By Louis Ibah
After almost four months of self-imposed closure, Aero Contractors Airline on December 22, 2016, is back to the Nigerian skies. The airline that went on a self-imposed suspension on September 1, 2016 following months of struggle to remain profitable returned to schedule commercial flight operations to the delight of its teeming passengers and workers.
Chief Executive Officer of Aero, Capt. Fola Akinkuotu, who announced the airline’s resumption acknowledged that the temporary closure became inevitable to allow it’s management embark on a strategic business realignment to reposition it to return to the part of profitability. Prior to its shutdown, the airline had reduced its fleet from 13 to just one owing to years of mismanagement, high level off corruption and the inability of successive managers to service loans to creditors. At some point, the Nigerian Civil Aviation Authority (NCAA), which regulates the industry, stepped in and made the airline see reasons to halt operations since the Nigerian civil aviation regulations do not allow airlines with just two aircraft to stay in operation for safety reasons.
Benefits to industry
But the return of Aero, although with skeletal flight services to Lagos, Warri, Port Harcourt and Abuja airports, now increases the competition among existing local carriers in Nigeria’s air space, thus offering travellers more flight options.
Babatunde Noah, a passenger at the Lagos airport, who spoke with Daily Sun, said the resumption of flight operations by Aero Contractors late last year has already triggered other competing airlines to crash air fares on some routes. “Once Aero announced its come back bid, air fares displayed on the online portals of some of other airlines, especially on the Port Harcourt and Abuja routes dropped,” said Noah. Aero is Nigeria’s oldest airline with 57 years record of flying both chartered (for oil and gas companies) and scheduled commercial flights and parading the highest safety record.
Noah who said he has been a regular flyer of Aero for the past 15 years, alluded to the safety record of the airline as its greatest selling point. “Most of us who fly Aero Contractors do so because we consider it as the safest among the local airlines and this is one factor that attracts most passengers to the airline. In the last four months, we missed the airline. In fact, Aero’s exit had created a monopoly for some other airlines and discomfort to its passengers and some of us opted to go by road. But its return has ended that monopoly and we are happy about it,” he added.
“We are aware of the impact the four months suspension had on our staff and our highly esteemed customers and hence our move to return to operations is to continue to offer the most reliable, safe and secure operations, which the airline is renowned for,” said Akinkuotu, the airline’s CEO.
Daily Sun learnt that at present, Aero is re-launching schedule services to just the Lagos, Abuja, Warri and Port Harcourt airports, using two Boeing B737-500s and one Bombardier Dash 8-300 aircraft.
It was, however, learnt that before the end of this month (January), the airline would deploy two more Bombardier Dash 8-300s currently undergoing maintenance overseas to bring its fleet to five aircraft while also opening up its services to Uyo, Calabar, Enugu, Kaduna, Jos and other airports in the northern part of the country. With more route expansion, improved patronage and revenue, Aero Contractors, it was learnt, before the end of the year, would return all of its aircraft comprising six Boeing B737-500s and three turbo props Dash 8-300s back to the country.
Already, the resumption of flight operations by Aero has come with improvement in revenues for service providers and regulators like the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agency (NAMA), Nigerian Meteorological Agency (NiMET), and the Nigerian Civil Aviation Authority (NCAA) as well as food, catering, cleaning and other local vendors.
Immediate challenges to deal with
Aero Contractors is returning to the Nigerian sky at a time the industry is battling a lot of challenges. The first challenge has to do with the scarcity of aviation fuel currently bought at between N240 and N270 per litre. Other challenges are related to foreign exchange (forex) to service aircraft offshore as well as for the payment of insurance premium to foreign underwriters. Already, for existing airlines, these factors have impacted smooth operations leading to several flight cancellations and delays. In fact, the airline industry is reported to be losing an average of N200 million on a weekly basis as a result of rescheduled and cancelled flights.
The returnee airline would also battle in the immediate term its bloated workforce. Analysts have decried as “unrealistic” the decision of its management to retain a workforce of over 1,000 when the major source of revenue, the aircraft in its fleet, had depleted from 13 to seven and then to just one. Industry sources told Daily Sun that the Assets Management Corporation of Nigeria (AMCON) that now manages the airline under a receivership had put its feet down that it must be restructured with some staff retrenched in the weeks ahead irrespective of how labour feels about the exercise.
What went wrong
Aero, in fact, had been operating for the past six years like a two-engine aircraft that had lost both engines and was merely gliding towards its final crash. This was very evident in its inability to maintain its fleet of over 13 aircraft it had about a decade ago. The airline business is all about functional aircraft, and once that is absent, the business ceases to exist.
Aero’s flight into insolvency was, however, not just about the external factors cited above. Internally, as the years went by following its takeover by the Ibru family, allegations of widespread mismanagement and stealing from the airline’s vault were rife in the industry. At a stage, the level of mismanagement in the airline was said to have constituted a clog in its ability to effect routine maintenance of the aircraft in its fleet. Some aircraft sent for maintenances abroad could not be brought back owing to the inability to pay maintenance firms; creditor banks and insurance firms were similarly owed. The Federal Government, sensing that the airline was on the brink of collapse given its huge indebtedness to banks, compelled AMCON to step in with a bailout package. An estimated N25 billion is believed to have been injected into the airline by AMCON, which subsequently made AMCON to become majority investor in the airline. But the looting did not stop. “Corruption killed Aero,” one of its staff told Daily Sun. But by February 2016, AMCON was forced to fully take over the airline under a receivership term and sack its board and management staff following the discovery of the massive looting of funds.
What Nigerians should expect
Secretary General of the National Union of Air Transport Employees (NUATE), Mr. Olayinka Abioye, told Daily Sun “that the major problem of Aero Contractors is to be found in the management of the airline’s finances and the lack of trust between AMCON and the Ibru family immediately AMCON came in.” In the months ahead and after nearly four months of re-engineering involving AMCON, the NCAA and officials of the Federal Ministry of Aviation, Nigerians should expect to see an airline that has been rebranded with an improved customer relations and corporate governance practices. Safety has remained the watchword of the airline and Nigerians should also expect the airline not to lower its safety and security standards.
How govt can assist
Chairman of the Airline Operators of Nigeria (AON), Captain Nogie Meggison, who lamented, in an interview with Daily Sun, the plight of Aero Contractors and some others caught under the weight of several government policies inimical to their businesses, urged the government to offer some assistance to distressed airlines given that they are employing hundreds of Nigerians.
“I speak like a Nigerian; the Federal Government now has to sit down and come up with a vision and policies that will get the economies of the airlines out of the woods,” said Meggison.
“The policies we have are not helping the airlines and we have said this repeatedly. Aviation is the barometer by which the prosperity of any economy is measured.
“In Nigeria, no airline is operating at its optimal capacity and that is not very good. Under a recession like we are currently faced, a viable aviation and logistics industry is key to getting the economy back on track, and we cannot afford to allow the airlines die,” Meggison added.