Recently, the director general of the Nigerian Civil Aviation Authority (NCAA), Capt. Musa Nuhu, revealed for the first time that Nigeria’s domestic airlines owe N42 billion and $7.8m to aviation agencies. The money accumulated from non-remittance of statutory fees. He also raised the alarm that the parastatals are on the verge of collapse should the carriers fail to pay up. In this interview, Nuhu says NCAA has adopted the no-debt-service-plan-no-operating-licence-renewal as a policy to collect its money from the defaulting airlines. He also speaks on some other issues including CBN’s release of part of the foreign airlines’ trapped funds, auditing of five local carriers, etc
Ime Akpan
Assent to Civil Aviation Act 2022 and effect for aviation
Since the Civil Aviation Act 2006, there have been significant changes in the industry. We have had new annexes in ICAO, new developments in terms of ICT, environment in the sector, generally. In addition to that the service providers namely NAMA and FAAN have some residual regulatory functions in them and those regulatory functions have been removed and moved to NCAA as the regulator 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 (there) with the view to having efficient, effective air transportation industry and to make sure Nigeria complies with the new ICAO standards, new Annexes and international best practices.
Release of foreign airlines’ trapped fund by the CBN
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 for because of the challenges this country is facing, the funds accumulated and became very high. It is a welcome development that CBN had released a significant amount of this 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 is 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, but unfortunately, six, seven years later, we found ourselves in the same conundrum, but I know all efforts are being made at the high level to settle this.
Efforts to prevent some foreign carriers from leaving Nigeria
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.
Release of balance of blocked funds
I don’t have the slighted 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 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.
Resolutions reached at meeting with airlines, ground handling firms, others
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 on the issues of funds. At a point in time during the Covid-19 pandemic when the airlines ran into trouble, 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 are 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 5 per cent TSA/CSC is automatically deducted and goes into the NCAA bank and NCAA will share it with the other sister agencies on a pre-determined ratio as entrenched in the 2006 Civil Aviation Act.
For the legacy debts, what we have done is to sign 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 licenses – AOC, 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 off 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 injection of funds. Like Aero decided to shutdown on its own volition and they are reorganising, getting more aircraft, and expecting some injection of funds so that their financial status will grow. So, we are in discussion with them on this matter.
Financial distress in the industry
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 in hand so that they can get out of the financial challenges they find themselves.
On Dana Air
Dana 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. We had 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 is paramount and it will never be compromise.
