Domestic Airlines threatened by High Cost of Aircraft Insurance and Maintenance


The high cost of aircraft insurance and maintenance is threatening the operations of domestic airlines according to the Chairman of Air Peace Limited, Mr. Allen Onyema.

Onyema warned that unless urgent action was taken to review downwards, the cost of aircraft insurance in Nigeria and the establishment of Maintenance, Overhaul and Repair (MRO) facility locally, domestic airlines would find it extremely difficult to continue to operate.

He said that besides the cost of aviation fuel, which constitutes over 40 percent of airline’s operational cost, insurance and aircraft maintenance erode the revenue of airlines.

He noted that insurers wrongly designate Nigeria as high risk environment and therefore multiply the cost of aircraft insurance, noting that with the low value of the naira it is very expensive ferrying aircraft overseas for maintenance, so urgent establishment of MRO in Nigeria is needed to save the country billions of naira in foreign exchange.

Onyema made this known during the weekend when he announced that Air Peace had acquired two new Boeing 737-500 aircrafts as part of efforts to boost its fleet and route expansion programme.

He said the investments in the new aircraft had become necessary following the receipt of licences to commence regional flight operations.

Onyema said, “We have been designed to fly into these regional routes: Dakar, Senegal; Accra, Ghana, Niamey, Niger; Abidjan, Ivory Coast; and Duola and Cameroon. One of the new aircraft has the capacity to take 142 passengers, while the other can take 126 passengers. In our fleet, we have nine Boeing and one Dornier aircraft, which make us the second largest airline in Nigeria in terms of the number of aircraft. Some of the aircraft we will deploy for the regional routes. We have visited the civil aviation and relevant authorities in these countries and plans are at advanced state. We will soon announce our commencement dates on these routes but one thing that we want to assure our passengers is that we will put in our cockpit the best of pilots“.

According to the Air Peace Chairman, the airline had employed over 700 Nigerians in its two years of operation. He however lamented the harsh operating environment in Nigeria saying airlines were finding it so difficult to survive as going concerns.

The domestic airline industry is not getting the right support it deserves from the government as they would rather do everything possible to support foreign airlines. We do more for the country than the foreign airlines. If the foreign airlines face the kind of challenges that we face for 72 hours they will seize to exist. The government must rise up and protect local airlines, but I give kudos to the Minister of State for Aviation, Senator Hadi Sirika who shows understanding and who knows the enormous challenges we are facing,” he added.

Onyema listed some of the challenges facing local airlines to include forex and fuel scarcity, high premium on insurance, double taxation to regulatory and airport agencies, as well as the failure of Nigerian Customs Services (NCS) to comply with the recent government directives that exempted imported aircraft spares from duties.



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