Divergent Views over Grounding of Arik Air Operations

Chinedu Eze

On Tuesday this week, the Minister of Aviation and Aerospace Development, Festus Keyamo ordered the grounding of Arik Air operations in compliance with a court order.

The Nigerian Airspace Management Agency (NAMA) later explained that it was the agency that took the decision in order to ensure that further execution by way of sale (assets mentioned by the court) can be halted whilst the parties go back to court to resolve the issues.

The agency said: “However, in order to preserve the subject matter of the present dispute which are the aircraft in question, we have decided to comply with the effect of the Supreme Court order, by grounding the aircraft (subject of dispute) so that they are not taken out of the jurisdiction of the court or tampered with in a way as to frustrate the courts.”

NAMA further explained that on the 19th day of July, 2024, the enforcement department of the FCT High Court enforced an Order made by the Court regarding a debt of $2.5 million owed by Arik Airline to one Atlas Petroleum International Limited by attaching their aircraft.

Arik was further given a notice of Public Auction of the planes by the Court which was slated to hold on the 26th day of July 2024, if they fail to pay the Judgment debt.

“All these were served on our agency and also on our Supervising Minister, the Minister of Aviation. The records show that on the 8th day of March, 2016, the Judgment Debtor (Arik) appealed the decision of the High Court of Lagos State entering judgment against it to the Court of Appeal and on 30th September, 2021, the appeal was dismissed by the Court of Appeal in a unanimous decision with cost. 

“Arik again appealed to the Supreme Court for leave to appeal the decision of the Court of Appeal, and on the 9th day of January, 2024, the Supreme Court, per Okoro, J.S.C., delivered its Ruling dismissing the Judgment Debtor’s application for leave to appeal,” NAMA explained.

The grounding of Arik Air has raised many issues, some industry stakeholders hail the decision, as one of the industry insiders stated, “The Minister of Aviation and Aerospace Development, Festus Keyamo, has done what many political officeholders don’t have the courage to do—comply instantly with a court order.Yesterday (Tuesday), the Minister ordered the grounding of Arik Airline’s operations. The Nigerian Airspace Management Agency (NAMA) said the grounding of the airline’s service was in response to a court judgment, stating that in order to prevent the aircraft from being taken out of the country, the airline had to be grounded, thereby justifying the minister’s directive.”

But other industry observers have different opinions about this. Some are suspecting the swiftness of the decision to ground the operations of the airline, noting that similar judgment had taken place in the past and the neither the aviation agencies nor the Minister reacted to the judgment.

“A start-up airline with outdated Air Operator Certificate (AOC) was supposed to be grounded but this was not done, even the airline had only one aircraft, which is against regulations, they have to borrow aircraft to operate and nothing happened,” the insider said.

Some also said that it is a conflict of interest because a private creditor’s interests could directly influence a minister’s decision-making process, especially when the creditor’s interests conflict with the government’s own agencies and legal obligations. The suggestion that the minister, who serves the government and the public, would act in a manner that favors a private party over a government institution like AMCON undermines the integrity of the public office. This scenario suggests a potential conflict of interest and questions the Minister’s impartiality.

“The notion that a creditor could prompt a Minister to bypass established legal processes, such as the court’s directive to maintain the status quo, is alarming. It indicates a disregard for the separation of powers and the rule of law. The Minister, as a public servant, is expected to uphold legal principles and the judiciary’s decision not circumvent them based on the interests of a private entity. This behavior can be seen as a betrayal of the public trust and a deviation from the duty to serve the public good,” the source said.

However, some stakeholders believe this could be a new trend that when such decision is reached, the government agency involved takes swift action, which indicates progress, noting that the issue has nothing to do with safety or aviation regulation but court judgment.

But the impact of the grounding is still being felt. THISDAY learnt that about 130,000 crude produced daily by Chevron may be at risk, following the grounding of Arik aircraft’s fleet. This is because Arik Air has a contract to carry the crew of Chevron Corporation to Osubi airstrip to operate the oil field, which extracts 130,000 of crude oil daily and the grounding of the airline by NAMA, has made it impossible for the crew of Chevron Corporation to be airlifted to Osubi airstrip by Arik Air.

The project is said to be a joint venture agreement between the Nigerian National Petroleum Corporation Limited (NNPCL) and Chevron Corporation.

THISDAY also learnt that the Asset Management Corporation of Nigeria (AMCON) has been managing Arik Air under receivership since February 2017, in an effort to stabilize and restructure the airline amidst significant debt obligations. The grounding, however, seems to have occurred in a context where multiple legal proceedings were ongoing, notably a dispute involving the enforcement of a $2.5 million judgment obtained by Atlas Petroleum International Limited and Engineer Arthur Eze.

The Corporation explained that in recent weeks, it has been actively defending its secured interests in Arik’s assets, including a fleet of aircraft. The Federal High Court of the FCT had ordered all parties to maintain the status quo, pending the resolution of AMCON’s challenge against a writ of attachment targeting Arik’s assets. Despite this directive, so, “the Minister’s action appears to have sidestepped judicial prudence, aligning instead with the interests of the judgment creditors—an unsecured party in this complex financial landscape.”

“The consequences of grounding Arik’s fleet have been immediate and far-reaching. Thousands of passengers have been stranded, flights have been canceled, and the aviation sector has been thrown into disarray. The knock-on effect has been a sharp increase in airfares, adding financial strain to businesses and consumers alike. Moreover, the grounding jeopardizes critical contracts, such as Arik’s role in transporting Chevron’s crew to Osubi airstrip, a key operational site for oil production,” a source from AMCON said.

However, travellers and industry insiders have commended the Federal Airports Authority of Nigeria (FAAN) and the Nigeria Civil Aviation Authority (NCAA) for their quick response to help the passengers slated to travel with Arik Air, which operations have been grounded.

Meanwhile, industry experts and stakeholders have urged the Federal Government to re-evaluate its decision and ensure that all parties adhere to judicial processes, noting that the grounding of Arik Air, if left unresolved, might threaten not only the stability of the aviation sector but also the broader economic interests of Nigeria.

Arik Air source also noted that with the aviation industry already facing significant challenges, the need for a balanced and equitable resolution has never been more pressing.

“The eyes of the nation are now on the government to see whether it will uphold the rule of law and protect the economic well-being of the country,” the airline source told THISDAY.