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Nigerian governors — known for their romance with luxury, typified by expensive local and foreign trips on private jets — may finally be cutting their coat according to their cloth.
Since the inauguration of the President Muhammadu Buhari administration in May 2015, the jet charter business has dipped to an all-time low in Nigeria, industry insiders have told TheCable.
“Before and during the election in March, I would say the charter business hit its peak, but since Buhari was sworn in, there has been a marked low frequency,” the chief executive of one of the operators, who asked not to be named, said.
The first factor held responsible for the change in travel habit is Buhari’s “body language” — a euphemism for the spartan lifestyle and the anti-corruption posture of the president who, many believe, will soon unleash the anti-graft agencies on public officers. Maintaining a low-key lifestyle is a strategy to divert the searchlight elsewhere.
Clearly, since the governors reduced their patronage, our business has been seriously hit. That is the major cause of the lull. Without the governors, our business cannot boom,” he said, but did volunteer information on the value of business lost so far.
A second factor, another industry operator told TheCable, is the huge debts states are owing.
“I don’t know of any governor who would want to be caught flying in chartered jets by his banker. Even if the banker does not say anything to his face, you will see the story in the media the following day of how the governor of a debtor state is still flying jets around,” he said.
This is linked to another factor — the issue of unpaid salaries in many states, some running into eight months. The fear of incurring the wrath of unpaid workers has effectively blackmailed many governors into maintaining a low profile in their travels, although dwindling oil revenue and heavy election spending contributed largely to the debt overhang.
The lack of business has also affected patronage at a dozen air strips in the country. The only ones that are discernibly busy are the airstrips at Osubi operated by Shell, Bebi near Obudu Cattle Ranch and the one at Ajaokuta.
A favourite luxury of Nigerian politicians
Not all bad news
While political office holders and public servants have reduced their patronage of charter business, those in the private sector are still keeping it afloat, even if at a far reduced level.
“Those who used to patronise charter services from the business sector still do, at least to visit their branches at different parts of the country. But the major clients who are political office holders and other highly placed public servants have gone back to their shells,” an operator said, adding cheekily: “We no longer help fly their girlfriends around as we used to.”
It is also expected that as soon as the Nigerian National Petroleum Corporation (NNPC) finishes its current review, activities will pick up. The oil industry is the biggest customer after government.
“Because of the present status of NNPC, things are also slow. We are confident things will pick up, even if not as they used to be,” he added.
“Don’t forget that much is also not happening at Aso Rock. Everybody is operating at low key. There are no ministers and no contracts being awarded. We expect a change in fortune when ministers come on board.”
Necessity, the mother of invention, may save the charter business in the short run.
The lull has given rise to innovation, another charter service provider told TheCable, revealing that his company is considering ordering smaller propeller planes (turboprops) that will cost N500,000 for one hour service.
“We are also considering going into courier and cargo service because movement of cargo and parcels by land is cumbersome and unreliable,” he said.
The charter business
Charter operators charge $6,500 per hour for Hawker aircraft type and $8,000 for Challenger aircraft, and charges are usually calculated in “block time” which is not based on “flight time”: an aircraft could wait for long at the holding point on the runway while the client is conducting his or her business.
“Block time” means from the engine start to engine shut-down. For example, if a client charters an aircraft for a Lagos-Abuja-Lagos trip, he will pay $6,500 for a Hawker. When the aircraft lands in Abuja, it will wait for him. The first three hours are usually free but from the fourth hour, every hour is charged $2,500 or more.
Out of 146 private jets operating in Nigeria, 80 per cent are used for charter services. About 40 operate legal charter services — they are registered for that with the Nigerian Civil Aviation Authority (NCAA). However, about 100 have foreign registration and NCAA recognises them as privately owned but most of them are illegally into charter.
The future of charter business is not that bright, though. The luxury tax about to be introduced by the federal government “would definitely kill some operators because charter operation is generally very expensive and many of us cannot survive the taxes”, an operator said.
The Nigerian Airspace Management Authority (NAMA) had, in October 2013, introduced a luxury tax of about $3,000 for every departure of a private jet. It was initially suspended by the senate, but there are hints that it may be re-introduced by Buhari.
Source: The Cable
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