By Chris Aligbe

In my last piece, I promised an x-ray of the Presentation of the Airline Operators of Nigeria 

(AON) to the Minister of Aviation and Aerospace Development, Hon. Festus Keyamo.  In early October 2023, the AON presented a 42-page Document titled, “Nigeria Aviation Industry: Constraints and Challenges and Probable Solutions”. One must commend the AON because, for the first time in recent memory, the body was able to put up a comprehensive document that reflects their perception of the state of the industry, the challenges, possible solutions and the demands of AON members.  As a business pressure group, AON Presentation was deft and point blank on their interest.

In their Aviation Industry Core, for AON, the Airlines occupy the fulcrum.  I am not sure that this position will be generally accepted.  What is also clear is that many of the issues that plagued the industry which are presently in the burner are canvassed.  However, the AON Charter, presented lucidly by one of its outstanding nominal members was dumb, as it were, on the challenges that are intrinsic which constitute impediments to development and growth of the industry.  Such issues like Corporate Governance, Interlining and Code-Share among member airlines at the domestic level, the passenger rights abuses and the attitude of most AON members of refusal and non-restitution of due compensation to passengers affected by their services failure whenever it occurs.  The Charter did not have any focus of the millions of air travel passengers without whose patronage they will not exist.

In their view and recommendations, the onus of pulling the industry out of the woods is entirely on the Government with its Agencies while they present themselves as the eternal victims.  The passenger does not exist in their Charter directly except by inference.  The Minister I guess probably saw this when he said to them in paraphrase, “I will work to help you but you must guarantee me improved services and reduced passenger rights abuses”.  In fact, the Minister threatened enforcement of sanctions for passenger rights abuses.

In the various demands of AON, there are challenges like Forex, Airport Infrastructure, MRO and Manpower Development that are real and germane as well as need urgent addressing. But AON’s recommended solutions may not scale insightful analyses.  There are others like Licence for Jet A1 importation, creating a special forex window in the CBN, restrictions of frequencies and entry points to foreign airlines and forcing/encouraging them to enter into code-share with Domestic airlines. These are as non-starters for various reasons much of which have been argued in many industry forums.  There are however two major issues that need exhaustive discussion.  These are; the need for a World-Class Transit Lounge and the Challenges of Wet-Lease.

AIRPORT TRANSIT LOUNGE:

Transit Lounges are holding places at Airports for passengers who are waitingto connect flights to another destinationor final destinations.  Transit Lounges are mandatory facilities for airports that are aiming to be Hubs.  They are critical in growth of flight operations and passenger volumes as well as non-aeronautical revenue.  Transit Lounges are different from normal departure dwell lounges.  They are mainly used for international passengers who are passing through a country’s airport for the purposes of taking a connecting flight to their next destination.  Such passengers are called Transit Passengers.  In many countries, Transit Passengers do not require visas as they are not allowed entry into the country of transit.  Some other countries however require transit visas.  But the trend is non-transit visa requirements.

Hubs are major airport and passenger growth infrastructure.  For a country like Nigeria that is in dire need of growth and expansion in the Airline Subsector, given particularly its vibrant market and excellent location in the Continent, a Hub or Hubs are one a condition that is not only precedent but mandatory.  So, the AON’s demand for Transit Lounge is in the right direction, given the new number of regional aircraft acquisitions by airlines like Air Peace, Ibom Air, United Airlines, Green Africa, Overland Airways and others.

Today, our airlines – AON members are positioned to make a big impression in the West and Central Africa Sub-regions.  Also, Air Peace need a Transit Hub facility to grow its eastwards international flights to cater for ECOWAS passengers heading to Middle East and Asia.  In fact, as a matter of utmost urgency, Nigeria needs a World-Class 1000-Seater Transit Lounge in Lagos and a 500-Seater one in Abuja.  These have become very necessary now that our airlines, after years of opposition to Nigeria’s accension to Single African Air Transport Market – SAATM, have come to the stark realities that SAATM is not only irreversible but also is the number one of the twelve factors for the realisation of a One Integrated African Continent envisaged by African Heads of Government by 2063 as encapsulated in the African Continental Free Trade Area- AfCFTA.  

This is why the Honourable Minister of Aviation and Aerospace Development, Festus Keyamo should take as priority the MMIA and NAIA Concessions as it is not advisable to seek funding from the government.  Transit Lounges must be realised, not later than the end of 2025.

WET LEASE:

A Wet Lease in the aviation sector is a specific reference to the airline Subsector.  It is alternatively called ACMI (Aircraft, Crew, Maintenance and Insurance).  There are other types of Leases – Dry Lease, Damp Lease, Finance Lease and Lease-buy back.  The one which the AON Presentation raised as a challenge is WET LEASE.  In a Wet Lease, the airline pays for the Aircraft (A), Crew (C) – “Pilots, Engineer(s), Cabin Crew”, Maintenance (M) and Insurance (I).  In airline operations, because of the huge cost of aircraft acquisition, both start-up airlines and those already in operation wishing to increase their fleets normally adopt Leasing as the option.  The option may be any form of Lease; Dry, Damp, Wet or Finance.  Of all of them, the cheapest is Dry Lease as it allows the airline to source its crew – Pilot, Engineers, Cabin Crew as well as handle its Maintenance arrangement and Insurance.  But the most expensive is WET LEASE as the airline will have to pay for every item, the rates and costs of which are usually very high beyond the local rates and cost and prohibitive.  WET LEASE is what obtains today in Nigeria.  WHY?  For decades, up to 1990, Nigerian Airlines had and availed themselves of the opportunities for Dry Lease. 

 Dry Lease, unlike Wet Lease, offered job opportunities to both technical and cabin crews as well as growth in competences of the crews and Engineers.  The few airlines in operation had integrity and respected the terms of the Dry Lease, chief of which was timely payment of Lease rentals and return of the aircraft to the owners when there is a default.  But in 1988, a Generator and Trading Merchant – Desmond Iwuagu floated an airline called Barnax Airlines Limited based in Port Harcourt.  It was a family business and all the six Directors were all Iwuagus.  With little or no consultation, Barnax Dry-leased three B737 unaware that the three aircraft were due for C-Check within three to four months of acquisition.  Desmond had no knowledge of Aircraft and Airline Operations.  The Leasing Company capitalised on his ignorance and cheated him.  The then Minister of Aviation, Late AlagbonOrubibiye Douglas, not being aware, glowingly applauded Desmond andhis Barnax.  This was in the early years of the precursor of NCAA, the Federal Civil Aviation Authority – FCAA.  Late Air Commodore Falope was the Director-General while a youngman – Dr. Segun Demurenwas the Director in-charge of Airworthiness.  Desmond was informed of how he had been defrauded.  Severely hurt that Barnax could not fly because before he could set up the operational structure, the three aircraft were due for heavy maintenance checks.  In a fit of justifiable anger, Desmond refused not only to pay the lease rental but also refused the Leasing Company to repossess the aircraft.  For over four years, the three aircraft were on ground at Port Harcourt Airport.

The Leasing Company in response carried an extensive global campaign, demonising Nigerian Government and Aviation Industry.  In 1992, at Nick Fadugba’s Conference in Nairobi, I was so incensed by the way the Leasing Company’s representative demonised the then Head of State – IBB from the Podium that I took the microphone to berate him and demanded an apology.  Embarrassed Nick Fadugba had to apologise.  

Again, in Cairo, Capt. Joji in the same 1992 berated the Company’s representative over the same demonisation of Nigeria as irresponsible country on Leasing.  

By 1993, Late Tony Momoh who was now practising as a Lawyer was able to get a court order freeing the aircraft for the owner’s repossession.  Since then, no Nigerian airline could dry-lease as the country had been black-listed.  So, from 1992, Nigeria operators, new and old resorted to buying junk aircraft – like BACI-11, Tupolev and Yakolev, which the then Minister of Aviation, Air Commodore NsikakEduok referred to as “Flying coffins”.

This situation until 2007 when Demuren, who had returned as Director-General of the new NCAA in 2006 ensured that Nigeria acceded to the Cape Town Convention on Mobile Equipment.  

The Cape Town Protocol made it possible and easy for any Lessor to repossess its aircraft from a defaulting Lessee.  The Civil Aviation Authority – CAA of the country had the obligation to deregister the aircraft and allow the owners to take their aircraft unimpeded. 

To ensure its legality in Nigeria, Dr. Demuren ensured its domestication to meet the conditionalities of the International Finance and Leasing Institutions.  In March 2007, Dr. Demuren deposited the proof of Nigeria’s Domestication at the UNIDROIT in Rome, and filed it with the International Registry in Ireland in July 2007.  This was a legacy that ended the pain of the Barnax debacle.  For almost ten years, Nigerian airlines could dry-lease.  But by 2017, at the close of Capt. Usman Murthar’s tenure as NCAA Director-General, two AON members defaulted in their lease obligations and instead of allowing the law of repossession take its course, they went to court, in contravention of the terms of Cape Town Convention, sued NCAA and its DG to stop them from deregistering their aircraft in order for the owners to repossess their aircraft.  In response, the world black-listed Nigeria again, making it impossible for our airlines to dry-lease.  So, today, our airlines can only wet-lease with all its disadvantages – cost, employment, growth, etc.

So, AON shot itself through its two members.  So, their cry for pity is like the worst classic ad misericordiam when a man charged for killing his father and mother pleaded for leniency at the point of conviction on the grounds that he was an orphan.  It is a great lesson not to breach international laws and terms.  Globally, there are no surprises that laws, conventions and agreements are breached by Nigerian establishments. This is one of the saddest commentaries of our industry and it will dog us for a long time.

Chris Aligbe  Aviation Consultant