The Minister of State for Aviation, Sen. Hadi Sirika, says the proposed establishment of Maintenance, Repair and Overhaul facility and Aviation Leasing Company (ALC) in the country will boost aviation business.
Sirika stated this at the presentation of the Outline Business Case (OBC) Certificates for the Aviation Leasing Company (ALC) and the Maintenance, Repairs and Overhaul (MRO) by Infrastructure Concession Regulatory Commission (ICRC) on Monday in Abuja.
He said that the two projects were critical to the development of aviation industry, adding that funding had remained a huge challenge to the operators in the industry.
Sirika said that the implementation of aviation industry roadmap commenced with appointment of transaction advisers since all the projects would be implemented through Public Private Partnership (PPP) guided by ICRC regulations.
According to him, the six items on the roadmap, which include the establishment of national carrier, concession of airports, aviation leasing company, MRO facility etc are all intertwined.
“You cannot have a national carrier where maintenance would be done oversea because you will lose a lot of time and resources and you will also be denying people the job opportunities.
“That is why we decided that there is need to have our own MRO in the country to serve as a maintenance base for the proposed national airline and other existing airlines.
“Most of the aviation businesses in the country have no access to leasing company and appropriate source of funding has continued to be a huge challenge in aviation sector.
“It is impossible to succeed in airline business in Nigeria where profit margin is less than five per cent and interest on bank loan is around 24 per cent.
“With the existing airline companies, catering companies and other aviation businesses in the country, the leasing company and the MRO would be a huge boost to the industry,” he said.
The minister disclosed that the OBC for airport concession and national airline were also ready and would soon go to ICRC to ensure compliance before proceeding to procurement.
He said the issuance of OBC certificate by ICRC was a testimony of the government’s commitment to transparency.
According to him, the national airline will be ready by December, while the timeline for other projects would be announced in due course.
Mr Chidi Izuwah, Acting Director-General, Infrastructure Concession Regulatory Commission (ICRC), commended the ministry for its insistence on due process and adherence to the guidelines and processes of the ICRC.
Izuwah said that aviation industry was a highly regulated industry, saying that its international nature made it mandatory to observe set-standards and adhere to regulations as required by global industry regulators.
He said that MRO was the most important link in the aviation value chain since safety was the major consideration in the industry.
According to him, considering the importance of the MRO, it is incomprehensible that none exist in the West African region, 98 years after the first aircraft landed in the country in 1920.
“The lack of an MRO has had a negative impact on the survival of airlines in the country as airlines have struggled to maintain their fleet or stay in business for consistently long periods as seen in other climes.
“Our review of the CBC presented a compelling case for the establishment of an MRO in Nigeria as the demand forecast study undertaken presented an assurance of a market that remains unserved locally.
“This is because, more than half of the $3 billion annual expenditure by African airlines on maintenance is taken outside the continent,” he said.
On the leasing company, Izuwah said it was estimated that about 70 per cent of commercial aircraft in Nigeria were leased and 50 per cent of the fleet globally.
He added that despite the obvious market for aircraft leases, the West Africa region had no single Aviation Leasing Company and relies solely on leasing companies in Europe, North America and Asia.
Sirika, on assumption of office, promised to roll out the Aviation Development Roadmap, which include the establishment of national carrier, MRO, leasing company and airport concession.
Others are the establishment of Aerospace University and Aviation Development Bank.