Local Content Campaign in Aviation

Last week, the House Committee on Banking and Currency toured the facilities of two major domestic carriers under the management of Asset Management Corporation of Nigeria (AMCON), Aero Contractors and Arik Air to evaluate what the government agency had done in the two airlines.

On February 19, 2017 AMCON took over Arik Air due its huge debt profile and failure to fund its continued operation. The takeover was planned to last for one year. So after the 12 months period the House Committee came to determine what the agency had done in the airline.

The Committee also visited Aero Contractors where AMCON substantively took over the management in February 2016. While the House Committee was impressed with what the two airlines have done, it pointed out that Aero and Arik are yet to stand firmly on their feet; so more work needed to be done.

The House therefore charged the new management of the two airlines to stabilise them within the next one year, saying that this would further bring confidence of the flying public not just to the airline, but to the aviation industry as a whole.

The Chairman of House Committee on Banking and Currency, Hon. Jones ChukwudiOnyereri, noted that AMCON had been able to bring out the airlines from the woods.

On Arik Air, he said that despite the crisis of the airline, it has remained one of the safest airlines in the industry and had been able to maintain a good safety records, which he said, was important for the confidence of all air travellers.

He gave kudos to the airline for having enough spares in its warehouse and to have maintained the high safety status the former management and owner of the airline entrenched, which has built enviable goodwill for the Nigerian carrier.

Onyeriri remarked that the airline has spares to carry on with adequate maintenance of its fleet, adding that its timely departures and seamless operations have become assuring to the flying public.

Reacting to the rumour that there are chances of Arik Air being named the national carrier, the Chairman said that was beyond the committee for now, stating that there were so many things to be considered before such a development could happen.

Onyereri, however said that the National Assembly was worried about the debt profile of the airline and in order to address this, it had met with the Central Bank of Nigeria (CBN), AMCON and the new management of the airline.

“We have said it earlier on that we are worried about its debt profile, we are eager to get out of that quagmire. We are here to encourage them and if you look at the amendment in the AMCON Act, we have dealt with the issue. First, it is under a receiver manager and secondly, for the receiver manager to bring out a well-thought out plan on how to rehabilitate Arik at least within three months.

“That’s the plan and within one year, they can get them out of the woods. If they can’t get out of the woods within the one year, you need to stabilise them in a way that you are sure that going forward, Arik would be profitable. That’s why we are here; that’s our primary responsibility. We need to see operations of agencies within our purview.”

When the Committee visited the facilities of Aero Contractors it was excited by the advancement the new management of the airline, which took over in February 2017, has made, especially in the area of aircraft maintenance.

Today the airline has been able to rebuild its Maintenance, Repair and Overhaul (MRO) facility and it has upgraded it to the level that it can conduct checks on Boeing B737 aircraft to C-check level, the first time in Nigeria. Aero, which has already started the maintenance of its Boeing aircraft and has received offers from other airlines to conduct C-check on their aircraft and currently carrying out importance checks on third party aircraft (that is aircraft owned by other airlines), which is known as 18 months maintenance checks.

Impressed by the aircraft maintenance status of the airline, the Chairman of the House Committee on Banking and Currency said the Committee may push for a certain level of local content in the aviation sector, when Aero builds enough capacity in its MRO organisation.

The Aero Chief Executive Officer, Captain Ado Sanusi, told the Committee that the airline under him has acquired the capacity to conduct checks on Boeing 737 Classics as well as the maintenance of small body aircraft like the Bombardier Q300 and Helicopters, which it had been doing before.
The Committee members inspected Aero maintenance facility and expressed satisfaction that the company successfully conducted C-check on one of their aircraft, which has been operating successfully since January and it is also conducting checks for all other domestic carriers.

The members were also impressed by the experience and commitment of Nigerian engineers working for the airline and they became elated when the Receiver Manager of the airline, Mr. AdeniyiAdegbonmire told them that Aero did not borrow money from banks or elsewhere to build the maintenance facility; rather, it generated money internally to fund the project. He also pledged that after his tenure in 2019 he would give comprehensive accounts of the finances and other activities that have taken place under his tenure.

AMCON had earlier stated that it set out its objective on how to revive Aero Contractors, noting that it has no expertise in airline management or in aviation, so it has to scout for experts who would effectively manage the airline.

The local content policy, if adopted will save Nigeria huge amount of money in forex, but Nigerian must build the needed capacity first for this to happen.