The federal government is considering measures to reduce the debt obligations of domestic airlines to aviation agencies as part of efforts to cushion the impact of soaring aviation fuel prices.
A debt discount or discounted payoff (DPO) allows a creditor to accept a reduced amount to settle an outstanding obligation.
Festus Keyamo, minister of aviation and aerospace development, disclosed this in Abuja after a high-level meeting held to address the sharp increase in aviation fuel costs.
He said President Bola Tinubu, who was briefed on the meeting, directed that a proposal be submitted for urgent consideration.
“He mandated us to quickly bring a request to him. The first request that he will consider and grant is a generous discount on the debts the airlines are owing the aviation agencies, NAMA, FAAN, NCAA, and so on,” the minister said.
“The percentage of discounts and all that Mr President will decide.”
Keyamo added that the president would also establish a committee to review taxes, levies, and charges on domestic tickets to reduce costs for passengers.
“This request has been on for a long time. Mr President will put the team together, and he will give them a deadline to report to him as quickly as possible on the government fees and charges and levies that we can take off domestic tickets for now to give respite to Nigerians who are also buying their tickets,” he said.
“He will consider a date for the airline operators to meet him one-on-one for the other more robust discussions regarding access to capital and all of that.”
At the meeting, Allen Onyema, chairman of Air Peace, attributed the crisis to the steep rise in Jet A1 prices, which he said far exceeds global crude oil price increases.
He noted that airlines are under heavy financial pressure, relying on borrowing to sustain operations while trying to maintain safety and maintenance standards.
“The truth is that the marketers must be brought to book to explain how they got about the 300 percent increase,” he said.
“Even Dangote is surprised, because what he is selling to us still remains the cheapest, and some of them lift from there. So why the astronomical rise?
“We appreciate Mr. President for coming to our rescue, but we want to say that instead of the president deciding which discount to give us, we are asking for a total waiver of all the debts we owe, and at the same time, a suspension of further payment until Hormuz is open.”
Onyema also called on the government to address high interest rates on aircraft financing, noting that while airlines in other countries access loans at about 3 percent, Nigerian operators face rates between 30 and 35 percent.
“All over the world, they acquire at 3 percent. In Nigeria, we acquire at 30 to 35 percent. This is killing. That’s why airlines owe FAAN, owe NCAA, owe everybody,” he said.
“We ask Mr. President to please fund the Bank of Industry. That is the only bank that is still doing single-digit or at least 10 percent interest to airlines but they don’t have funds now.”
Earlier, the Airline Operators of Nigeria had threatened to suspend operations over the spike in aviation fuel prices, which rose from N900 per litre in late February to about N3,300 per litre, marking an increase of over 300 percent. However, the group later announced a temporary suspension of the planned shutdown.