Either by mistake or in the hope that it will not be noticed, Nigerian banks gave airlines in the country less change than is right, leaving them to bleed profusely with debts running into billions, a Nigerian CommunicationsWeek investigations have shown.
Consequently, short-term loans which orchestrated buoyancies and explosive growths in the Nigerian aviation industry are leaving scares on the flesh of the airlines as businesses fall to less than expected.
Even the N300 billion intervention funds released by the Central Bank of Nigeria (CBN) for the sector have failed to impact as charges and counter claims rent the industry.
Industry sources accuse the Bank of Industry (BOI), where the intervention funds are domiciled of conniving with commercial banks to inflict deep cuts on the airlines’ finances.
The CBN had while injecting the fund to the sector said that “airlines can now partake from the funds and those that are indebted to banks can refinance their loans and amortize them over a period of ten to 15 years. This we believe will help put off a feared financial crisis in the aviation industry”.
Nigeria CommunicationsWeek however gathered that airlines business in the country have witnessed some erratic growth in recent years, with older domestic names such as Chanchangi, Aero Contractors and IRS are slugging it out with new entrants like Arik, Dana and the Virgin Nigeria now called Air Nigeria.
All of them are however in form of trouble or the other but mostly financial and may never get out of their present dilemma unless there is a far-reaching intervention.
At last count, the sixteen domestic airlines, both operational and dormant, are trapped in the debris of over N 325 billion debt owed various aviation agencies, banks and government agencies.
Apart from the huge debt overhang, the airlines are faced with the problems of high fuel costs, ageing aircrafts and high operating costs.
Nigeria CommunicationsWeek recalled that only recently, three airlines locked horns with their financiers.
One of them, a long time player in the industry was nearly grounded on account of its indebtedness to then Oceanic Bank.
Benjamin Okewu, president of Air Transport Senior Staff Association of Nigeria (ATSSAN) said that industry needs long-term planning for survival.
“The truth is that when the intervention money was released neither the Ministry of Aviation nor the airlines were directly involved in the sense that the commercial banks in conjunction with the Bank of Industry (BOI) were the managers of the fund. And the commercial banks saw it as an ample opportunity to get hold of the funds they have already released to the airlines. So the airlines are barley surviving. It has gotten to the extent that they can’t pay their service agents and staff. The workers are becoming the scapegoats.
Nodding in agreement, Captain Dele Ore, president of Aviation Round Table (ART) called for swift action by the government by injecting more funds into the system, while the regulatory agency steps up its functions to ensure in the industry.
He said: “NCAA should have carried out financial audit of the airlines before now. The present situation paints a gloomy picture for the industry because nobody knows if the airlines are stable to carry on. On the part of the government, it needs to add some more grants with human face. That is the interest rates should be reduced to single digit interest rate and not the interest rate that we have now. And when the Minister alleged that the fund was misappropriated, she didn’t tell us how and when things started going wrong”
On the alleged diversion of N300 billion government grants by the airlines to personal uses by the chief executives of some of the airlines, Ore said, “And anybody indicted for diverting the money obtained in the name of a particular airline must be prosecuted to serve as deterrent to others. The problem is that a situation where everybody wants to be an MD or CEO of an airline, because they think is a money spinning sector, even without commensurate responsibility, must end. If that should continue, it means we are not ready to develop”.