Forex Shortage Affects Airline Operators In Nigeria


The current Federal Government’s foreign exchange (FX) policy causing forex shortage may be taking a big toll on Airline operators in Nigeria as they have an estimated build-up of $575 million held in the country, which they are unable to repatriate.

The International Air Transport Association (IATA) rule, which stipulates that monies that are not repatriated within a period of two months should be considered as blocked, have some aviation experts speculating many airlines operating in Nigeria may be tempted to cut corners in their maintenance schedules as scarcity of Forex makes it harder to buy and stock consumables for aircraft in reasonable quantities.

Some airline operators say the high exchange rate is also affecting domestic airline operations because major checks are carried out overseas and payments for such services arer made in foreign currency, whereas they earn their revenue in naira. The slide in the value of the naira since last year, prompted airlines to use more funds from their meagre earnings on maintenance.

Experts say this developments may result in fewer investments and loss of jobs in the country’s aviation sector, as many airlines may be faced with the option of laying-off staff.

Read More Here: About 2000 Nigerian Foreign Aviation Workers To Lose Their Jobs

Also, in order not to jolt the domestic market, the operators were said to be reluctant to increase fares, fearing it could further shrink the number of air travellers, as purchasing power shrinks, due to the economic crunch.

Chairman, Airline Operators of Nigeria, Nogie Meggison, says airline operators are required to change their tyres on a weekly basis, pay for wear and tear on a monthly basis and fix old engines when the need arises, and this is often done outside the country and requires dollars to foot the bills.

According to Meggison, these routine activities which are mandatory are becoming very difficult for the airlines, as the FX is not made available. The huge cost of carrying out mandatory C and D checks has become a very big burden for the airlines, given that when an airline is able to carry out these checks and scales through, “it means it has come to stay.”

A and B checks, which are lighter level checks, are usually done in Nigeria and there are the daily line checks, which airlines do after daily service of the aircraft.

C-check maintenance of a Boeing 737, which cost between $500, 000 and $700,000 prior to the foreign exchange volatility has tripled because of the sliding value of the naira.

However, Director of Airworthiness Standards, of the Nigerian Civil Aviation Authority (NCAA), Benedict Adeyileka, has said that there are structures put in place to monitor the airlines and that the structures are so foolproof and transparent that they cannot be compromised by the operators.

Adeyileka said NCAA officials carry out ramp inspection of aircraft operations, they check and review aircraft maintenance status, cockpit and cabin crew and overall airline service.

Aviation experts say the majority of aviation-friendly countries have low interest rates, stable and easily convertible currencies, and no draconian policies that adversely affect airline operations.

Read Also: Dollar Scarcity, Foreign Airlines Increase Fares By 100%