Economic woes ground flights in Nigeria

Nigeria’s largest airline, Arik Air, Tuesday temporarily shut down its operations around the country, leaving hundreds of passengers stranded. Arik is the latest of several Nigerian airlines to cancel its flights, and some foreign airlines have started to refuel their planes in other countries. The latest activity highlights the continuing decline of a sector that could potentially lead Africa’s largest economy out of recession.

Arik said it shut down due to a “temporary disruption pending approval of aircraft documentation related to insurance approval.” The airline has increasingly faced flight delays in recent months. It warned in June that aviation fuel scarcity could result in more delays and cancellations.

“This business decision is as a result of the current economic situation in the country, which has forced some other airlines to suspend operation or outrightly pull out of Nigeria,” Fola Akinkuotu, the airline’s chief executive, said in a statement.

At the start of the month, another Nigerian airline, First Nation, suspended operations citing maintenance reasons. The country’s oldest airline, Aero Contractors, indefinitely stopped its flights two weeks ago.

Nigeria’s dwindling economy has faced an increased shortage in dollars that has resulted in high jet fuel prices. Local suppliers have doubled the price of jet fuel. Dubai-based Emirates airline now refuels in Ghana before arriving in Abuja, while Germany’s Lufthansa loads more fuel in Germany before heading for Lagos, airline executives told Reuters. United Airlines earlier this year cancelled its operations in Nigeria. Several other airlines have responded by cutting down on their flights, and others have raised their fares.

“This has resulted in the continuous dwindling of revenue,” Allen Onyeama, the chairman of Nigerian airline Air Peace, told Nigeria Today.

Nigeria’s economy is currently at its worst in nearly three decades, the National Bureau of Statistics revealed in its second-quarter report. The National Union of Air Transport Employees said the economic crisis could lead to about 2,000 job losses within the aviation industry. In response to its temporary shutdown, Aero Contractors placed its entire staff on leave.

John Ashbourne, an economist with London-based Capital Economics, told Reuters the potential impacts of the aviation crisis could go beyond the industry to affect international trade.

“The economy is crying out for investment, and now it’s going to be even harder for anyone to visit,” 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.”

The aviation minister last Tuesday said the ministry plans to concede four of Nigeria’s international airports to private management while still retaining ownership. Hadi Sirika listed the move as part of the ministry’s plans to make the aviation sector more lucrative by reducing the financial burden on the government.