Hundreds of passengers of Nigeria’s biggest airline, Arik Air, were left stranded at airports across the country and beyond on Tuesday because of suspension of flight operations by the carrier.
Arik is having problems with the renewal of its insurance policy.
At the Murtala Muhammed International Airport, Lagos, and the Nnamdi Azikiwe International Airport, Abuja, it was observed that all the ticketing and reservation stands of the airline were closed and customers were directed to other carriers.
Airport officials told one of our correspondents that the carrier had been having issues for some time and that these were affecting its smooth operations.
The airline said in a statement that the development was caused by documentation issues relating to the renewal of its insurance policy.
It said the delay in renewing the insurance policy was caused by the two-day holiday, which was declared by the Federal Government to celebrate the Eid-el-Kabir.
Arik said the suspension of flights might continue for the next few days until the approval of a waiver on a priority basis by the National Insurance Commission for a new insurance company to renew the policy.
It added that during the period of the disruption of operations, the management of the airline would be working hard to resolve the necessary documentation issues.
The statement read in part, “Arik Air, West and Central Africa’s largest airline, has alerted all air travellers of a temporary disruption to its operations pending approval of aircraft documentation related to insurance renewal. The airline said that it was working around the clock to resolve the necessary documentation, which has been a challenge due to the long weekend holidays.
“At the present time, all flights of the airline have been cancelled for Tuesday, 13 of September, 2016, and the airline has stated that it would be getting in touch with passengers to provide an update on rescheduling of their flights.
“This situation is likely to continue for the next few days until such time that NAICOM approves a waiver on a priority basis for the new insurance company to renew the policy.”
The airline however advised its customers to visit either its website or any of its ticket offices to know the status of their flights before proceeding to airports.
Arik Air’s Group Chief Executive Officer, Dr. Michael Arumemi-Ikhide, said, “The airline wishes to advise and assure the public, its customers, stakeholders and partners that we are fully committed to returning to our normal operations and minimise any unfortunate inconvenience to our passengers.
“Where flights have been cancelled, the airline will notify passengers through SMS and in such cases, passengers will be accommodated on first available alternative flights as soon as normal flight operations resume.
“The Group CEO apologised and appealed on behalf of the airline for the understanding of passengers, while it works diligently to resume normal operations at the earliest time.”
The Nigerian Civil Aviation Regulations kick against any airline operating an aircraft that has insurance issues.
Part 18.11.2 of the regulations dealing with aviation insurance states that “no person shall operate any aircraft in the public air transport category without adequate and valid insurance cover.”
Part 18.11.2.2 of the regulations states that “any person having a duty to maintain adequate insurance shall submit to the Authority on quarterly basis insurance certificates, evidence of paying premium and policy documents.”
However, the Assistant Director, Corporate Affairs, National Insurance Commission, Mr. Salami Rasaaq, said that NAICOM did not have any direct business with Arik Air but with its insurance company.
According to him, the commission did not delay the insurance of the aircraft because the request for the Approval in Principle was only submitted to it on Friday afternoon after the close of work.
“When you submit a request, there is due process to follow before you give an approval. A staff member on special risk had to go to the office today (Tuesday), which is a public holiday, to work on it, and we gave them one-month approval effective from today (Tuesday) to expire on October 12, by which time they are expected to do everything possible to get the one-year approval,” he said.
Rasaaq explained that the commission had specified a minimum of 10 days to the expiration of the policy for the request for the AIP.
“Because they were supposed to have applied 10 days before, which is the minimum to the expiration of the AIP, but the airline did not comply. But even if they did, the commissioner has said we will always work on it because of the interest of the public,” he said.
Aero and First Nation
The disruption of Arik’s operations is coming about two weeks after Aero Contractors Airlines Nigeria’s second largest commercial carrier, and First Nation Airlines announced the suspension of operations.
In the case of Aero, the airline had in a statement stated that the suspension was part of the strategic business realignment to reposition it and return it to the path of profitability.
It explained that this business decision, which was as a result of the current economic situation in the country, had forced some other airlines to suspend operations or pull out of Nigeria.
For First Nation, the Director-General, Nigerian Civil Aviation Authority, Capt. Muhtar Usman, had explained that the decision was taken in order to ensure that the airline carried out the required maintenance of its aircraft.
The NCAA DG had said, “First Nation Airline on its part is in the middle of an engine replacement programme for one of its aircraft. Another aircraft is due for mandatory maintenance as allowed by the regulatory authority.
“In these circumstances, these airlines clearly cannot continue to undertake schedule operations, hence the inevitable recourse to self-regulatory suspension.”
Foreign carriers boycott Nigeria’s fuel
Meanwhile, the scarcity of aviation fuel occasioned by dollar shortage has made the price of the Jet-A1 fuel to rise by 81 per cent from N220 per litre to N400, Reuters has reported.
This came barely two months after the price of the commodity, which contributes 30 per cent of airlines’ cost of operations, increased from N120 t0 N220 per litre.
The latest increase has made foreign airlines flying into Nigeria to start boycotting the country to refuel, according to Reuters.
It is the second blow for airlines operating in the nation’s recession-hit economy in a year. The Central Bank of Nigeria’s naira peg had made it almost impossible for them to repatriate profits from ticket sales as it tried to prevent a currency collapse.
The crash in the naira since a devaluation in June has led firms who market jet fuel locally, such as Total, Sahara and ConocoPhillips, to double the price to N220 a litre in August, and to as much as N400 presently, an airline executive told Reuters.
A Deputy Director at the Ministry of Aviation, James Daudu, said Jet-A1 prices were deregulated, and therefore outside government control, but stated that the Minister of State for Aviation, Mr. Hadi Sirika, was working with the Ministry of Petroleum Resources to see if “interventions” in the sector were possible.
“It would be a whole sphere of intervention, if possible, from the Central Bank of Nigeria to the Ministry of Petroleum Resources,” he said.
Even at the higher costs, marketers’ lack of dollars has made fuel scarce. Some carriers have had aircraft stuck, or were forced to cancel planned journeys, after frantic last-minute calls from ground staff warned that there was no fuel available.
“The economy is crying out for investment, and now it is going to be even harder for anyone to visit,” an economist with Capital Economics, John Ashbourne, said.
“Who is going to want to park a billion dollars in a country that you can’t even easily fly to? It sends the worst possible signal,” he added.
A spokesman for the Nigerian National Petroleum Corporation did not answer calls for comment.
The central bank hoped floating the naira would attract dollar inflows, but the naira has sunk by 50 per cent, forcing oil firms to charge airlines, stuck with piles of naira, in dollars for jet fuel.
“It’s an impossible situation. The oil marketers don’t want to sign long-term agreements anymore so we have to accept whatever prices they demand,” one airline executive said, adding, “We sell tickets in naira and now they want us to come with dollars.”
Spain’s Iberia and United Airlines cancelled their Nigeria services earlier this year, and two local carriers also halted operations. Other international airlines responded by boosting ticket prices within Nigeria, charging their globe-trotting elite as much as $2,000 for an economy class ticket to Europe to cut losses – more than double the cost of a Lagos ticket bought abroad.
Dubai-based Emirates has started a detour to Accra, Ghana, to refuel its daily Abuja-bound flight, a spokesman said. The airline already cut its twice-daily flights to Lagos and Abuja to just one.
The move was aided by a substantial drop in Ghana’s jet prices amid tax reform last month, according to the Ghana Chamber of Bulk Oil Distributors.
Air France-KLM said it was refuelling abroad in “very exceptional cases” by juggling suppliers and stomaching extra costs.
Germany’s Lufthansa is loading more fuel in Frankfurt for its Lagos flight, where the ground staff doubt their ability to refuel for the final destination of Malabo, the capital of Equatorial Guinea, an executive said. The airline did not respond to official requests for comment.
The scarcity has even pitted airlines against local consumers; a surge in demand for cooking and heating kerosene during the rainy season, when households cannot easily burn wood or charcoal, means if the airlines do not pay up, marketers will sell to locals.
Airlines met with Transport ministry officials last week in Abuja to press for lower fuel prices, industry sources said.
Nigeria used to be one of the most profitable markets for foreign airlines, landing planes with plenty of first and business class passengers to cater to executives and officials jetting around under former President Goodluck Jonathan administration.
British Airways, a popular choice for well-heeled Nigerians, said it was using smaller aircraft on its Lagos-London route, as did Air France-KLM.
Turkish Airlines’ use of smaller planes has added another inconvenience: passengers complained there is not always space for luggage on the smaller aircraft, delaying it for days. The airline did not respond to requests for comment.
