It’s another busy Tuesday and I’m glad to bring you the headlines of Aviation stories.
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Exit of Foreign Airlines Worries Senate C’ttee, Aviation Minister Summoned
|United Airlines Boeing 777-200ER photo credit: www.airplane-pictures.net|
The Senate Committee on Aviation Monday expressed concern over the constant withdrawal of some foreign airlines from the nation’s airspace and consequently announced its plans to summon the Minister of Aviation, Hadi Sirika, to appear before it and explain the rationale behind this ugly trend.
Making this disclosure in the National Assembly after a meeting of the committee with various aviation agencies, the committee chairman, Adamu Aliero, told journalists that persistent scarcity of aviation fuel which had forced some foreign airlines to shut down operations in Nigeria was embarrassing for a nation which produces crude oil in large quantity.
Why Nigerian Airlines May Close Shop, by Operators
Aviation experts have again raised the alarm over problems that airlines in the country are presently going through, which may drive others out of business. They listed factors ranging from increase in Jet A1 (Aviation fuel) to its non-availability down to access to foreign exchange to do business (as aviation in Nigeria is 98 per cent foreign exchange dependent), to the multiple charges that airlines have to bear. To them, the aviation industry is not looking good, reiterating that the sector is in serious dire straits.President, Airline Operators of Nigeria (AON), Capt. Noggie Meggison lamented that skyrocketing Jet A1 price and its scarcity, has made it difficult for airlines to be profitable, arguing that the group has made a presentation to the Federal Government on how to stem the tide. Also piqued by the situation is the Managing Director of Arik Air, Chris Ndulue, who noted recently that the situation including scarcity of foreign exchange, has made it extremely difficult to do business.
Senate Moves to End Scarcity of Aviation Fuel
Members of the Senate Committee on Aviation yesterday met with stakeholders in the country’s aviation industry over the scarcity of aviation fuel and other challenges facing the industry.
|photo credit: google.com|
Chairman of the committee, Senator Adamu Aliero, told newsmen at the end of the meeting held at the National Assembly, the Minister of Aviation, Senator Hadi Sirika, would be invited to find a lasting solution to the scarcity.
He said even though Nigeria was an oil producing country, foreign airlines were now purchasing aviation fuel from neighbouring countries. He said for the aviation industry to flourish, there was the need to unbundle the sector.
Aliero assured that the National Assembly would amend relevant laws needed for the unbundling of the industry.
“As regards repatriation of funds, it is more of a constitutional problem. We will look at ways of fine-tuning the constitution to make it possible for airlines to remit funds owed government.
“There is also the need to unbundle the aviation sector. We are of the opinion that if this is done, the operations of the sector will be liberalised and that will go a long way to boost revenue generation,” he said.
The Deputy Senate Leader, Senator Bala Ibn Na’Allah, also supported the unbundling of the sector, saying the challenges of the sector made it imperative.
Challenging Times as Banks Slow Airlines’ InvestmentThe tough economic situation has slowed airlines’ expansion programme. Banks’ double interest rates are killing, while financial institutions that fund the sector are also feeling the heat; signposting a very difficult period for carriers.
Nigerian airlines’ last ray of hope for bank funding seems to be fading. The airlines passing through financial turbulence are finding it difficult to approach banks to rescue them following huge indebtedness to various financial institutions. Some of the loans are classified as nonperforming, but they have been refused fresh funding.
|Photo credit: www.airplane-pictures.net|
Nigeria’s airline industry owes banks and government as much as $2 billion after funding rapid expansion with short-term loans, leaving some firms struggling, industry and financial sources say.
In Nigeria, commercial banks, which are profit oriented and without huge financial base are reluctant to lend such long-term loans to airlines and this has hampered air transportation in the country.
The situation is not helped with the risks associated with air transport in the country. So, lack of adequate funding has led to the short life span of many airlines, in addition to bad business plan and technical failure, it has also led to the many air crashes suffered by airlines.
The airline industry in Africa’s most populous nation a few years ago saw explosive growth. The explosion then saw older domestic names such as Aero, Chanchangi and IRS fighting competition from new players such as Arik, Dana and Virgin Nigeria. Chanchangi, IRS and Virgin Nigeria have all gone into extinction.
The expansion gave Nigerians a wider choice of airlines, many of them flying with relatively new and refurbished aircraft, helped reverse the country’s dismal reputation for air safety
in the wake of a spate of crashes.
IATA, Manufacturers Seek Sanctions Against Illegal Lithium Battery on Planes
Director General of IATA, Tony Tyler
Worried by growing safety threats of lithium batteries onboard a plane, the International Air Transport Association (IATA) has demanded stricter enforcement of international regulations regarding the transport of lithium-ion power batteries.
Lithium-ion powers our phones, our computers, and even our cars, but airplanes and lithium batteries don’t mix.
The risk is that, if left unattended, the batteries could overheat and burst into flames, and that in the confines of a cargo hold a battery fire and can spread so quickly that it could overpower existing fire-suppression systems.
IATA, in partnership with leaders of the lithium battery supply chain, yesterday urged Ministers of Trade, Industry and Transport, and Directors of Civil Aviation in the world’s largest lithium battery manufacturing and export countries, called for its safety
regulations to be enforced at the point of origin including the initial shipper and the battery manufacturer.
The body also called for the implementation of cooperative enforcement initiatives between jurisdictions to address situations, where lithium batteries manufactured in one state are driven over a border to be flown from another state.
Lack of enforcement is increasing pressure on airlines and regulators to unilaterally ban all forms of lithium battery shipments from aircraft. This would add to the cost of global supply chains and consumer goods, and encourage those who flout the law to
increase mislabelling of batteries, further increasing safety and security risks.
Freight forwarders petition Presidency over import guidelines
Freight forwarders under the aegis of the National Association of Government Approved Freight Forwarders (NAGAFF), have petitioned the Presidency over the flagrant disregard for procedures and guidelines in the administration of exchange rate for Customs duty payment.
The group in a petition signed by the Secretary General, NAGAFF, Arthur Agwilo, and obtained by The Guardian, chided the authorities for ignoring a letter issued by the Central Bank of Nigeria (CBN) to all authorised dealers and general public with reference No. TED/FEM/FPC/GEN/01|012, dated April 30 2014, detailing import guidelines, procedures and documentation under the destination inspection scheme in Nigeria.
According to the petition, number (H) of the guideline with the heading ‘Import Duty Payment’ is very clear as to what exchange rate should be applicable for the purposes of Customs duty collection.
Naira Records Slight Gain, Closes at 393/dollar
|photo credit: google.com|
The naira recorded marginal gain at the parallel market on Monday and closed at 393 against the United States dollar, up from 397 on Friday.
The local currency, which had fallen to 400/dollar last Friday, traded lower last week.
The naira closed at N505 and N435 against pound sterling and euro respectively at the parallel market on Monday, the News Agency of Nigeria reported.
At the Bureau De Change segment of the foreign exchange market, the naira closed at N385, N505 and N420 against the dollar, pound sterling and euro, respectively.
The naira appreciated at the official interbank market to close at N317.34, from N320.25 posted on Friday.
Traders at the market said that the demand for the greenback was still on the high side.
NAN reported that the market was eagerly awaiting the sale of forex by banks to the BDCs during the week.
Meanwhile, the interbank overnight lending rate had jumped to 23 per cent on Friday from 10 per cent recorded in the previous week.