This week’s abrupt grounding of Arik Air operations has raised fresh concerns over executive’s meddling in core technical and operational issues in the air transport sector.
The development, akin to a recent grounding of Dana Air airlines by ministerial order, has been flagged as illegal interference in regulators’ oversight remits, beneath the norm of extant laws, and bad for investments in the air transport sector.
Though the Minister of Aviation, Festus Keyamo, recently insisted on interfering in all aspects of the air transport sector, stakeholders said the industry would be the worst for it.
It will be recalled that the struggling local air transport sector was on Tuesday thrown into chaos following the grounding of Arik Air’s fleet – on the order of the Minister of Aviation, Festus Keyamo, in carrying out a court order.
Arik Air, in a statement signed by its Managing Director, Capt. Roy Ilegbodu, recalled that on February 26, 2016, a judgment was made in favour of Atlas Petroleum International Limited and Engineer Arthur Eze regarding $2.5 million debt.
However, there was an ongoing case in the Federal High Court, where AMCON is asserting its secured interest in Arik’s assets. Ilegbodu said despite this, a writ of attachment was issued on July 18, 2024, targeting their aircraft, subsequent to which, further an originating motion was filed by AMCON and the High Court of the FCT on July 25, 2024, “clearly instructed all parties to maintain status quo”.
Ilegbodu said they were perplexed as to the grounding of their fleet, “which is an overreach of the ongoing judicial processes and directives of court”. He urged the authorities to lift the embargo placed on their fleets as they are committed to following the legal process and have full faith in the judiciary to resolve these matters fairly.
In response, the Special Adviser to the Minister of Aviation and Aerospace Development, Tunde Moshood, said the action was carried out by the Nigeria Airspace Management Agency (NAMA).
Moshood noted that on July 19, 2024, the enforcement department of the FCT High Court enforced an Order made by the Court regarding a debt of $2.5 million owed by Arik Air to one Atlas Petroleum International Ltd. “Copies of the Order and Certificate of Judgment were also served on us and the Minister,” he said.
He said although they are aware that Arik Air has obtained an ex parte order stopping further execution of the order, they have not been formally served.
One-too-many turbulence of Arik
The erstwhile biggest airline in Nigeria and West Africa is not immured from one-too-many troubles. Recall that Asset Management Corporation of Nigeria (AMCON) took over Arik Air in February 2017 as part of measures to “save” the airline from “imminent collapse”. AMCON had cited gross mismanagement by the owners of Arik, and debt of over N300 billion.
After six years of difficult operations and long-hard-drawn battle with shareholders, AMCON last year hinted on plans to withdraw from ownership and operations.
AMCON, which is the Federal Government’s special purpose vehicle for asset recovery, foresaw its withdrawal, either by means of a win-win negotiation with the Arik shareholders or outright liquidation of its assets. An effort to float a new airline, NG Eagle, out of the Arik Air asset was foiled by the National Assembly.
Now, the grounding, however, seems to have occurred in a context where multiple legal proceedings were ongoing, notably a dispute involving the enforcement of a $2.5 million judgment obtained by Atlas Petroleum International Limited and Engineer Arthur Eze.
The Guardian learnt that AMCON has been defending its interests in Arik’s assets, including a fleet of aircraft. The Federal High Court of the FCT had ordered all parties to maintain the status quo, pending the resolution of AMCON’s challenge against a writ of attachment targeting Arik’s assets.
“Despite this directive, the Minister’s action appears to have sidestepped judicial prudence, aligning instead with the interests of the judgment creditors—an unsecured party in this complex financial landscape,” the management stated.
Huge cost of disruption
The abrupt enforcement of the shutdown order robbed not only Arik but the entire aviation sector the wrong way. Thousands of scheduled passengers, already at airports or on their way, were immediately thrown into confusion and stranded. The effect on other airlines was telling.
The knock-on effect has been a sharp increase in airfares, adding financial strain to businesses and consumers alike. Moreover, the grounding jeopardises critical contracts, such as Arik’s role in transporting Chevron’s crew to Osubi airstrip, a key operational site for oil production.
Travel consultant, Sunday Olumegbon, said the development showed the little regard the entire industry has for its customers. Olumegbon noted that it was the same approach with Dana Air shutdown.
“How on earth will anyone shut down an airline without consideration for the customers that have paid and waiting to catch their flights to important assignments? You know the cost of airfares; your trip has to be very important to consider flying today. We have six of such customers on the queue the day this happened. No warning whatsoever. Who does that?” Olumegbon queried. He added that such would keep happening where there are selfish interests and meddlesome interlopers, who would not strictly play by the rule book.
“I’m not a fan of the Nigeria Civil Aviation Authority (NCAA), but we all should respect its autonomy and remits. The NCAA should be in charge as the top regulatory body. The minister is the leader of the sector, yet not above board. He should allow the regulatory agencies do their job and in accordant to the extant laws. This interference in technicalities of the airlines, and the industry at large, will not help our sector,” he said.
Another stakeholder in the industry said that the minister is getting to become an oversight authority in place of the NCAA, and the government agencies too are going on the same track of oversight on operators (airlines) like them.
“We are going back to the ’80s when the operators were self-regulated. This is where the fear should be with us today and I am worried with everything that is happening in the industry with more of political interferences than regulation compliance, oversight and enforcement,” he said.