The continued depreciation of the Nigerian naira against major currencies, particularly the dollar, is having a significant impact on the nation’s airlines. George Uriesi, the Chief Operating Officer (COO) of Ibom Air, highlighted this issue at the AviaCargo Chinet Conference. He expressed concerns over the high insurance premiums faced by airlines due to the fluctuating exchange rates and emphasized the urgent need for government intervention to address the situation.
Uriesi noted that the increasing insurance costs are challenging for airlines as aircraft and equipment must be adequately insured before being put into service. He warned that this predicament could potentially lead to the collapse of some carriers if not addressed promptly.
He cited the difficulties airlines face in accessing dollars through the Central Bank of Nigeria (CBN) and explained how the currency instability is impacting their operations. Uriesi mentioned instances of procuring dollars above the official CBN rate and the delays and uncertainties in obtaining foreign exchange for insurance payments.
Uriesi’s concerns echo those of others in the aviation industry, as the instability of the naira and the challenges in accessing foreign exchange are affecting various aspects of airline operations. The economic impact extends beyond insurance costs to procurement, maintenance, and overall financial viability.
The Nigerian Civil Aviation Authority (NCAA) recently issued a warning to airlines and aviation service providers, emphasizing the importance of complying with regulations related to insurance coverage for equipment. Non-compliance could lead to sanctions, including grounding specific aircraft and enforcement actions against defaulting entities.
The situation underscores the need for comprehensive measures to stabilize the country’s currency and create a conducive environment for businesses, particularly those in critical sectors like aviation, to operate smoothly and sustainably.
