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Muhammed: Why Nigerian Airlines Fail

The high cost of procuring aircraft and  the  inability of  Nigerian operators to  lease aircraft  due to bad reputation of not paying for leased aircraft  have been identified   as some of the reasons  the country’s airlines fail.
The Managing Director, Discovery Airways (a new indigenous airline), Abdusallami Muhammed, who stated this,  explained that an upcoming airline in other parts of the world usually lease aircraft from international financiers and therefore does not spend huge resources on aircraft acquisition.
 
“It is very hard to operate an airline in this part of the world. If you are in Europe or you are in America and you want to set up an airline, there will be finance companies that will be willing to lease aeroplanes to you. Most of these airlines do not buy airplanes with cash. They lease them. Big aeroplane owners are leasing companies. But unfortunately in Nigeria because we have had over the years a bad reputation that we don’t pay our bills, you find out that these leasing companies are reluctant to lease aeroplanes to Nigerian operators. So Nigerian operators are forced to buy with cash and these aeroplanes are quite expensive,” he said.
According to him, it  is difficult for Nigerian airlines to make profit in their operations because of the high  interest paid on loans obtained to buy  or lease those aircraft.
 
“By the time you buy aeroplanes worth millions of dollars, you are talking of billions of naira and it will be very difficult if you now have to go to the financial market to borrow that huge sum; with high interest rate it will be very difficult to survive. That is why the environment is not conducive,” Mohammed said.
However, he said  Discovery Airways would not suffer from this problem because the airline had studied the market and known the factors that made indigenous carriers  to collapse, saying that Discovery Airways would steer away from the weaknesses noticed in the industry, operate safe, sustainable and provide affordable services.
Mohammed said the new airline would fill an existing niche in the market with on time take off, good fares and inimitable passenger satisfaction.
 
“The major reason we established this airline is to provide Nigerians, safe, sound and effective airline that actually make Nigerian to fly from point A to point B at the lowest cost. That is what we want to achieve. Discovery Airways is an airline that was set up about a year ago with the aim of offering Nigerian travelling public something that is missing in the airline service, which is very good customer service, apart from the fact that there is shortage of commercial aircraft in the country,” he said.
He added that the airline would start operations with the popular destinations: Abuja, Lagos, and Port Harcourt but would expand the routes structure as it brings in more aircraft.
“Today marks important day for us because the first of our aircraft just arrived from England. The second one will follow in the next two weeks and we are going to start with three aircraft. The third one will come in January. The one that just arrived is a Boeing B737-300,” he said.
 
According to him, the   major reason the airline was established is to provide price effective airline that can enable Nigerians to fly.
He also disclosed that Discovery Airways had already signed agreement with two major maintenance, repair and overhaul (MRO) organisations in England and France, noting that these organisations had been certified by the Nigerian Civil Aviation Authority (NCAA).
“We signed contracts with MROs in England and in France as well and I can tell you they are top notch MROs and they have been certified by NCAA. We have religiously gone through each process of the way that will lead to obtaining AOC (Air Operator Certificate). We want to give the best service to Nigerians although it is coming at a premium and we want to actualise the ideal situation the minister is trying to put in place. We have our marketing model which we are going to unveil gradually,” Mohammed said.
According to him, although it is hoped that the airline would begin service by the middle of this month, he admitted that it is subject to the decision of NCAA.
 
“The commencement of our operations is, however, subject to NCAA because we are still going through our certification to get our AOC. As you know, the AOC process is in five phases and we are now in the 4th phase and the 5th phase is just the issuance of the certificate. So now we are in the demonstration phase. The flight today (November 30, 2013) is part of that demonstration. Now we will be expected, for the next few days, to be flying all over the country, but we will not be carrying passengers,” he said.

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