$2.5m Debt: Local Airfare May Increase As Federal Govt Grounds Arik Air

Return tickets on local airlines in Nigeria may increase due to the grounding of four Arik Air aircraft by the minister of aviation and aerospace development, Festus Keyamo, over a $2.5 million debt to Atlas Petroleum.

Aviation stakeholders have predicted that with the grounding of Arik Air, the capacity of local airlines will shrink and lead to a hike in air ticket prices.

They argue that with return tickets currently at N283,000 on busy routes, it may furtrher increase in coming weeks if the impasse continues.

LEADERSHIP reports that the aviation minister had grounded Arik Air fleet after the enforcement of an order made by the FCT High Court regarding a debt of $2.5 million owed by Arik Airline to Atlas Petroleum International Ltd, by attaching their aircraft.

Arik was further given a notice of a public auction of the planes by the court which was slated to be held on the 26th of July 2024 if the airline failed to pay the judgement debt.

Meanwhile, Arik Air has acknowledged that the decision of the minister to ground its operation was in disregard of the ongoing judicial processes.

According to the chief executive officer, Arik Air (in receivership), Captain Roy Ilegbodu, “On February 26, 2016, a judgement was made in favour of Atlas Petroleum International Limited and Engineer Arthur Eze. However, there is an ongoing case in the Federal High Court, where Asset Management Corporation of Nigeria (AMCON) is asserting its secured interest in Arik’s assets.

“Despite this, a writ of attachment was issued on July 18, 2024, targeting our aircraft, subsequent to which, further to an originating motion filed by AMCON, the High Court of the FCT on July 25, 2024 clearly instructed all parties to maintain status quo.

“We, therefore, are perplexed as to the grounding of our fleet, which is an overreach of the ongoing judicial processes and directives of court.

“We believe this action undermines the rule of law and sets a dangerous precedent, prioritising unsecured private interests over the public good and the rights of secured creditors. We are committed to following the legal process and have full faith in the judiciary to resolve these matters fairly,” he stated.

However, the general secretary, Aviation Round Table Initiative (ARTI), Olumide Ohunayo, urged all the parties involved to resolve their differences through negotiation.

According to Ohunayo, the grounding of the airlines’ aircraft would lead to capacity gaps that would fuel an increase in airfares across the country.

“There was a court order on some aircraft of the Arik Air, the order was from the Supreme Court; if there is a Supreme Court order and you do not negotiate the judgement, then this is bound to happen. The ministry has implemented the Supreme Court judgement that they should have done long ago but decided to wait till July 30 in order for Arik to negotiate with the judgement creditor or they should have gone to court to see how the judgment can be reversed or set aside.

“Also, I expected that there would be a human face because Dana is out, and there will be a strong effect on fares and capacity in the industry. There should be a way out of this process rather than just allowing the grounding of the aircraft and Arik must be ready to come to the table to discuss.

“Due to the state of the industry at the moment, we are lacking in capacity which is affecting fares, so I think the debtor, the creditor and the ministry should sit and do serious negotiations to ensure that Arik continues operation while they resolve the issue.

“I am not saying it’s wrong to ground the aircraft but we must look at how it affects the industry, hence the three must come to the table to see what can be done to solve the issues that have brought about this judgement,” Ohunayo stated.

In the same vein, the Nigerian Airspace Management Agency (NAMA) disclosed that the Ministry of Aviation and Aerospace Development is enforcing the judgment of the court.

According to the director of public affairs and consumer protection,  Abdullahi Musa, Arik Air is yet to serve the agency an ex parte order stopping further execution of the order.

Abdullahi stated that the minister, being a member of the Inner Bar himself, understands the implication of the Supreme Court order dismissing the motion for leave to appeal and will not risk his licence as a legal practitioner or his privilege as a Senior Advocate of Nigeria by engaging in acts that will frustrate an order of the Supreme Court of Nigeria.

He, however, urged both parties to resolve their issues as quickly as possible so that the Arik aircraft in question can resume flight operations.

Moreover, the Federal Airports Authority of Nigeria (FAAN) has directed all airport managers across the country to assist the affected Arik Air passengers with plans to rebook and transfer passengers to other available flights.

According to the director of public affairs and consumer protection, Obiageli Orah, the authority is aware that Arik Airline has been grounded due to litigation issues between the airline and its creditors.

We Are Working To Move Stranded Passengers – NCAA, FAAN

Meanwhile, following the grounding of Arik Air which has rendered many passengers stranded, the Nigeria Civil Aviation Authority (NCAA) and the Federal Airports Authority of Nigeria (FAAN) have moved to ease the stress and move the passengers to other flights.

In a statement by the NCAA spokesperson, Michael Achimugu, the Authority said it “is well-informed of the grounding of Arik Air aircraft over legal issues and the attendant impact on its flights and intending passengers.

“While the NCAA monitors the situation and engages Arik Air on its plans for affected passengers, our consumer protection officers are available at the terminals to monitor passenger handling and to offer information.”

Achimugu also urged air travellers to walk into the NCAA consumer protection offices, identify and speak with the officers for assistance or send an email to [email protected].