Indigenous firms can’t insure aircraft, says Keyamo

Minister of Aviation and Aerospace Development, Festus Keyamo, has lamented that many of the insurance firms in the country cannot insure many of the aircraft in the fleet of Nigerian airlines.

The Minister disclosed to journalists while attending a summit in Lagos recently, that the lack of capacity and the high premiums by the insurance firms had also contributed to the hike in airfares.

He disclosed that the new rule of the National Insurance Commission is that every risk must be placed in the local market to enhance our local insurance companies, adding that by bending a bit to ensure that they give lessors the assurance that they can place the risk in the international market and let the operators bring their aircraft in.

Keyamo noted that if an airline purchases an aircraft, it is an international requirement that it has to be insured, but no insurance company can do that in Nigeria.

He added that many lessors are not operating in Nigeria because of insurance, a situation he said was killing the business.

Keyamo said, “But then, I apologise to say that most of them don’t have the capacity. So when you give them. they go and reassure again and that is a double amount for them too. That is why you are seeing a rise in the cost of tickets. The cost is too much. That is what translated to these high fares, and ticket prices we are seeing.

“So, we apologise to Nigerians, but then, we have a lot to do so that the prices will come down.”

He further noted that over the past four decades, numerous domestic airlines have failed to sustain operations and have gone bankrupt and, in some cases, airlines even obtained Air Operating Certificates but never launched their services.

This trend, he reiterated, reflects broader issues within the sector, including financial instability, regulatory challenges, and operational inefficiencies.

The Minister inferred that the inability of the airlines to remain viable underscores the urgent need for comprehensive reforms to ensure the long-term health and sustainability of Nigeria’s aviation industry.

“For so many years we have had a lot of high mortality rates in the aviation industry, in terms of airlines coming and going under with very high mortality. I think more than 100 airlines have come and gone under in the last 40, or 50 years. We have had some AOC holders who never came at all. They have AOC, but they never want to come at all.

“We need to enhance their capacities. In the absence of a national carrier, in the absence of our airlines, aviation, then we should have flag carriers within the aviation who will make us proud. And we will service our reciprocal rights under all the different BASAs that we have.”

“In fact, we need to enhance capacity in the industry, capacity for development; train and retrain our technical people within the industry. And ensure that we raise their standards to global standards. And of course, somebody just talked about revenue optimisation. Without imposing extra taxes on people, let us just optimise revenue. That is why I took a memo to the council”, he added.