Airlines Reluctant to Merge – Experts 4 years ago 6

Experts in the Nigerian aviation industry have said it would be difficult for airlines operating in the country to consolidate their operators through mergers because airline operators are not willing to embrace the idea.

Owing to recent revelations that most airlines in the country are insolvent and heavily indebted to the tune of $5bn, the Federal Government is reportedly considering a policy that will compel the operators to consolidate their operations through mergers.

Events following the June 3 Dana Air plane crash at Iju-Ishaga, Lagos, had highlighted the poor financial health of Nigerian airlines as a major reason for inadequate safety measures, which led to the loss of over 600 lives in air crashes in the last 12 years.

According to the convener of Congress of Aviation Unions and Professional Associations, Engr. Sheri Kyari, the airlines are not likely to accept the merger plan because they prefer to operate alone.

“Apart from the cultural factor which has to do with the fact that these airlines are individualistic, it would be difficult for the airlines to accept to merge. We don’t know if their financiers will be willing to merge. If airline A has two aircraft it bought and airline B has five aircraft it leased, how are they going to merge?

“What professionals in the industry have been asking for is a national carrier; not the type that would be owned by government, but the type that people can go to the Nigerian Stock Exchange and buy its shares,” he said.

He added that the insolvency of Nigerian airlines was not due to lack of profitability, but a result of diversion of profits by the airline owners to other ventures.

“It’s not that these airlines are not making money. Many of them take more than half of what they rake in as profit to other businesses, rather than using it to maintain their fleet and operations.

“If Nigeria Civil Aviation Authority was monitoring the airlines well, it should have found out how much they use for training and how much they invest in maintenance,” he said.

Similarly, former President of the Nigerian Cabin Crew Association, Olumide Ohanayo, said Nigeria airlines would only consider mergers as a last resort if government raises the stakes.

“In some parts of the world what obtains is voluntary merger; airlines come together on their own to become more competitive. In some places, there is regulatory merger when government would bring out a policy that would compel airlines to merge. That is what we have been clamouring for. China has done it, Indonesia has done it, but in Nigeria what you see is individual airlines insisting on struggling on their own,” he said.

Ohanayo, however, advised that a safety audit should be conducted to see the airlines that would survive before the merger plan is implemented because bringing all the airlines under one national carrier could stifle competition. Home Page

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