Alhaji Muhammed Tukur, assistant secretary general of the Airline Operators of Nigeria (AON) has declared to local media that the aviation industry in the country may not survive if the Federal Government does not put measures in place to create a conducive environment for local airlines to strive.
Tukur said the hostile operating environment and huge debt prevent airlines from doing business in Nigeria: “At this point, we must realise that airline business is capital intensive and requires long gestation period for the business to consolidate,” he said. “This is not the type of business that optimises outputs in the short-run like buying and selling, because it requires long-term investments and enormous resources to stabilise. So, until these problems are practically addressed and lasting solutions found, local airline operators would still face problems in their operations”.
Referring to the N500 billion bailout package for local airlines approved by the government as a “good initiative” and a “step in the right direction” because it would boost their operations, he warned “the bailout alone is no solution to numerous problems facing the sector”.
“If you also look at the few airlines that are still flying, they are not financially balance at all. They are carrying heavy debt burden, which makes them not to be credit worthy,” Tukur says. “Some of them are indebted to commercial banks, government, oil firms and other companies they transact business with on regular basis. Aside from creating enabling operating environment, local airline managers must also exhibit financial discipline in running their companies and handling funds. Company funds must be separated from personal and family businesses to enhance development”.