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Aviation Expert Lists Reasons Airlines Fail

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Aviation Minister Stella_Oduah Aviation Minister Stella_Oduah

Poor business model, absence of proper planning and lack of financial discipline are among the factors responsible for the frequent collapse of Nigerian airlines, an aviation

expert, who has 40 years experience, Mr. Fola Akinkuotun, has said.
Statistics have shown that an average life span of Nigerian airlines is  eight years, which is lower than  that of  airlines operating in other parts  of Africa and the world.

But Akinkuotun, who was  a former  Head of flight operations, Air Nigeria and currently the Rector of the International Aviation College, Ilorin,Kwara State, told THISDAY  that Nigerian airlines  lack properly articulated business plan and  are unable to   wait for a long time to  make profit, hence  many of them often  collapse.

Besides the Nigeria Airways Limited, which was liquidated by the Federal Government in 2003, there have been many airlines that started  but collapsed after a short  period of operations. The airlines include: Bellview, EAS Airlines, Afrijet, ADC, Sosoliso, Okada Air .
Explaining the reasons for the collapse of some of these airlines, Akinkuotun said: “My immediate outlook is that for you to succeed in the business you must  have a model. You  must  properly articulated business plans. Then you have to ask yourself, do I understand this business? I think that some of the reasons we have not been successful in running airlines are because we have notx done proper planning. We do not know the business and our business models may not be right. And what I consider key is that we do not have fiscal or financial discipline.”

He noted that entrepreneurs who go into the airline business are usually impatient to recoup their investment and make profits, stressing that for an investor to make profit in the business he has to wait for a long time and also should not see the huge cash inflow as robust financial situation for the airline.

“The airline industry is not that of immediate profit, but it is a cash cow. This is a business where the last airline I worked for was making N3 billion every month. But how much of the N3 billion is profit? Extremely little,  if any. So if we understand that the money is not ours to take, then we should understand that there should be financial discipline. Yes, a great level of discipline and creditability,” he said.

The rector added that  that the problems sometimes, also,  is that when a Nigerian airline leases an airplane the airline management does not recognise the fact that money would be expended on fuel, spares and these are bought on credit and for spares, in foreign exchange, and therefore does not earmark funds to offset these debts.

“So when the requests for the payment of these debts come, the airline may not be financially disposed to offset the debts and that begins its collapse,” he said.
Akinkuotun said airline owners get the wrong perception that the airline is making profit just because it is making cash from selling tickets.

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