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Nigeria Aviation Soars

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Old 2nd Jan 2008, 09:42
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Wink Nigeria Aviation Soars

Lately, working partners of the aviation sector such as banking, insurance and multilateral development institutions have been showing more than a passing interest in the industry. Hitherto, the aviation business was regarded as a high risk, with uncertainties on investment returns. Bureaucratic and administrative bottlenecks, caused mainly by crippling influence from government officials, and a lack of autonomy for the Nigerian Civil Aviation Authority, NCAA, deterred local and international investors.

Since the NCAA gained its autonomy last year, there has, however, been a gradual reversal of the trend with investors indicating positive interest in the sector. In this direction, a major threshold was crossed in the first week of last month when the CIT Aerospace Company hosted the NCAA in Dublin, Ireland, in a forum that marked an endorsement of the Nigerian aviation industry as being worthy of the highest levels of investments in aircraft and equipment. In tune with convention requirements of the International Civil Aviation Organisation, ICAO, the NCAA has registered with the Mobile Asset Registry in Dublin. The process conformed with a requirement of the Cape Town Convention put in place to protect operators and the leasors of aircraft. In short, it basically protects aviation investments.

In Nigeria, the Convention on International Interest in Mobile Equipment, otherwise known as the Cape Town Convention, is embedded in the Civil Aviation Act 2006 passed into law by the National Assembly in compliance with section 12 of the Nigerian constitution.

With the NCAA registration at the Mobile Asset Registry, financial institutions, aviation analysts posit, are assured of protection of their interests, while airlines can cash in on the advantage by investing in modern, safe and efficient equipment on affordable terms. As things stand, the Nigerian Civil Aviation Regulations, NCARs, empowers the NCAA Director-General to take effective action to help creditors when lessees default. According to an NCAA official, “if an investor comes into Nigeria in partnership with any operator either in way of investing or bringing in an aircraft, the investment is protected since the legal intricacies that block recall or withdraw of an aircraft have been removed.”

If an aircraft is leased out and there’s a default, the NCAA will de-register it accordingly, upon notice without the need for the investor to seek legal redress or be subjected to complicated legal intricacies that could cause delay in obtaining permission to move out the plane. The step is most important to investors which are predominantly foreign-based companies, the foremost being the CIT group which is a leading aircraft financing company in Europe involved mainly in buying and leasing aircraft to companies all over the world. CIT, which has transacted business across all continents except Africa, has always been cautious of utmost protection of its interests and investments, which it could not, until now, guarantee in Nigeria and Africa as a whole.

Globally, with the deregulation of the civil aviation industry, there has been a growth in renting or ‘leasing’ of aircraft by airlines from other companies. Between 1999 and 2005, for example, the number of international scheduled airlines which used leased aircraft grew by 20 per cent. In 2001, about than eight out of every 10 of the 532 international scheduled airlines worldwide used leased aircraft while over 45 per cent of all transport category aircraft currently in service with scheduled airlines are leased. The growth of aircraft leasing is considered beneficial to the aviation industry in some respects as it encourages the establishment and development of new and independent carriers.

With the new development, the stage appears set for the encouragement of fleet replacement of old aircraft with modern, new generation models. The enabling environment is already attracting aircraft manufacturers, leasors and banks, which are taking advantage of the Cape Town Convention using aircraft assets as collateral. Hopes are rising that the Nigerian aviation vision of working with international leasing companies and local banks to introduce affordable aircraft leasing schemes for local and regional airlines will turn to reality. The development is expected to create an enabling environment that will encourage the establishment of safer and more profitable low-cost airlines and attracting new customers, while affording the public the opportunity to travel by air in larger numbers.

Now that a financier’s risks have been reduced by the creation of a uniform international rule for the recognition, registration, assignment and enforcement of security in the event of default, Nigerian airlines can, more than ever before, tap into the perks that were, hitherto, beyond their reach. One of such advantages is America’s EXIM bank’s offer of a 1/3 reduction in the exposure fee it charges airlines in countries where the Convention and Protocol have come into force provided that the appropriate declaration required to be made by the country of origin of such airlines is made.

Fortunately, the bank is no stranger in the Nigerian aviation terrain and is, indeed, credited with having a bias for the sector. It is believed to be a major back-up or source for Arik Airlines and is believed to have a relationship with other Airlines. The Nigerian aviation industry has, therefore, already been witnessing a season of delivery of brand new aircraft, anchored on the Cape Town Convention as sealed up conclusively by the Dublin, Ireland, Mobile Equipment registration.

The NCAA beats its chest that Nigeria has demonstrated a readiness to fully join the fleet renewal club. This enthusiasm is based on its records that apart from Arik that has taken possession of new aircrafts, others like Chanchangi, Bellview, Aero Contractor and Virgin Nigeria are also in the process of following suit. It revealed that on the domestic routes, local operators now operate new Dash 8 Q200, the B737 300, 400 and 700 series and the CRJ200 and CRJ900 models. On the international routes can be found new Boeing 767 (until recently). The authority confirmed that in April 2007, a brand new Boeing 737-700 and a 2 CRJ 200 were delivered. Before the year ends, more are expected. A Nigerian operator has also signed up three Boeing 777 and four Boeing 787 Dreamliners. These are in addition to numerous brand new helicopters and business jets.

The CIT group, in pursuit of its awakened business interest in Nigerian aviation, has agreed to join forces with the NCAA to organise an administrative forum that will bring together banks and insurance companies to throw light on benefits waiting to be tapped in the aviation business.

Notably, the ‘high risk’ status of Nigerian skies informed the high premium paid on aircraft. While what obtains in Europe is put at less than one per cent, the unofficial figure is up to16 per cent, although Dr. Harold Demuren, the NCAA Director-General, put the figure at 12 per cent on the haul, paid by Nigerian airlines. The DG had earlier embarked on negotiations with Lloyds of London on how to reduce the insurance premium.

Due to their low capitalisation levels, Nigerian banks and insurance companies have always played the role of mere brokers to their much stronger foreign counterparts. In spite of recapitalisation, banking sector sources were quick to admit that Nigerian banks are still unable to provide the funding required by aviation in Nigeria, because the sector is extremely capital intensive. On the brighter side, however, because of the recapitalisation of the banking industry, it has become more attractive even to foreign banks. Therefore, an increased number of foreign banks and financial institutions is now eager to do business with Nigerians through the recapitalised banks. Collaborations are, therefore, being structured out based on a new-found confidence in the industry towards attracting more direct foreign capital.

Commenting on the role of banks and financial institutions in the aviation industry at an Allied Business Leadership Conference held in Dakar, the Group Head, Aviation and Telecommunications at First Bank Nigeria plc, Mr. Babatunde Dada, posited that financial institutions have vital roles to play in assisting airlines to tackle their financial challenges. In his view, financial institutions could play the role of providing credit facilities for outright equipment purchase and leasing while also acting as “risk transferors” in structured deals for operators. “Given that financial institutions in many African countries already have more developed structures in place than many other sectors, they can also be investors in the industry, as they are relatively more developed and can, therefore, ensure best practices, afford competent management and structure financial statements better to afford optimal returns,” he said. Financial institutions, Dada pointed out, are also in a position to provide financial advisory services, mergers & acquisitions and balance sheet structuring for airlines and are now more empowered to access foreign financing.

Airlines, on their part, were advised to increase their capacity by increasing their safety and security levels in a bid to giving confidence to prospective investors. It is believed that once there is confidence in the aviation industry, banks will ultimately rush in uninvited.

Generally, regarding the future of African aviation, Boeing forecasts that African airlines will require a total of 425 new planes before 2004 and 2024, to cater for traffic growth and replacement of older aircraft. Boeing puts the value of these 425 new aircraft at $34 billion while Airbus envisages that African airlines will require about 641 new aircraft between 2004 and 2023 to cater for traffic growth and older aircraft replacement. Airbus places the value of the 641 new aircraft at $60 billion. On the Nigerian scene, with varying substantial investments sunk into the realisation of the Murtala Muhammed Airport 2 terminal by Oceanic Bank, First Bank, Zenith Bank, BankPHB, UBA and Union Bank and with aviation desks emerging in various financial institutions to boot, the ground is already being laid for higher heights in aviation investments. If the momentum is sustained and there is no political instability or policy reversal to cause drawback, industry experts asserted, it is only a matter of time before the Nigerian aviation industry soars high into brighter skies.
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Old 2nd Jan 2008, 10:17
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Whoops !!!! following from the DAS Air thread on freight dogs forum subject their recent takeover by a Nigerian operator :

well by all accounts its still a shambles..so much for the rescue plan none of the staff have yet been paid since the new company took over back in november as i understand, and they are no further forward than from day one, sounds like another failed african take-over, did the administrators really see the true future past the amazing big bucks deal ,as they thought oh good another company off our books, or was it a case of please tie up your dog sir as you enter the building and allow me to help you sign on the dotted line and by the way what time is your flight back to lagos mr wonder if we're lucky you can still make the midday flight !!!!!!
Some things never change.

Happy and safe new year to aviation in Africa
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Old 2nd Jan 2008, 10:32
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2006 and 2007 have been 2 good years in our industry here in Nigeria, its been 2yrs of tremendous growth in all the sectors of aviation, there were times when I felt that there was too much happening in a short period.

Alas here we are 2008 new airline operators abound with loads of fine new aeroplanes, and surprisingly a lot of young lads at the controls all well trained and full of zeal .

A new airport facility opened and looking better than I anticipated, with its mothership going through major rehabilitation, lets not forget the tower, had the privilege of going up one saturday morning and was dazed at the sophistication of the new equipment then undergoing installation.

And the loads of new foreign airlines fighting for parking gates in Lagos nawadays, evenings could be so much fun if your flying in lagos and want to catch a glimps of international operators.

And the long taxy lines these days 9, 7, 12, aeroplanes lined up on the taxy way for departure looking up at another line of arrivals

Well I am comfortable now with the pace and I am not worried anymore, there have been set backs with some of the areas mentioned above but we will get through it and soar even higher

I score the Nigerian Aviation sector very high this past 2yrs, I am still in disbelief at how well we have done and how far we have gone in such a short period its incredible.

And I believe come 2010 this country's aviation industry is going to be a force to reckon with in this part of Africa and the world at large.

The Nigerian traveller, who is reckoned to be one of the highest and well travelled individual have also supported our indigenous operators considerably in recent years and I hope these operators will improve on their services and return the favor to them, ( I have shuttled between Europe and Nigeria during these past few months and must give a lot of Kudos to Bellview 767 and VirginNigeria 767 fellas a big hand, thanks guys .) those years of exploitation by foreign airlines is coming to an end, Thank God.

I support all the good things coming our way in the Nigerian Aviation Industry and ask all our pilots out there to keep up the good work and fly the flag of progress this year.

Well Done and yes welcome to 2008
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Old 2nd Jan 2008, 10:47
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Thumbs up Some Things Do Change

Just take a look at the numbers of executive jets operating in the country Zazoo and the chopper operations also, its wicked man

Funny u brought this up, couple of the fellas just talking about the same thing here at the hotel.

Exciting eh

B
PS: undiemole sorry about Das Air Cargo, heartfelt sympathy goes out to them, you know during times like this there are some who just dont make it through. But things might just change for the better, fingers crossed!
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Old 2nd Jan 2008, 14:57
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What's up with fixed wing ops in BHL? Heard notice has been given?
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Old 3rd Jan 2008, 17:16
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Zazoo I love your enthusiasm.
Balewa yours too.
Good luck to you guys,and African aviation in general.
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Old 4th Jan 2008, 10:23
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Metro man read Zazoos article and eat your heart out
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Old 4th Jan 2008, 11:43
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sorry guys,i personally do not see any improvements.
A fleet of brand new equipment is not change,even with the old previous equipment,if regulation,training and monitoring was effective,the horrible crashes in recent times may not have occured.
Its not just about brand new,its about the expertise as well.few posers
1.do you know of anyone at the NCAA thats type qualified on any of the 5N aircraft
2.are airlines not encouraging thier pilots to bust duty times and getting away with it
3.what infrastucture has improved?
is it atc radios?
is it radar covergae?
is it DNMM international congestion and failing conveyor belts,traffic congestion,and lack of adequate parking
what difference in DNPO apart from a new runway with no lights
is 18R in lagos degresed from its slippery state
have you been a connecting passenger in lagos and seen the horror,of carrying suit cases up four fleet of stairs,or better still having to take a taxi from one terminal to another because the word "transfer/connection"is non existent
4,has NAHCO/SACHOL not damaged an aircraft in recent times
5.how many bird strikes have you had in recent times?
6.how long does it take to process your licence at NCAA
7.how many times do you not need a relay from DNAA TO DNIM from 127.3
8.how many times do you fly at FL140 from DNIM to almost BEN b/4 you get contact with LAGOS control
9.how many times have you forgotten your pen knife in your bag and worked through screening machines for months on end b/4 its discovered
10.how many avio bridges work
11.is it the adequate number of buses to shuttle pax b/w airside and aircarft or the daily sight of pax struggling for space with tow trucks fuel bowsers airplanes and baggage trucks on the tarmac
12.what would happen to the tarmac of fanciful MMA2 should you park a fully loaded 747 there,methinks the airplane will sink
should i go on........the list is endless
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Old 4th Jan 2008, 13:26
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18L my thoughts too. A miracle is needed to put things right in my beloved country.
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Old 4th Jan 2008, 20:10
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Hey Zazoo, check your pm.

Regards
DMan
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Old 5th Jan 2008, 02:23
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Metro man read Zazoos article and eat your heart out
I'm going to resign from my job and and go to Nigeria ASAP

BTW hotmj43 I'm looking for a pilot for a VVIP BBJ. We are offering free type rating US$20 000/month tax free. Free acommodation in a luxury villa with servants, car and driver at your disposal 24/7. On duty hotel is minimum five star, usually you get a suite. All duty travel is confirmed first class. Month on, month off first class tickets anywhere you like.

Please send me copies of your licence and passport along with US$2500 for verification and security checks and I will get back to you.
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Old 5th Jan 2008, 07:19
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Cool

Metro man,

You can have my CV, but no USD 2500. And I settle for business travel instead of First Class. Only to show the right attitude

HavingSaidThat, it is difficult to join the excitement of some people on this thread after reading 18L`s post yesterday. But if we all base our arguments and comments on what has been, and look at the improvements that have surfaced lately........we should be able to see a positive trend. No?
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Old 5th Jan 2008, 09:18
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I agree there have been many improvements in Nigerian aviation. I now fly an aircraft modern aircraft, when i got my Nigerian CPL the inthing was Boeing 737-200 Advanced (advanced my @$$). Not too long ago we were all hustling to fly junk. Anybody remember 30 pilots at the associated interview or 50 pilots at the sosoliso interview? My problem is that the infrastructure hasn't changed much. 18left has pointed a few obvious problems. Anybody landing landed on maiduguri's "new" runway recently? many a times we have to brief for ILS and VOR when shooting the ILS cos its nut unusual to lose either LOC or GS or both (due to NEPA?). If you read the newspapers you'll get the impression that radar coverage covers 90% of the coverage. In the last 3 years the only improvement is that the radars in lagos and abuja stay on longer. As regards NCAA, its the same old guys and you can't teach old dogs new tricks. I don't expect too much fom them. I do see improvement sin FAAN with the appointment of the new MD, sharp guy. I think the NAMA DG might have had his progress hampered by the former minister, i hope he'll be able to get more done in the new administration.
Does anybody know what happened to the N19 billion released after the sosoliso crash?
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Old 5th Jan 2008, 10:14
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Good Luck Metro Man,i hope you get offers,replicated from your cast, called 4
and ends with a 9
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Old 5th Jan 2008, 10:20
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I wish some contributors to this thread will try and focus their minds for improvement,instead of the negatives of the past....which appear to fill them with glory as far as Nigerian Aviation is concerned.
Well whether they like it or not, it is happening......be it at a pace,that some might consider, snail pace or not coordinated.
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Old 5th Jan 2008, 10:32
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Nomatter how you look at it, Nigerian aviation is improving.

Where was LOS Rwy 18R and 18L two years ago?

How dramatically has the mobile tower project improved the situation?

How did the domestic terminal look prior to 2007?

etc. etc.
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Old 5th Jan 2008, 11:43
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Capt. Manuvar, could not agree more. I definitely remember that associated interview, it brings back memories of time when things were pretty bad in Nigerian aviation. Things are improving, but alot more has to be done, starting with radio discipline, better communications equipment especially around Lagos and better weather reporting. Nice to see you back Capt. Manuvar, you have to take it easy with the flying though, nah small small, Rome wasnt built in a day

AP
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Old 5th Jan 2008, 12:11
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AP,
Long time buddy. Don't worry about me, i'm busy but legal (barely legal). anyway i'll give u a buzz.
I would like to see radar coverage around the PHC/ Benin area very soon. has anyone heard anything about the CAT3 ILS that were supposed to have been operational in Lagos, Abuja and Kano?
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Old 5th Jan 2008, 17:33
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Its the place to be

Count me in on the enthusiasm fellas, I think aviation in africa is going to set new trends - Nigeria will play a big part just as will Kenya.

Cue the influx of young professionals in 2008, fingers crossed ill be one of them. The bar is raising, and i'm definitely on board.

Metro man - why the sour attitude?
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Old 5th Jan 2008, 18:13
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I was going to join in the discussion and agree that things have changed, however going through the list from 18L. Theres a lot that needs to be done.
The problem I have is that we should be furtther down the roan that we, considering the amount of money that has entered the industry from both the govt and private sources.

I must say however, I have not heard much from the new avation minister.
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