Aviation

June 17, 2024

FX crisis: Airlines groan as fleet depletion worsens

air traffic

By Dickson Omobola

Fresh indications have emerged revealing that some domestic airlines’ operators may close up shop due to inability to access forex required to either return or take their aircraft outside the country for checks.

Vanguard learnt that the country’s 12 scheduled airlines with different range of airplanes from Boeing 737 series, Airbus A320-300, A220-300, ATR, Embraer CRJ, Embraer E2, Embraer ERJ-145, Dash 8 to MD 83, among others, had suffered severe fleet depletion, leading to reduction in capacity.

It was also gathered that the instability in exchange rate was affecting the cost of aircraft spare parts, forcing operators to constantly adjust airfares.

Stuck aircraft

A senior member of Airline Operators of Nigeria, AON, and the Chief Executive Officer of Top Brass Aviation Limited, Captain Roland Iyayi, lamented the paucity of rex, calling for an urgent fix.

He said: “I know of a domestic carrier that has as many as 13 aircraft stuck at various maintenance facilities worldwide. The same operator, in the course of putting in bid for forex, has domiciled with the Central Bank of Nigeria, CBN, $14 million worth of naira. A year and half on, he is yet to receive the dollars.

“They have a situation where, because of this paucity or unavailability of forex, they are stuck with having about 30 per cent of their operational fleet stuck with maintenance facilities worldwide.

‘’That has depleted their fleet availability and schedule reliability. So, when you hear a lot of domestic airlines cancelling and delaying, it is not completely unconnected with the fact that they have not had FX available to be able to recover their airplanes to optimize operations.

Unsustainable

“It is not sustainable. That is the reason a fleet of about 30 aircraft is now down to 21. Some airlines with about 10 airplanes are now down to four. What that translates to ultimately is an increase in fares because if there is no capacity and demand is higher, fares will increase. The lack of forex is a major factor in how domestic airlines fare.

“Right now, I think government should declare a state of emergency in aviation. If we continue at this rate, the fleet size of the domestic market may be reduced to as low as between 35 and 50 per cent within the next three months, meaning airfares will increase.”

Instability

Also speaking to Vanguard, the Managing Director of Aero Contractors, Captain Ado Sanusi, said: “There is no part of the aircraft that is manufactured in Nigeria. So, whenever there is a rollercoaster of exchange rate, it translates directly to the price of spare parts being bought. ‘’That is what has translated to the number of aircraft we currently have in the country. The aircraft that are down for maintenance is a direct relationship to the exchange rate.

“If the foreign exchange could be stable, the airlines will adjust their tickets to reflect the foreign exchange. The problem lies in the rollercoaster of foreign exchange. And that is where airlines experience challenges to remain in business.

‘’However, when there is long-term stability in the FX market and the margin between the naira and dollar is not so wide, then one can plan.

Fiscal policy

“Thank God the fiscal policy of current government is showing that we will probably have it stable between N1,400 and N1,500. If it remains, then I believe airlines can now adjust their tickets prices to reflect the exchange rate that would give them a good picture to plan ahead and make a good budget.”