Wednesday, 3 October 2012

Nigeria: Domestic aviation almost extinct

In recent years, the performance and growth of Nigeria's domestic aviation sector has been at best just below average, with most airlines struggling to maintain profits and operating under enormous mountains of debt. On the periphery, however, observers assumed the airlines were making passable profits and doing quite well.
For most Nigerians, the major concern has been the question of aircraft safety and whether the regulatory authorities were doing enough to ensure it. About 90 per cent of air accidents that occur in Nigeria are completely fatal. They have so far involved only domestic airline operators and a couple of aircraft belonging to security agencies, the police, and the military.
What was not known was that domestic airlines were hugely indebted to the financial sector. The bubble burst and the secret financial rot came out in the open in 2009, when the Central Bank of Nigeria (CBN) and the National Deposit Insurance Corporation (NDIC) conducted a joint audit of the banking sector and found mammoth margin loans and nonperforming loans on the books.
It was found that some of the prominent debtors were domestic airlines. This spurred the CBN to offer a bailout fund in the hope that the aviation sector would not collapse and plunge the economy into chaos.
For more news and expert analysis about Nigeria, please see Nigeria Focus and Nigeria Politics & Security.
© 2012 Menas Associates

1 comment:

  1. The Nigerian aircraft market is not new to debate but what could be new is that many Nigerians including those in Govt groups possibly, with the exception of those in the sector do not really know how bad things are in the sector that is supposed to be one of the most open and transparent considering its importance in the life of a country.