MUSA NUHU, an aircraft captain and current director general, Nigerian Civil Aviation Authority (NCAA), presides over one of the many regulatory agencies in the aviation business in Nigeria, and at a time so many things are taking place that his attention is well sought after. With foreign airlines having their money trapped in the country and deciding to suspend flights, domestic airline operators are facing different challenges that threaten their business. NUHU met with domestic airline operators recently and granted an interview shortly after, where he spoke about his hope for the release of trapped funds belonging to foreign airlines; the ongoing audit of airlines, even suggesting that some licences and certificates might not be renewed. SADE WILLIAMS here presents excerpts from the interview.
Assent, sector impact of Civil Aviation Act 2022
Since the Civil Aviation Act 2006, there have been significant changes in the industry. We have had new annexes in the International Civil Aviation Organisation (ICAO), new developments in terms of ICT, environments in the sector, generally. In addition to that, the service providers namely; Nigerian Airspace Management Agency (NAMA) and Federal Airports Authority of Nigeria (FAAN) have some residual regulatory functions in them and those regulatory functions have been removed and moved to NCAA as the regulatory authority of the industry to avoid conflict of interest. You cannot provide service and also regulate some of the services you provide. Those are the main things that we have in the new Civil Aviation Act 2022.
Of course, there are other changes that are with the view to have a much more efficient, effective air transportation industry and to make sure Nigeria complies with the new ICAO standards, new Annexes and international best practices.
Release of trapped funds & airlines leaving NigeriaÂ
Airlines are businesses like any other business that investors make money and the Bilateral Air Service Agreement (BASA) arrangements state that they should be allowed to repatriate their funds without hindrance. Unfortunately, because of the challenges this country is facing, the funds accumulated and became very high.
It is a welcome development that the Central Bank of Nigeria (CBN) has released a significant amount of these funds and going forward, I know the Minister of Aviation, Hadi Sirika, the Minister of Finance and the CBN Governor are still working to ensure the balance of the funds are released to the airlines and a mechanism is developed to avoid the repeat of this. If you remember when this government first came into power; 2015 and early 2016, there was the same case of about $600 million which, through the efforts of the minister, ensured the funds were released to the airlines. Unfortunately, six, seven years later, we found ourselves in the same conundrum, but I know all efforts are being made at the highest level to settle this. But, we cannot force any airline to operate in Nigeria; we can encourage them, we can talk to them, but it is a commercial decision for an airline to decide a number of frequencies and where they operate to. If the passenger load is not there, you cannot force them to operate. If they believe they have other difficulties and challenges that affect their operations into certain airports, it is their decision. I cannot force or manipulate any airline to operate in Nigeria. We can only encourage them.
Hope for release of remaining trapped funds
I don’t have the slightest idea. My prayer is that it should be released like yesterday. Nigeria currently has some challenges with the issue of foreign exchange, but we hope it is released as soon as possible so that normal services can resume and not be interrupted. Nigerians travel a lot and air transport is critical for the economy of our country. So, we hope these funds are paid as soon as possible.
Meeting with airlines, ground handling companies
We have discussed and that was why we had a closed door meeting and it was a much calmer meeting. We all agreed; everybody is having challenges, difficulties and this is not restricted to the industry stakeholders alone, the airlines, ground handlers and other service providers. Even the agencies, we have the same problem with the issues of funds. At a point in time during the Covid-19 pandemic, when the airlines ran into troubles, a lot of the agencies too had the same challenges of paying the salaries of their workers. So, we are all in the same boat. You can imagine FAAN running about 27 airports and the funds are not there, NAMA has facilities all over the country that they must maintain, equipment is imported and they must be maintained. I had to train my inspectors overseas. We are all in the same boat and we all need to work together, collaborate and get out of the problem. We need to stabilise the system and ensure there is improvement.
Also, there are issues of the outstanding debts that need to be paid. So, we are working on the airlines, we know that if we tell them to give us all these monies at the same time, it is very difficult and not possible, so, what we have put in place in NCAA and to prevent the debts from growing, we have put in place a tripartite agreement; the NCAA, airlines and the airlines’ banks. So, once those funds go to the bank, the five percent Ticket Sales Charge (TSC) and Cargoes Sales Charge (CSC) is automatically deducted and goes into the NCAA bank and NCAA will share it with the other sister agencies on a predetermined ratio as entrenched in the 2006 Civil Aviation Act.
For the legacy debts, what we have done is to enter an MoU with all the operators; we know they can’t pay all at a time, but they have to pay us a reasonable amount of money on a monthly basis, at least. I think almost all the airlines are complying with this, except a few that we are working on. What we have said is that if they don’t pay this legacy debt, we are not going to renew their licence; Air Operators’ Certificate (AOC) and Air Transport Licence (ATL). That is one of the conditions and most of them have entered into the agreement. My account people are sitting with them so that they can make an arrangement on payment of a reasonable amount so that the debts can be cleared over a short or middle time period.
Audit of five domestic airlines and the outcome
Yes, the airlines have challenges; we have sat down with some of them, discussed with them and some of them need some injections of funds. Like Aero decided to shut down on its own volition and they are reorganising, getting more aircraft, expecting some injection of funds so that their financial status can grow.
So, we are in discussions with them on this matter. Financial distress in aviation if not managed properly could turn out to be a safety issue because we don’t want airlines to start to cut corners. Those with financial difficulties if you notice, they are delaying flights, cancelling flights, but we need to work with them. We are all in this together, except where we have serious concerns in the continued existence of the airlines or serious violation, we will work with them hand on hand so that they can be able to get out of these financial challenges they found themselves.
Update on Dana Air
Dana’s audit was not only the financial issue, there were other violations in conjunction with the weak financial position. We are working with Dana assiduously to see how the issue can be resolved. Even yesterday (Monday 29 August), we had an internal zoom meeting with the airline and a couple of things need to be completed and we will call our management; Dana will sit down with them, they will tell us what they have done and what they have put in place. If we are happy, we release them, but if not, we will tell them what they must do before they are released for safe operations. Safety of the industry is paramount and it will never be compromised.
