As the naira continues to freefall against major currencies, especially the dollar, the nation’s airlines are feeling the brunt more than expected.
Mr. George Uriesi, the Chief Operating Officer (COO) of Ibom Air stated this over the weekend at the third edition of AviaCargo Chinet Conference in 2023 held in Lagos.
Uriesi in his presentation at the conference, specifically said that the situation had led to high insurance premiums for the airline and wondered how some of the airlines were coping with the situation.
He stated that this was a major challenge to operators as aircraft and other equipment must be appropriately insured by the airlines before being deployed to service.
According to Uriesi, the perilous situation needed urgent government attention and warned that the present condition may lead to the collapse of some of the carriers.
He, however, emphasised that Ibom Air was committed to commencing its earlier advertised new routes, especially the West Coast operations.
He further expressed that the operators were having difficulties accessing the dollars through the Central Bank of Nigeria (CBN) as they encounter a lot of delays.
He said: He said: “Insurance is a growing problem and because we cannot fly an uninsured aircraft we have no choice, but to hang in there and source for the dollars to do the insurance.
- “The losses we accumulated were mainly dollar-based components, when you are procuring dollars above the then CBN rate, you apply when it was N400 to a dollar and you get it at N680. The difference is a lot.
- “Now, it is being floated and it is running faster. Recently, we bought a dollar for N915, but on the platform, it was put at N890. Today, it is N900 on the platform I’m sure when we are getting it, we would procure it at N950.
- “The new style now is they tell you ‘give us cash and when we buy dollar we will give you.’ But, it delays, you ask for your cash back and they tell you that you wouldn’t get the dollar.”
- “Then when they now have the $400,000 they will now tell you the price they got far exceeds what was paid and you need to add more. That is where we are now, I don’t know how other airlines are managing the situation.”
Uriesi expressed worries about the instability of naira, saying operators are not sure of what the future holds.
Just yesterday, the Nigeria Civil Aviation Authority (NCAA) warned airline and allied aviation services against the violate the Nigerian Civil Aviation Regulations (Nig. CARs) 2022 on insurance cover for their equipment.
The Director-General of Civil Aviation (DGCA), Capt. Musa Nuhu warned that non-adherence to this regulation would attract immediate sanctions, which would include the grounding of the specific aircraft and taking enforcement action against any airlines or service providers that defaulted.
Nuhu stated that this directive contained in an All Operator Letter referenced NCAA/DG/AIR/11/16/369, dated August 11, 2023 and addressed to all airlines and allied aviation services providers, which was personally signed by him.
The statement hinted that compliance was a sequel to the coming into force of Nig. CARs 2022 on July 10, 2023, which made it mandatory that all airlines comply with Part 18.14.1.1 of the regulations.
According to him, Part 18.14.1.1 of the regulations provides amongst others that all airlines and other allied aviation service providers must not operate without adequate and valid insurance cover and submit to the authority copies of valid insurance certificates, evidence of payment of premium and other policy documents of insurance cover of not less than three months as specified in IS: 18.14.1.1.
Can’t our local insurance companies handle Aviation insurance especially for planes on local routes.