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Published On: Tue, Jun 17th, 2014

AON decries financial difficulties in acquiring aircraft

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Stories From Suleiman Idris, Lagos

The umbrella body of airline operators in Nigeria, the Airline Operators of Nigeria (AON) has condemned the difficulties operators face in aircraft acquisition in Nigeria.

The AON Chairman, Capt. Nogie Meggison said the challenges led to the acquisition of geriatric aircraft with average ages between 15 and 18 years as bank interest rates in Nigeria are in double digits averaging about18 percent.

Meggison said access to finance for a long time has become expensive for airlines to acquire newer and more efficient equipment.

He spoke at the African Aviation Summit 2014 and 23rd annual Air Fair for Africa at Addis Ababa in Ethiopia on funding challenges, moving the Nigerian airline industry forward.

The AON leader highlight the high cost of aviation fuel (JET A1) which cost airlines about 40 per cent of their income, resulting in high operating costs with little meager profit margins.

According to him, export banks like EXIM of United States, the Export bank of Europe will require a Nigerian Bank guarantee whilst the local bank will charge 7 percent for their guarantee in addition to the 5percent of the export banks bringing the total to approximately 12 percent most times and $5 m as cash for a B 737 classic and while others pay the $5m as a deposit for a new B737 NG.

Also he noted that for commercial jets 120, he said 70 percent are purchased on outright cash, 25 percent are finance, 5 percent are on Operating lease, while on helicopter100, 95percent are financed with backing from the oil & gas sector guarantee with Nigerian banks at high Interest rates.

“British airlines have 14 flights weekly, Air France 14, Virgin Atlantic 14, Emirates 21, Lufthansa 14, Ethiopia/Asky 31 flights, Kenya Airways 18, Etihad 7, Qatar 14, Delta 12 flights, United 7, Continental 7 flights, all into Nigeria. Nigeria has over 27 international airlines flying in and out of its shores.

“Nigerian international and regional value over $8billion in 2013, Nigerian operators sadly has less than 3 percent of its own passenger market share and zero percent from the international cargo movement of average of four B747F (400tons daily). Nigerian airlines are paying $5million cash for a B737 classic because of inability to access fare rates, while other airlines pay the 45million as new deposit for B737NG.”

Certification while the government approved $2 billion for ongoing Airport Infrastructural development in 2014.

 

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