…faces harder times in 2016 over naira’s depreciation
Domestic airlines may face harder times in 2016 if the naira continues to lose value against the US dollar, experts have argued.
According to the experts, since the airlines earn their revenue in naira and besides buying fuel locally they do all other things including maintenance, purchase of aircraft parts, leasing, insurance, payment for training and some technical personnel in foreign currency. This they said might affect their operations.
Domestic airlines may subsequently increase fares by about 35 per cent due to the rising cost of operations.
According to them, with projections that the nation’s economy would face further downturn in 2016, airlines might suffer lower patronage because many Nigerians who presently travel by air may prefer other cheaper means of transport.
They contended since some of the airlines may not have the resources to continue to maintain their aircraft, pay for leases, training, technical personnel and others, they may be forced to shop, while others may lay off workers and also disengage the services of some aircraft in their fleet.
However, a chief operating officer (COO) of one of the domestic carriers said some airlines would continue to carry out their operations but obviously would continue to spend more money. He remarked that there might be temptation to defer maintenance date or training or acquisition of aircraft parts except when the aircraft cannot function until such parts are replaced.
“If an aircraft part needs to be changed you must have to change it before you operate the aircraft; otherwise it would be left as aircraft on ground (AOG). This is because once the aircraft part is bad you will no longer manage it,” he said.
The COO also said that the consequence of the high exchange rate is that many airlines would have to rest their aircraft that need parts replacement or any other major maintenance. He disclosed that recently an airline rested about eight of its aircraft out of 13 and was operating with only five because it could not afford to pay for their checks.
He noted that by resting aircraft the airline would be losing a daily revenue of about N5 million and it would still have to pay for leases, insurance and the personnel, including pilots and engineers.