AON Denies Government Funding of Airlines

Chinedu Eze
The Airline Operators of Nigeria (AON) has debunked reports that government has been funding Nigerian airlines, insisting that domestic airlines in the country did not get any form of funding from the government in the past 30 years when the deregulation of the industry was introduced in 1983.

The operators said this is contrary to widely held beliefs, opinions and publications in the media in recent past that they were given an intervention fund by the federal government.

The Chairman of AON, Capt. Nogie Meggison noted that domestic airlines in the country are privately owned establishments and have been funded solely by their owners without any form of injection of funds by the federal government.

He said the airlines have approached banks to source for funds like any other highly capital intensive private entity doing business in Nigeria and employing Nigerians, so airlines are free to approach the banks for loans which are serviced regularly at stipulated interest rates.

Meggison clarified: “Contrary to what most people in the public think, the airlines never received any direct fund from the Federal Government intervention. Rather, what happened was that the funds released went to the banks in an effort to keep them afloat for bad debts owed to banks by the airlines during a period of economic recession of 2011.”

The AON said the Minister of State for Aviation, Senator Hadi Sirika, confirmed its position during the Senate hearing on the investigation of disbursement and utilisation of $40 million Afrexim loan and N86.6 billion federal government intervention funds held at the National Assembly complex, Abuja on June 20, 2016.
It added that minister who incidentally was also a member of the Senate Committee that looked into the matter some years ago, noted that they observed that the banks were responding to global shocks at the time and argued that on the strength of the revelations, the monies were not meant to help aviation but rather to help some banks from going under.

“If monies were sent to a bank for a specific purpose and it was used for other purposes not directly to the airline account, then that matter should be looked into seriously,” Sirika had said.
To this end, Senator Hope Uzodinma, former Chairman Senate Committee on Aviation noted that since the money did not eventually get to the airlines to revamp their fleet, then the money should not be called an aviation intervention fund.

Meggison expressed concern that airlines in Nigeria are grossly over burdened by the numerous charges from government agencies, taxes, overheads and epileptic and excessively priced aviation fuel of N200 per litre, unavailability of forex that they have to grapple with on regular basis to meet repairs and maintenance costs, purchase of spare parts and excessive bank loan interest of 26 percent, as well as training of pilots and other technical personnel abroad on regular basis.

“It is very sad to note that despite all these numerous burdens on the shoulders of the Nigerian airlines which leaves them virtually able to survive or even make ends meet; airlines are still expected by the Federal Inland Revenue Service (FIRS) to pay taxes out of their losses, making the operating cost more expensive to run an airline in Nigeria than anywhere else in the civilized world today due to multiple and excessive taxation from the Nigeria Civil Aviation Authority (NCAA), the Federal Airports Authority of Nigeria (FAAN) and the Nigeria Airspace Management Authority (NAMA).

“This is an aberration and we therefore call on the government to as a matter of urgency forge a strategy to bring all parties to the negotiating table, and look for the first time direct intervention funding to airlines in the interest of saving the aviation system from collapse considering that without the airlines there is no aviation,” Meggison said.

“It must also be put on record that the Nigerian airlines create about 90 percent of the full time employment in our aviation sector today both local and international and “we remain a pivot to the Nigerian economy and one of the main catalysts to economic recovery and national progress through the critical services we provide daily”, the operators added.