FX window for domestic airlines
Nigeria’s Petroleum Products Pricing Regulatory Agency (PPPRA) in a January 2021 report, announced that Nigeria’s Liquified Petroleum Gas (LPG) consumption surpassed one...
Moved by the skyrocketing domestic air fare and other operational cost of airline operations, the House of representatives has called on the Central Bank of Nigeria (CBN) to create a special window for domestic operators to access foreign exchange.
The national assembly members is also speaking against the backdrop of CBN’s stoppage of sale of Forex to Bureau De Change operators, expressing worry about the possible effect of the ban on operators that are struggling to survive.
At the just-concluded 25th annual conference of the League of Airports and Aviation Correspondents (LAAC), Nnolim Nnaji, chairman, house of representatives committee on aviation, said the lawmakers have succeeded in getting zero duties on spare parts for aircraft but a major issue that is affecting the operations of the airlines and having a spill over effect on passengers is the issue of access to forex. He is worried that the airlines may be hit harder over the ban on sale of forex to BDC operators.
According to him, “We have succeeded in getting zero duties for the airlines for the purchase of spare parts. Another issue that they are battling with is the issue of forex. Since they buy most of their stuff abroad, it is important that they have access to forex.
The planes need to be in the sky all the time because the more you move the more money you make so that you can pay your bills. We would want the Central Bank of Nigeria to create a window for Forex because it will help reduce the airfare’’.
“For now, I don’t know how the ban on Forex to BDCs will affect airlines but I heard that the black market rate has gone up. I still wonder if banks can manage but from next week, we will get to know how airlines will be affected”, he said.
Nnaji also lamented that the airlines only got a meager amount of what they are supposed to get as bail out from the Federal government, adding that the operators do not break even; they only manage to remain in business. He assured that lawmakers who are committed to the safety of the sector, they would continue to do their best.
The success of any industry he said is management. ‘’If you have the right people in management, it is going to go a long way in achieving good results. Also, once you have committed people especially like we who are in the legislative arm, we are committed to what is happening in the executive. It is not that we are trying to police the executive; we are not the type that would want to boss the agencies around because we feel that we have the power to do so, and it’s just that we are committed to the safety of the industry. Our duty in the House of Representatives is to support the industry’’.
Nnaji lamented that the government did not do much in terms of bailout for the airlines. The cost of the engine of a Boeing is close to $10 million and what the government provided for all the airlines is about N4 billion, so, when you compare what our airlines got to other countries, you will find out that they didn’t do much for the industry.
‘’The aviation industry is a very expensive business and most people do not break even. What they just succeed in doing is to just keep the business going because everything about the industry is offshore and that is a challenge”, he added.