Cally Air, Cross River Carrier Allegedly Runs Aground over Ownership Tussle

Chinedu Eze

Cross River state owned Cally Air, may become the first source of conflict between the outgoing governor, Prof. Ben Ayade and the in-coming governor, Bassey Ottu, as the later stood in the way of the plan to concession the airline to a private company.

 Cally Air was wholly owned by the Cross River state government with the acquisition of Boeing B737 classics in 2021, but now that Ayade is leaving office, there are plans to cede the two aircraft to a private company with somewhat blurred agreement, which the in-coming governor it was gathered had kicked against.

THISDAY learnt that the status of the two aircraft under Cally Air was that they are allegedly grounded. One is undergoing C-check while the other was down because of the refusal of the Cross River state government to pay the aircraft insurance.
Although Cross River state government registered an airline, Cally Air, but the airline was yet to have Air Operator Certificate (AOC) so the aircraft were being operated by Aero Contractors before they were grounded.

THISDAY learnt that while the outgoing governor wanted its aircraft, Boeing 737-300 with the registration number: 5N-BYQ to be brought to Calabar for “concessioning”, it was learnt that the incoming governor suspected foul play in the entire arrangement.
Apart from this, the outgoing governor had earlier in the year listed some of the state’s assets to be concessioned to private firms and included Cally Air as one of such assets.

 The plan to concession the state’s assets did not however, go down well with some of the state indigenes as one Mr. Mba Ukwenu, immediately sued the State government in court to stop it from going ahead with its plan.

A source close to the State Government told THISDAY that the Cross River State Government planned to “concession” the airline to its consultant and asset manager (coordinator), IRS Airlines Limited.
Also, Aero Contractors, which had been operating and managing the airline since it signed a Memorandum of Understanding (MoU) with the State Government on April 30, 2021 for operations and maintenance of the airline until recently, was reluctant to release the aircraft to the State government over an alleged breach of agreement by the government.

THISDAY gathered that the government was owing  Aero Contractors over N900 million for services rendered to it on the operations and maintenance of Cally Air for over 24 months.
The MoU was signed among Cross River State Government, IRS Airlines Limited and Aero Contractors for the operation, commercial profit and maintenance of two Boeing 737 aircraft.

According to the MoU, which was made available to THISDAY, the Cross River State Government, acquired two airplanes – 5N-BYQ and 5N-GRS – and selected IRS Airlines Limited as its consultant and asset manager, while Aero Contractors was designated as the operator and expected to provide licenses, permits and certificates necessary for the airline to operate a passenger transport aircraft.
The B737-300 with the registration number: 5N-BYQ was still parked at the Aero Contractors hangar, while the other B737-300 with the registration number: 5N-GRS was supposed to be undergoing C-check but needed some spares that would be made available by Boeing.

 Furthermore, THISDAY learnt that about two weeks ago, representatives of Cross River State Government led by Jake Ottu Enyia and Mr. Udiba Effiong Udiba, Commissioners for Aviation and Asset Management and Recovery, respectively, held a meeting with the management of Aero Contractors management on the possibility of returning the aircraft for concessioning,

 The Aero Contractors management agreed to the deal, but raised concerns over the N900 million debts owed it by the state government.

However, when contacted on the matter, the Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, shed more light.

He explained to THISDAY that the two aircraft were mired in a tripartite agreement that was not clear between Cross River state government, IRS Airlines and Aero Contractors.

Sanusi said the agreement between Aero Contractors and Cross River state government was concluded during the interregnum he left the company.

“The arrangement was not tidy. There are so many agents. I was not there when it was concluded. If I were there, I would have asked for a full dry lease of the two aircraft, which will enable us manage them 100 per cent and pay to the state government but they extended the arrangement to a third party, which they dubbed coordinator.

“I didn’t understand that. The arrangement is not favourable to Aero. I learnt it is also not favourable to Cross River state government. So, the arrangement is not transparent and sustainable and that’s why we may not operate the aircraft again; unless they are given to us on dry lease, which is arrangement that is obtainable all over the world.

“When we insisted that we would only take the aircraft on dry lease arrangement those negotiating for the aircraft refused and threatened to take them to Dana Air,” Sanusi told THISDAY.

Sanusi also said that he would wait for the new government to come so that Aero and the Governor would discuss the issue and insisted that outright dry lease would be better for the state government and Aero Contractors, which has Maintenance, Repair and Overhaul (MRO) facility for Boeing 737 classic and other aircraft types up to C-check.