Why Arik Air, Aero, others failed in Nigeria – Aviation experts

Nigerian Aviation sector has over the decades witnessed the gradual decline in the number of domestic operators from 40 active domestic airlines, to an ailing sector with only 23 active domestic airlines due to several factors, according to aviation experts.

In 2017, the government took over the management of Arik Air and Aero Contractors.

According to the Minister of Aviation, Hadi Sirika, the airlines were going through difficult times that were attributable to their bad corporate governance, erratic operational challenges, inability to pay staff salaries and heavy debt burden among other issues.

Experts in separate interviews argued that several airlines could not survive under their owners due to several factors, of which lack of corporate governance, bailout funds, unfriendly business environment, high cost and nature of maintenance among others played major roles.

According to the General Manager, Public Affairs, Nigerian Civil Aviation Authority (NCAA), Sam Adurogboye, many Founders interfered in the day to day administration of the organisations and in some cases, they would abandon passengers and run errands for elites.

He said, “In other instances, the founder would sit as the Chairman but want his wife and children to be directors regardless of whether or not they were qualified for the role.”

Another aviation expert, Capt. David Olubadewo, Managing Director, Starburst Aviation Limited said an unfriendly business environment was another contributory factor.

He said, “Although the government has the role to provide an enabling environment for players, it is not something that has to do with the government alone.”

Olubadewo added that some banks believe that aviation is too difficult to invest in, but that is wrong, as it is not different from other sectors. Everyone is in business to make profit – and that has pushed interest rates to the roof.”

Sharing his personal experience, the former youngest pilot said, “I don’t obtain loans from Nigerian banks, because I will end up with -25% loss or more, but that is not happening in the UK where I pay far less interest rate.

“If I take such a loan in Nigeria, it means I am -28% (interest rate) in red, and by the time you get to the top, you are owing millions. I cannot approach any of the banks to give me local money to do business in Nigeria.”