August 9, 2021

Airlines choking on high repair, fuel costs — REPORT

Abuja Airport

*Inadequate MRO facilities stifling growth

*Aircraft maintenance, second biggest cost to airlines, after fuel — Operators

*COVID-19 worsened things, says Air Peace COO

*FG’s proposed MRO still at negotiation stage

By Lawani Mikairu, LAGOS

Failure to establish a  Maintenance, Repair and Overhaul facility, MRO, that can carry out comprehensive maintenance and checks on aircraft operating in the country has been identified as a major factor stifling the growth of domestic airlines in the country.

It has also been established by stakeholders that aside from aviation fuel, maintenance remains the second major cost to airlines operating in the country, stifling their growth.

However, there appears to be no end to this, as the Federal Government’s proposed MRO facility is still at negotiation stage, according to Aviation Ministry officials.

It will be recalled that the federal administration had for over two decades nursed the ambition of setting up a maintenance facility in Nigeria to position the country as aircraft repair hub in West and Central Africa, but has so far failed to muster the necessary political will to bring it about.

The only two MRO centres in the country at present, Aero Contractors and 7 Star Global Hangar Limited, lack the capacity to meet the demands of operators. The harsh business environment in the country has also not helped their efforts to expand and acquire the necessary equipment for maintenance.

Airlines incur heavy costs

Experts, who spoke with Vanguard were unanimous that domestic airlines incur heavy costs taking their aircraft overseas for maintenance, especially as they have to pay allowances to pilots who will fly the aircraft to the MROs, pay for hotel accommodation, fuelling as well as airport charges. 

READ ALSO: Nigeria’s aviation sector: Private airlines to the rescue

It was learned that some of these expenses could have been avoided, if there were maintenance facilities in the country.

Vanguard learned that of the four aircraft maintenance regimes  — A, B, C, and D-checks, only the first two can be conveniently done in the country, while for the last two stages, operators have no option but to take their planes abroad.

According to current NCAA regulation, every aircraft operating in Nigeria is mandated to go for a C-Check after every 18 months.

For Boeing 737-300 and 737-500, the C-check is conducted after every 4,000 flight hours, while for Boeing 737-400 and Boeing 747-400 it is conducted after 4,500 and 6,400 flight hours respectively. In the case of Airbus A-330-341 this check is done every 21 months

The most detailed inspection is the D-check. This inspection is generally an overhaul. For Boeing 737-300, 737-400 and 737-500, this inspection is conducted after 24,000 flight hours. 

Boeing 747-400 requires a D-check after 28,000 flight hours, while for Airbus A-330-341, after six years.   Note that the commonest aircraft type used by operators in the country is the B-737 series because it is strong and rugged.

$200m spent annually on aircraft checks

Vanguard investigation and interaction with some operators revealed that Nigerian airlines spend more than $200 million dollars annually on maintenance of their aircraft abroad.

This constitutes huge capital flight and heavy financial burden on operators, considering the difficulty of accessing foreign exchange even as rates race upwards.

‘FG working on an MRO’

Right now, there is no government-owned MRO facility currently in the country. The Federal Government recently came up with an advertorial that it intends to establish an MRO facility in Nigeria, stating that it had identified the need for the establishment of such facility.

It read: “The Federal Government of Nigeria (FGN) through the Federal Ministry of Transportation (Aviation) has identified the need for the establishment of Maintenance, Repairs and Overhaul (MRO) Facility in Nigeria, as currently there is none in the West and Central African regions.

“The availability of this facility would help to achieve the following objectives: establish the first MRO facility in West and Central Africa that will address the demand in the region; optimize foreign exchange expenses for major aircraft maintenance; generate more employment opportunities for Nigerians and Nigerian companies; enhance knowledge and technology transfer and support aviation value chain contribution to Gross Domestic Product (GDP) growth.”

The ministry noted that due to the sizable investment and technical expertise required in setting up the MRO facility, FGN was exploring the possibility of entering into a Public-Private Partnership, PPP via a Build-Operate-Transfer, BOT, model, whereby a private sector partner will develop and operate the MRO facility, while the government provides the required support to facilitate its establishment.

The proposed MRO will have the capacity to serve both Narrow Body (Jet and Turbo Prop) and Wide Body aircraft maintenance requirements and may be located at either the Nnamdi Azikiwe International Airport, Abuja or Murtala Mohammed International Airport (MMIA), Lagos,” the notice also read.

‘Project on, at advanced stage’

Speaking with Vanguard about the current status of the proposed federal government-owned MRO, the Director of Press, Federal Ministry of Aviation, Dr. James Odaudu, said the project was still on track.

According to Odaudu, “the project is in advanced stage in the procurement phase. A preferred partner has been selected, negotiations will commence soon.

“The next step will be commencement of negotiation with preferred partner and finalisation of Full Business Case, FBC.”

Airline operators lament

Some operators noted the debilitating effects the problem of inadequate maintenance facility in the country was having on their operations.

The General Manager, Corporate Affairs, Dana Air, Mr Kingsley Ezenwa, said: “It’s affecting all airlines, not just Dana Air; and we are taking the initiative to build ours because our engineers have the capacity for such maintenance here in Nigeria.

“The only thing affecting it is just the huge cost of taking the aircraft outside and bringing them back.

“We also work with Aero when necessary and it has been good. If we have more functional ones in Nigeria, it will help a great deal but while we are working towards this, we would continue the maintenance schedule abroad and partner Aero where necessary also.”

COVID-19 worsened things, says Air Peace COO

Reacting in a similar manner, the Chief Operating Officer, COO, Air Peace, Mrs. Toyin Olajide, said the coming of COVID-19 devastated airlines worldwide.

She explained that Air Peace had several aircraft out on C-check maintenance abroad before COVID-19 and were caught up with the Covid-19 lockdown globally.

“In our own case, we had several aircraft out on C-check maintenance abroad before COVID-19. These aircraft were supposed to have since come back, one after the other, but because of lock-down in those countries since February, the maintenance facilities shut down too. There was no maintenance.

“The Nigerian C-check regime is driven by calendar, which implies that every aircraft has a time frame they must go for mandatory checks, which is usually between 18 and 24 months.

“Out of 25 aircraft in our fleet, several aircraft were out on one maintenance or another. This is the reason for our cutting down on our frequencies and the destinations we serve.

“However, the good news is that most of the planes have started returning to the country after the maintenance and we have started returning to our old routes and opening new ones.”

Only 2 MROs in Nigeria

In spite of Nigeria being aviation hub in West Africa, there are only two maintenance facilities in the country licensed by the Nigeria Civil Aviation Authority, NCAA. They are Aero Contractors and 7 Star Global Hangar Limited, a start-up facility.

But their capacity in aircraft maintenance is limited and not comprehensive, as they can only conduct the first two stages of repairs, A and B-checks.

Speaking with Vanguard, the Base Maintenance Manager/Head, AMO, Aero Contractors MRO, James Ominyi said the current cost of carrying out C-Checks on a Boeing 737 series depends on the state of the aircraft.

“There are so many factors involved. The first is the type of aircraft; second is the type of C-check, age of aircraft, and work scope for the C-check,” he said.

One of the domestic airlines’ maintenance engineers who preferred anonymity, told Vanguard that “depending on the scope of work to be done, an average C-check costs about $1.8 million, which is conservatively about N500 million per aircraft based on the current exchange rate.”

Costly maintenance abroad

Further investigations revealed that to carry out a C-check on a B737-300 aircraft outside the country costs between $320,000 and $350,000 per plane, while the changing of a landing gear of the same aircraft type costs around $90,000. D-check, which is almost complete overhaul, costs much more.

Speaking about the urgent need for an MRO in the country, the Accountable Manager of 7 Star Global Hangar Ltd, Isaac Balami, said the total cost of aircraft maintenance in West Africa is over $1 billion dollars annually, adding that Nigeria, with the highest number of aircraft taken overseas for maintenance, bears about 75 per cent of the said amount.

Balami said: “When you talk about Nigerian airlines, you are talking about West Africa because Nigeria is actually West Africa, whether you like it or not.   Across the sub-region, over $1 billion is spent annually on aircraft maintenance and that is a fact. Nigeria contributes about 75 per cent of this expenditure.

“That is huge capital flight. Those of us in the sector and in MRO business feel frustrated about it. This is obviously a serious blow to Nigeria’s economy because I think that if the Aviation industry has $1 billion, you can imagine what they will do with it.

‘’So the point is that we must stop that leakage. It is not a matter of let’s try; we have to stop it. The private sector has to be involved because government cannot do it alone.

“Yes, there is 100 per cent interrelationship between cost of airline failure and cost of maintenance overseas. Aside from aviation fuel, maintenance is the second biggest cost for Nigerian airlines and it is affecting our airlines badly.

“The issue is when you put Boeing-737 on the ground and it is not flying, you will be losing over $100,000 every day. This is because your fixed and variable costs are known. You cannot change it because whether you fly or you don’t fly, you will still do maintenance; whether it is after 500 hours, 1,000 hours or 18 months, whether it is D-check, whether it is C-check; that you are not flying does not mean you won’t conduct checks on the aircraft.’’

He also identified high cost of maintenance overseas as the major reason Nigerian airlines go under after a short period of operation.

“Aircraft maintenance is determined by calendar and cycles. So when you are not flying, you may not be getting the cycles, but the calendar is affecting it, so at the end of 18 months, you must do it.

“When you do it overseas, you spend extra cost, including visa for your crew, allowances you have to pay to the crew, hotel accommodation, among others. You are also going to pay for navigational charges. If you are going to the US, you will be losing about three to four days. You will stop and refuel. What you will spend on your aircraft taking them overseas will be enough to pay your staff for a certain period,” he explained.

There is, therefore, an urgent need for Nigerian MROs to upgrade their facilities so that Nigerian airlines will not be taking their aircraft abroad.

Modern equipment needed

The head of Aero Contractors MRO, James Ominyi, while speaking on this, said for Nigerian MROs to develop the capacity to take over the maintenance of aircraft and stop airlines from taking their equipment overseas, they have to ensure that they had modern equipment and personnel.

“MROs in Nigeria first need to spend money to improve their equipment, training, tools to be able to compete with MROs outside the country.

“One thing airlines think about is if I go to Aero, will they have everything to do what they need to do? But thank God that our chief executive officer has been buying new equipment every month.

“Last month, our set of jacks came in. So the truth of the matter is that in Aero MRO and other MROs locally, once you patronise us, your man-hour rate is lower than you can get in Europe. That is already big savings.

“If an airline has to leave Nigeria and fly six hours to Europe; that is a huge cost you would have saved if you towed your aircraft to Aero Contractors’ hangar.

“The growing MRO sub-sector in Africa is a $3 billion business. Most of that business is going outside. We need to retain that business within Africa.

“For Nigerian airlines, they need to retain their hard-earned foreign currency by patronising Nigerian MROs,” Ominyi said.

Vanguard News Nigeria