Nigeria to halt N360bn capital flight in aviation sector

Nigeria to halt N360bn capital flight in aviation sector

A new internationally licensed Maintenance Repair and Overhaul (MRO) that will end over N360 billion capital flight has been launched in Nigeria. The facility known as 7 Star Global Hangar, owned and managed by Nigerians, according to the promoters, when fully established and with the investments on ground, will attract the said sum into the country annually. The investors said apart from saving the said amount which would have been lost to Europe and America, due to capital flight, since domestic airlines in the country fly their aircraft abroad for all kind of maintenance, the company stated that it would also employ thousands of aircraft engineers and technicians aside other support staff.

Chief executive officer of 7 Star, Mr. Isaac Balami who disclosed the company’s plans in a chat with our recently, stated that 7 Star MRO facility would help to curb capital flight in that area of operations, adding that the firm already has clients from the industry. Lamenting the high cost or aircraft maintenance on the part of domestic airline operators, Engr. Balami noted that, about 80 per cent of the aircraft that operates in Nigeria today are the classic and new generation Boeing aircraft. Assuring that they will start operations by the end of this month till next month, Balami said “The cost of each check depends on the age of the aircraft. This is because age comes with so many things like life limiting components.

The need for landing gear overhaul, the need for engine overhaul and what have you. “With age, it comes between one million to two million US dollars, depending on the age of the aircraft. In other words, if you have a new generation aircraft, what you will be looking at based on the inspection might not be much, compared to a traffic aircraft. It is quite expensive. We are talking about one to two million US Dollars depending on what you are doing on the aircraft”, he said. Balami who was the former President of National Association of Aircraft Pilots and Engineers (NAAPE) informed that last year August, the federal government through the Nigerian Civil Aviation Authority (NCAA) issued them the Approved Maintenance Organisation (AMO) certificate. Recounting the hurdle the company passed through before NCAA certification, he said”. We got the AMO certificate and it took us about 5 years to get it.

The process was rigorous because NCAA has to pass us through phase 1 to phase 5 and it took months and years but through the help of God we were to get that done. “Phase 1 and phase 2 involves documentation. In phase 3, you now have to review your aircraft manuals and maintenance procedure manuals. And at phase 4, NCAA has to come to your owned or leased hanger physically. Then, they want to see if the hanger has what it takes in terms of 24-hour operation, safety equipment, markings and signs in the hanger. “They will also check the right tools and equipment. Does the AMO we are requesting has qualified personnel in terms of certified aircraft engineers.

What kind of aircraft do we actually want to maintain. Do we have people trained in that area? “We went through all that and I am proud to say that in the whole of Africa, we are the first currently existing independent aircraft maintenance repair overhaul facility. We have hangers and MRO or AMO in Egypt, Ethiopia, Kenya, Morocco and SA but we don’t have any in the entire West Africa that is independent. In these countries I just mentioned, the facilities are state owed and they belong to the government”, he said.

He said what makes 7 Star unique is that it is purely independent and privately driven, such that, it can attend to their clients at all times, stressing that other MROs which are not independent prefer to focus and finish their own aircraft maintenance before attending to clients. “We have one or two MROs or AMO around but you know, they are tied to an airline. If it is tied to an airline, what that means is that if you take your aircraft to them, and their own is bad, they will not take your own to the hanger. They will prefer to focus and finish their own first. You can get service if they don’t have maintenance on their own aircraft. But in our own case, it is purely business and independent” Balami added. Emphasising that 7 Star focus purely on maintenance and technical issues, Balami revealed that the firm is hoping to bid based on what the present government of Nigeria is doing through the minister of Aviation to set up an MRO for the upcoming national carrier and national leasing company.

According to him, being an independent MRO which is one of the number one requirements as stated in the notice, 7 Star believes they are in the position to actually apply for that. “We also have our financiers from Canada and we are going to be putting about 200 million US dollars. We also have local companies that are into infrastructure development in terms of real estate or construction firms. We have them on ground because these are things that you must have before you apply for the national MRO”, he stated. Speaking further, he pointed out that 7 Star now has hangers in Lagos and Abuja. While the one is as a result of takeover of the Nigeria Air Force (NAF) 205 rotary wing hanger through leasing, the Abuja facility is also the Sky Jet hanger which was equally leased. According to Balami, one does not really have to build a hanger from the scratch, but operators of hangers can actually start by leasing, once they have a contract with the owner of the hanger, equipment, personnel and all the certifications.

Expression satisfaction for the journey so far, the CEO said that “the good thing now is that even if we start it and our two hangers in Lagos and Abuja are occupied, we still can’t even take care of up to half of the domestic airlines. “However, the good thing is that we have started; we have been into more partnership and technology transfers with NAF and other stakeholders. If you look at other airports in other parts of the world, they actually support domestic airline operations because they have land in the airport, space, hangers and other facilities. So you just focus on tooling, certifications and getting all the endorsements required”.

Meanwhile, MRO market has fluctuated in recent years with the recent economic challenges and downturn in demand reflected in trends of falling revenue for a number of leading MRO companies. More recently, the aviation industry has indicated signs of recovery with considerable growing demand forecast over the next decade in certain regions. In Africa for instance, MRO Market has been estimated to worth over US$2.4 billion and it is still growing on daily bases. Unfortunately, this goldmine has remained untapped over the years in most parts of Africa.

Currently African airlines MRO providers include: Air Algerie Technics, EgyptAir Maintenance & Engineering, Ethiopian Airlines MRO, Kenya Airways, Royal Air Maroc, Morocco, South African Airways Technical and TunisAir Technics. Nigeria on its own part is making efforts to join the league of these providers following a recent breakthrough through diversification into aircraft maintainace with the establishment of a maitainance, repair and overhaul (MRO) facility by the oldest domestic carrier, Aero Contractors. So far, the airline has carried out the first C-Check on Boeing BB737 Classic in Nigeria after almost two decades that Nigeria Airways attempted such feat.   Speaking at a recent industry forum, chief executive officer of African Aviation Services Limited, Mr. Nick Fadugba said that, to achieve success in MRO business in Nigeria, for example, there should be a sound business plan & competent management to drive the process.

According to Fadugba, access to low interest rate funding, access to cheaper land from the Federal Airports Authority (FAAN), investment in modern hangar, tooling and manpower and partnerships with established international MROs such as airframes, engines and components must be avaiable.   Speaking on his paper titled ‘MRO Financing‘, Fadugba said one of the benefits of African MROs is that it would spark off competition for foreign providers leading to more competitive pricing for African operators. He said such situation would also enhance time effect, create jobs and training for the local population while making substantial contribution to the local economy.

Enumerating African MRO barriers, Fadugba who stated that global competition cause barriers to entry for African MROs listed other challenges as access to capital, tooling and lack of proper infrastructure, bureaucratic interference, sourcing, attracting, training and retaining a skilled workforce, reputation for performance and tolerance for risk.   Lamenting that there is n no major MRO facility in West Africa s at today, Fadugba noted that the Nigeria’s National Hanger Project is still on the drawing board after many years of discussions while Arik Air and Lufthansa Technik did not have an MRO Partnership.   Although, the aviation expert confirmed that Aero has in-house MRO capabilities which he said, could be expanded, he is equally worried if the facility has the necessary funds vis-à-vis its core business. culled from leadership.ng

Leave a Reply

Your email address will not be published. Required fields are marked *