Experts: Cost of Aircraft Maintenance Overseas May Jump from $2bn to $3bn in 2024

Chinedu Eze

The total cost of aircraft maintenance by both scheduled operators and others currently cost about $2 billion per annum, but experts in the aviation industry have predicted that the cost may likely reach $3 billion annually in 2024.

This, the experts said, is because airlines are expected to increase their fleet to meet the new policy of the Nigeria Civil Aviation Authority (NCAA).

The MD/CEO of 7 Star Global Hangar Nigeria Limited, an aircraft maintenance outfit in Lagos, Isaac Balami, who put the current cost of aircraft maintenance at $2 billion per annum, is of the view that the cost will likely increase by 2024. 

Currently Nigeria does not have major aircraft maintenance, repair and overhaul (MRO) facility, where comprehensive checks of airplanes can be conducted.

Although there exist, Aero MRO, 7 Star Global Hanger, and Overland Airways Maintenance Hangar facilities, including the Ibom Air aircraft maintenance facility, which is yet to be completed, Nigerian airlines still take majority of their fleet overseas because existing hangars in Nigeria do not have capacity and cannot attend to many aircraft at the same time.

With the high cost and scarcity of forex, it is difficult for airlines to maintain their aircraft overseas.

The experts argued that if airlines are to have six aircraft as minimum requirement in accordance to NCAA new policy, it means that more aircraft would be ferried overseas for maintenance.

For schedule operators, this would constitute a huge challenge because of the cost implication and also the delays, since it takes longer time to maintain aircraft overseas because the MROs already have aircraft on the line. So Nigerian carriers have to queue and every day the aircraft is on ground, the airline loses revenue of about N2 million.

The Chief Commercial Officer, Green Africa Airways, Obi Mbanuzuo, confirmed to THISDAY that Nigeria may lose a capital flight of about $3 billion by next year if airlines acquire more aircraft and ferry their aircraft overseas for major maintenance.

He noted that to build large capacity MRO facility in Nigeria would take time and the training of skilled indigenous manpower that will man such facility will equally take time, but expressed the hope that the MRO in Akwa Ibom would soon come on stream, even though it is not yet known when the project would be competed.

Mbanuzuo explained why maintaining aircraft overseas is a challenge to Nigerian carriers, pointing out that sourcing foreign exchange is very difficult and with the current depreciation of the naira, airlines which earn revenue in naira would have to spend hugely to buy dollars. 

He disclosed that most often what you project as the cost of the maintenance may increase by 25 per cent or more when the aircraft is stripped and it is discovered that more jobs would be done.

“When we used to send Boeing 737 and MD 83 for C-check, we may budget $800, 000 but it will eventually cost about $1 million or more. This maintenance is carried out every 18 months, as stipulated by NCAA, Boeing 737 New Generation (NGs) may take longer period before major maintenance. This will even cost more if there are structural issues in the aircraft and that will double the cost of maintenance,” he said.

He said acquiring brand new aircraft would save airlines money because it would take a long time before such aircraft would go for major maintenance like C-check, citing aircraft like Embraer, E195-E2 acquired by Air Peace and other brand new aircraft on order by some Nigerian carriers.

“Some of the airlines bought B737 classics at about $5 million then and they will take them for C-check and they will be stripped bare. Some of them will have corrosion, which will increase the cost of maintenance. So, part of our problem is that some airlines don’t recognize what is called depreciation, which is wear and tear of equipment. Airlines are supposed to keep money for the depreciation of their equipment but many do not make this provision. This is why when you lease aircraft from some lessors, they will demand maintenance reserve. So, if the revenue is not coming as projected and CBN does not give the needed forex, the airline will keep that aircraft on the ground for a long time,” he said.

He regretted that Nigeria is yet to have major maintenance facility and explained that even the small number of aircraft that are maintained locally the facility management still take some aircraft equipment overseas for maintenance, while the aircraft is in the maintenance hangar in Nigeria.

“When you take aircraft to the maintenance facility you need to do overhaul. Such overhaul is not done locally. For example, a Boeing 737-800 NG aircraft  may go for maintenance and you will have to overhaul the life jackets. The aircraft may have 150 to 160 seats. You will have to take the life jackets of those number of seats overseas for overhaul, while the aircraft is waiting in a maintenance hangar in Nigeria,” Mbanuzuo stated.

He stressed that for Nigeria to stop spending that huge foreign exchange, there is urgent need to establish major MRO facility in Nigeria, train manpower to meet that need and insisted that Nigeria can have indigenes that will be well certified to efficiently conduct all levels of checks after they have been trained.

“We need to urgently establish a maintenance facility. Although we have some maintenance facilities in Nigeria but they do not have capacity. Aero MRO hangar is small. Once one aircraft enters it covers the whole place. Ibom Air hangar is good because it is huge, but it is unfortunate that when Lufthansa was here maintaining aircraft for one of Nigeria’s airlines it did not transfer knowledge to Nigerians. Nigerian airlines do not even have wheel and brakes shop. They took most of the equipment overseas for maintenance,” he said.

While delivering a paper at the Nigerian Bar Association (NBA) conference recently, the Chairman/CEO of Air Peace said that the airline has about 15 aircraft in maintenance facilities overseas. 

He also said that the airline has about $14 million stranded in the Central Bank Nigeria. 

“Do you know the amount this country spends on aircraft maintenance through its airlines? Air Peace alone in 2022, spent N78 billion on maintenance and these funds went to foreign countries,” he added.