Why airline businesses fail in Nigeria – AMCON chief

Ahmed Kuru, Managing Director, Asset Management Corporation of Nigeria (AMCON)
Ahmed Kuru, Managing Director, Asset Management Corporation of Nigeria (AMCON) [Photo: Tadall]

The Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), Ahmed Kuru, says airline business in Nigeria requires stiffer aviation industry regulations to succeed.

Mr Kuru attributed the short lifespan of airlines in the country to poor corporate governance in the management of the airlines.

The AMCON boss who was the guest speaker at the 3rd Nigeria TravelsMart Colloquium in Lagos by the Nigeria Travel Market (NTM) highlighted the major challenges airlines and airports face in attempt to achieve growth and stability.

He blamed the incessant collapse of airline businesses in Nigeria on lack of good corporate governance and inadequate regulatory oversight in the management of aviation business in the country.

He also called on the federal government to concession airports across the country, a move that has been rejected by aviation workers in the past.

“It is high time government, the regulatory agencies and practitioners realised the important role of aviation in the development of a nation,” he noted.

“Critically, it is a source of quality employment. For these reasons, it is a strategic sector deserving of a careful plot to greatness if Nigeria is to occupy its rightful place in the comity of nations.”

The AMCON chief spoke on the theme: “Corporate Governance and Airline Industry development in Nigeria.”

He said the aviation regulatory bodies like the Nigeria Civil Aviation Authority (NCAA) must develop the courage to insist that corporate governance is strictly adhered to by all operators.

The industry, he noted, was riddled with several airline businesses that have failed due to lack of good corporate governance, with most board of directors represented by family relations such as father, mother, son who have no competence to manage a business as fragile and sensitive as aviation.

Other challenges include lavish lifestyle of airline owners, who he noted take precedence over payments of pilots and engineers; as well asairline owners and staff becoming contractors for services thereby compromising standards.

He also said chairpersons of the airlines take decisions to buy aircraft running into several billions of naira without due diligence.

Mr Kuru said the trend was that in such airlines without structure, staff loyalty will only be to the owner, not to the company.

“Once the airline operates this sort of structure, vendors will naturally withdraw all forms of business support and the airlines tether to the point of failure,” he said.

He called on the NCAA to step up it regulatory functions like was being done in the banking sector.

The aviation industry, he noted, was as important and requires even more regulation than as the health and banking industry, because it deals with the lives of travelers.

“It is only in Nigeria that an airline can abandon you at the airport for more than five hours without any recourse. Indeed, there are consequences for frequent cancellations. However I cannot recall any airline punished in the recent past,” Mr Kuru said.


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