Interest rate, high insurance premium killing Nigerian airlines – NCAA

Bisola David
Bisola David
FG's 10-man panel to investigate airlines over fare hike

The Director-General of Civil Aviation, Capt. Musa Nuhu, has emphasised the significant difficulties that Nigerian airlines face in a challenging economic climate.

The Times reported that 25% interest rate on loans and the high insurance fees for airplanes, he emphasized, are big burdens.

Nuhu highlighted the negative effects of these high operational costs, which make it difficult for the nation’s airlines to compete with rivals in places like Europe and America, where loans have single-digit interest rates and aircraft insurance premiums are significantly lower.

However, he asserted that the airline could not function independently of the economy.

Additionally, Nuhu highlighted that the aviation agencies would make every effort to lessen the difficulties on the airlines by ensuring flexibility in their operations.

He stated that the apex aviation agency granted the airlines a buffer of quarterly insurance premiums on aircraft in an effort to lessen the burden on the operational airlines, but claimed it guaranteed the insurance cover was enough for the danger.

“Nigerian airlines are operating in a very challenging environment,” he remarked. An airline cannot function independently from the economy it operates in, and the Nigerian economy is experiencing particularly challenging circumstances. Financing costs 25% of the total. That is murder to begin with. You take out a loan and provide the bank 25% of your earnings in return.

“Some of them are in fine financial shape, but many are not. So, that is how things stand. We truly empathize with the airlines because of the challenging climate they are in, and we’ll do our best to find ways to be flexible.”

He claimed that the NCAA also entered into an agreement with some of the debtor airlines outlining how they might easily clear their outstanding obligations without suffering a setback to their business operations.

He clarified that some of the NCAA’s initiatives have helped to maintain the airlines’ profitability while also increasing the GDP of the country.

Nuhu also stressed the necessity for the African countries to follow the European Union Aviation Safety Agency’s lead by harmonizing their laws in order for the Single African Air Transport Market to achieve the desired effect.

He argued that the African Civil Aviation Commission’s efforts would not be successful without harmonization.

“One or two of the primary problems we have with SAATM, in my opinion, is that we compare ourselves to Europe, although Europe just has one regulatory authority, the EASA. There are 24 distinct regulatory organizations and 24 distinct regulations in Africa. This makes it challenging. SAATM won’t be successful unless we Africans come together and establish a unified regulatory organization like EASA.

“The European Commission is the only political organization in Europe. All are subject to their policies, which they make. However, everyone behaves according to his or her own policies here. Sincerely, even if SAATM is used, it won’t succeed unless we figure out a solution to address these problems.”

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