- Nigeria lacks capable Maintenance, Repair and Overhaul (MRO) facilities, causing the country to lose millions of dollars to foreign MRO providers.
- The establishment of MRO facilities in Nigeria can support the economy by creating jobs, retaining revenue, and saving costs associated with foreign MRO providers.
- Nigeria can drive investment in MRO business through policy changes, such as requiring an identified local MRO in the Air Operator’s Certificate (AOC) application form.
Nigeria is losing millions of dollars to the absence of capable Maintenance, Repair and Overhaul (MRO) facilities in the country that can carry out checks on all categories of maintenance and aircraft.
Capt. Samuel Caulcrick, the former Rector of the Nigerian College of Aviation Technology (NCAT), Zaria, said this can be curbed through a policy change. He also spoke on the government’s eight years in the industry in this interview with Nairametrics.
Enjoy the conversation.
NAIRAMETRICS: Sir, in the next few months, the present administration would hand over to a new government at the centre, what is your rating of the government in the aviation industry within the period?
Capt. Samuel Caulcrick: I have found it difficult to rate our government and I will tell you why. Aviation is a deregulated economy. Though we could have made it better, I think we should not judge this government on the Nigeria Air project alone.
Apart from this, the government has done very well. For this government to relieve the operators on the exception of customs duties on the importation of aircraft and spare parts, is a huge success.
Also, when it comes to Jet A1, the government doesn’t want to get involved, but I think the government should get involved in Jet A1, not as an importer. The government has a Jet A1 reserve for the Air Force because of security. So, the Air Force cannot rely on suppliers for Jet A1 to fly their jets. Government should be able to look into that reserve at times to save the commercial sector especially when the scarcity of the product is alarming or if there is a price hike and the government wants to subsidise it.
The government can call the fuel marketers and buy the product from them and sell it at a subsidised rate for the airlines. This is necessary because the government is taking money back from every airline that flies; the airlines are paying charges.
Definitely, with this, the government would make its money back because if they don’t fly, the government cannot make money. For every hour the airlines fly, the government gets some money too, which would have been zero if they didn’t fly. So, the government has to be very flexible.
NAIRAMETRICS: Sir, one of the six points agenda of this government for the aviation industry in 2015 was the establishment of major Maintenance, Repair and Overhaul (MRO) facilities, but this did not come to fruition within the period. How important is MRO to any economy?
Capt. Samuel Caulcrick: Once an aircraft is flying in Nigeria, it means it is our economy that is supporting it to fly. Let’s say it is now one hour to go for Maintenance, Repair and Overhaul (MRO) by the airline, it means our economy has supported that business for the maintenance to be ready for it to come to the hangar.
When we take the business of the MRO to foreign countries, it means we are creating business for those countries when we were the ones that created the business. So, it is better to let it stay within the economy. That is one argument by which the MRO supports the economy. So, this economy should not lose to another economy after creating that business.
Also, MRO supports the naira in the pockets of every one of us. Once the aircraft is taken out, there is the cost of labour that would be paid by the airline. Instead of the airlines saving that naira it earned in Nigeria, the airlines go to the foreign exchange market and start looking for dollars. The manpower too is no longer local and the airlines go to the foreign exchange market, looking for dollars, thereby further putting additional pressure on the naira. This negatively affects our economy and the Nigerian market.
NAIRAMETRICS: Can you estimate the annual loss by Nigeria due to the absence of capable MRO in the country?
Capt. Samuel Caulcrick: The advantage of having an MRO in Nigeria is that the company is going to use local labours, which is good for the economy, personnel and the government in terms of tax revenues and the experience that the technical experts are going to get, too. Then, you don’t have to pay for fuel to ferry the aircraft to and fro, which you were going to buy in dollars. So, those are the advantages.
What Nigeria would gain is the cost of labour, tax and local maintenance. What Nigeria is losing are taxes that are being paid to foreign countries instead of Nigeria and the money that you are going to change into dollars from naira. I can’t put a figure to this because it would be useless if I am giving a figure that is not current.
NAIRAMETRICS: How can Nigeria drive investment in MRO business?
Capt. Samuel Caulcrick: This can be done through policy. For instance, the Nigeria Civil Aviation Authority (NCAA) can say it will not renew an existing Air Operator’s Certificate (AOC) or issue an AOC to an intending operator without a local MRO identified in the application form. The government can give them a timeline because this could take up to three years to accomplish. Once you do that, just leave the rest to the private investors because they know there is an investment created for them.
Once an investor knows that their business is being protected, then, they will be willing to invest in the industry. They can then approach a bank to seek a loan.
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