Airlines in ‘Mayday’ situation, need urgent FG attention, says Aero MD

BY Sade Williams/Business a.m

Abdullahi Mahmood, the managing director of Aero Contractors, says the airline is not in any way going under but he wants the government to urgently address the numerous challenges facing the sector in the country.

Speaking with Business a.m. affiliate publication, The Travel Port, at the Lagos airport weekend, Mahmood said the issues beleaguering the sector have taken a toll on all airlines, adding that the sector is now in a ‘Mayday’ situation that must be addressed immediately.

Mahmood, who decried the persistent aviation fuel crisis, said the airlines are groaning under sundry issues such as forex, maintenance cost, among others, insisting that there is need for the government to intervene.

“There was an interview I granted to a major newspaper and I was asked about the situation of the sector and position of the company and I said the situation in the sector and our position is not peculiar to Aero Contractors, the fuel situation, exchange rate, our maintenance cost that have gone up. It’s what is really happening in the aviation sector today.

“But because I am the CEO of Aero Contractors and he asked me directly I can only speak for Aero Contractors and these are the happenings in the aviation sector today. But unfortunately, the headline does not portray the content of the interview, so the headline says Aero Contractors is going under, Aero Contractors is not going under, it’s not in any way going under, we did not talk about Aero Contractors going down, we just talked about the challenges facing the aviation industry and Aero is part of that industry, and effort we are making to come out of it. But the headline was wrong, it’s unfortunate, it meant well but the headline came out wrong.

“Aero Contractors is not going under. We are making efforts and I am encouraging each and everyone to focus on our plans and strategies. I have discussed with the unions and staff of Aero Contractors and I have given them assurances that we really have to come together and get this airline out of this challenging situation.

“The challenging situation is that passengers are not travelling, the revenue is not coming in as before, the prices have gone up. If you look at the unit price per seat, we are flying at less than $100 per seat while the fuel price as of today is almost about $1.3 or $1.5 per litre which is not sustainable, but we are doing everything possible to get out of the woods.”

While further decrying the situation, he said aviation fuel is now about 60 to 65 percent component of a flight ticket as against 30 to 35 percent which it used to be.

“A litre of aviation fuel as of today is N600 per litre in Lagos, in Abuja it is N650, in Kano it is N680 and in Maiduguri it is about N700 per litre and new prices started yesterday [Thursday]. That is what we are facing right now. It is a big monster.

“We had several meetings with people from the National Assembly, NNPC, downstream and to the regulatory agency and at one point, they gave subvention or subsidy and it was N500 per litre just to cushion the effect, it was just for two weeks. There was a promise that they could give the licence but the process of importing the fuel to the airline is a long one. But we are in an emergency situation, this is a May Day call, this is what airlines call May Day, and when somebody calls May Day, it’s a red flag, we are in a May Day situation right now, something has to be done really fast. We have been crying that if something is not done the airlines may not be able to continue, if we continue with the prices because what the airlines are avoiding is not about profit, but all these things will be pushed down to the travelling public, if you increase the fuel price, ticket price will change.

“As of today, ticket price is less than $100 per seat while fuel per litre is over $1, it is not sustainable, it is the fact. If you do the unit cost with this price right now, no ticket will be less than N95,000 and it’s not that the airline is carrying 100 percent load factor, the load factor may be between 60 to 65 percent so if you carry that load factor, remove the fuel, the major component is fuel, under normal circumstance, the fuel component is 35-40 percent but the fuel component is as of today, fuel has gone to about 60 to 65 percent component of the ticket so you are left with 35 percent to take care of landing, parking, maintenance and other charges, how is this sustainable. These are facts and numbers and this is where we are today,” he added.

Mahmood, who disclosed that the airlines had had several discussions with the government about the issues where promises were made, noted that aviation fuel is not being subsidised, but deregulated.

“So, everybody has his own price but I think the government should come in because aviation is the economic drive of the nation and with the security situation in the country today, we cannot afford that the aviation sector goes down. It is going to have a big negative impact on the economy. I think the government needs to do something as quickly as possible to save this industry. You can see the fuel prices as of yesterday, it’s really going up, it’s not sustainable, the government needs to act very fast,” he said.