at the Nnamdi Azikiwe Airport, Abuja, the Chairman and CEO of the airline, Chief Allen Onyema, said they hoped to have all the 13 aircraft that was paid for in 2022.
“We hope to have all the 13 aircraft we paid for in 2022. We have paid for the 13 aircraft and made purchase right of additional 17. In addition to the firm orders of 13 aircraft, which we would have received before the end of 2022, we would make further commitment of 10 additional aircraft and by the time we have 30 aircraft. we would employ about 17,000 personnel.”