Samuel Caulcrick
Once an aero plane is flying in Nigeria, it means it is our economy that is supporting the aircraft to fly. Let’s say it is now one hour to go for an MRO, it means our economy has supported that business for the maintenance to be ready for it to come to the hangar.
Now, we take the business of the MRO to foreign countries. It means we are creating business for those countries when we were the one that created the business. So, it is better to let it stay within the economy. That is one argument by which the MRO supports the economy. So, this economy should not lose to other economy after creating that business.
Also, MRO supports the naira in the pockets of every one of us. Once the aircraft is taken out, there is the cost of labour that would be paid by the airline.
Instead of the airlines to save that Nigeria it earned in Nigeria, the airlines go to the foreign exchange market and start looking for dollars. The manpower too is no longer local and the airlines go to the foreign exchange market, looking for dollars, thereby further putting additional pressure on naira. This affects our economy and the Nigerian market.
Now, let us look at the personnel themselves; being a formal employment that means it is pay as you earn (PAYE). This means locating the MRO in Nigeria, the government earns personnel tax, which another country would now earn. This is why the MRO is very key to any economy.
The MRO is a regulated environment; it means the way they will do it in Washington, UK, France, Accra and others, it is the same way they will do it here because in aviation, we do everything according to the books. Each regulatory body they must supervise that maintenance.
So, when it comes to quality, it doesn’t matter where that maintenance is carried out, it would be according to what the manufacturer and ICAO stipulated.
Projected annual loss to foreign MROs
The advantage of having an MRO in Nigeria is that the company is going to use local labour, which is good for the economy, personnel and the government in terms of tax revenues and the experience that the technical experts are going to get, too.
Then, you don’t have to pay for fuel to ferry the aircraft to and fro, which you were going to buy in dollars. So, those are the advantages.
What Nigeria would gain is the cost of labour, tax and local maintenance. What Nigeria is losing are taxes that are being paid to foreign countries instead to Nigeria and the money that you are going to change into dollar from naira.
I can’t put a figure to this because it would be useless if I am giving a figure that is not current.
Creating an enabling environment for MRO investors
This is simple. This can be done through policy. For instance, NCAA can say it would not renew an existing AOC or issue an AOC to an intending operator without a local MRO identified in the application form. The government can give them a timeline because this could take up to three years to accomplish.
Once you do that, just leave the rest to the private investors because they know there is an investment created for them. Once an investor knows that his business is being protected, then, they will be willing to invest in the industry. They can then approach a bank to seek for loan. That is how you create a market – you create a market through policy. A policy will naturally create a market. That is how China developed today; it’s through policy and law.
Aviation sector performance
I have found it difficult to rate our government and I will tell you why. Aviation is a deregulated economy. Though, we could have made it better, but I think we should not judge this government based on the Nigeria Air project alone.
Apart from this, the government has done very well. For this government to relieve the operators on the exception of custom duties on the importation of aircraft and spare parts, that is a huge success.
Also, when it comes to Jet A1, the government doesn’t want to get involved, but I think the government should get involved in Jet A1, not as an importer. The government has Jet A1 reserve for the Air Force because of security. So, the Air Force cannot rely on suppliers for Jet A1 to fly their jets. Government should be able to look into that reserve at times to save the commercial sector especially when the scarcity of the product is alarming or if there is a price hike and the government wants to subsidise it.
The government can call the fuel marketers and buy the product off them and sell at subsidised rate for the airlines. This is necessary because the government is taking money back from every airline that flies because the airlines are paying charges.
Definitely with this, the government would make its money back because if they don’t fly, the government cannot make money. For every hour the airlines fly, the government gets some money too, which would have been zero if they don’t fly. So, the government has to be very flexible.
*Caulcrick contributed this piece from Lagos.
