The federal government has failed to deliver on its promise to provide efficient maintenance, repair and overhaul (MRO) facilities for Nigerian airlines nearly eight years into the administration of President Muhammadu Buhari.
This is despite the fact that the government selected A. J Walters Aviation Limited, EgyptAir Maintenance & Engineering (EGME) and Glovesly Pro-Project Limited as the preferred bidders to establish the MRO center.
Three years after the winning bidders were selected in January 2020, details of the project’s takeoff remain sketchy.
Failure comes with losses: Meanwhile, the government’s failure to midwife a successful MRO facility is costing Nigerian airlines an annual loss of around $2.5 billion, according to industry stakeholders.
- The loss includes taxes on government agencies, workforce development and job creation.
- For example, to perform a C check on a Boeing 737 aircraft, airlines spend at least $1.8 million. The C-check is carried out on aircraft every 18 months.
- Stakeholders insisted that Nigeria’s potential and capacity in the global air transport industry was being severely underutilized and blamed the Federal Government for nearly eight years.
FAAN corroborates losses: The Managing Director of the Federal Airports Authority of Nigeria (FAAN) recently told reporters that Nigeria was losing around $2.5 a year from the loss of the facility in the country.
Aviation expert says: Former Chancellor of the Nigerian College of Aviation Technology (NCAT), Captain Samuel Caulcrick, said the Nigerian economy supports the sustainability of the airline business. However, he lamented the lack of a suitable and capable local MRO to retain resources in the country.
Caulcrick explained that due to the lack of capacity in the country, Nigerian airlines export heavy maintenance of their equipment to foreign countries, thus creating business, employment and income generation for those countries.
He noted that the absence of the facility in Nigeria also put more pressure on currency exchange by local airlines, causing the value of the naira to decline against most currencies.
- “So it’s better to let it stay within the economy. That is one argument why the MRO supports the economy. This economy should not lose to other economies after creating that business.
- “In addition, MRO supports the naira in the pockets of all of us. Once the plane is out there is the cost of labor that would be paid by the airline. Instead of the airlines saving what they earned in Nigeria, the airlines go to the foreign exchange market and start looking for dollars.
- “The workforce is no longer local and airlines go to the foreign exchange market for dollars, putting additional pressure on the naira. This affects our economy and the Nigerian market. Now, let’s take a look at the staff themselves; Being formal employment means that it is Pay As You Earn (PAYE). This means locating the MRO in Nigeria, the government earns tax on staff, which would now be earned by another country. That is why MRO is very key for any economy”, he said.
However, Caulcrick was reluctant to put a figure on the annual loss of Federal Government revenue from the absence of indigenous MROs, but said billions of naira may be lost this year.
Instead, he said Nigeria was robbed of local manpower, staff, tax revenue and expertise by technical experts.
However, he said Nigeria could attract foreign and local investors to the MRO business through policy making.
- “For example, the Nigerian Civil Aviation Authority (NCAA) may say that it will not renew an existing Air Operator Certificate (AOC) or issue an AOC to a potential operator without a local MRO identified on the application form. The government can give them a timetable because this could take up to three years to achieve.
- “Once you do that, leave it to the private investors because they know an investment was created for them. Once an investor knows that his business is protected, he will be willing to invest in the industry. A policy will naturally create a market. This is how China developed today through policies and laws.” he said.
The backstory: Aviation Minister Hadi Sirika unveiled a six-point Federal Government agenda in October 2015, which included establishing MRO facilities for airlines in the industry.
It later revealed that the selection of AJ Walters Aviation Limited, EgyptAir Maintenance & Engineering (EGME) and Glovesly Pro-Project Limited as preferred bidders followed the evaluation of proposals submitted by bidders in response to the request for proposals for the MRO center. .
The minister added that agreements would be signed between the preferred bidders and the Federal Government of Nigeria and implementation of the projects was expected to start in the third quarter of 2021.