Nigerian Govt considers seat-for-debt arrangement to settle domestic airlines’ debts

The Nigerian government is exploring a novel approach to settle the substantial debt owed by domestic airlines to various aviation agencies. Known as a seat-for-debt arrangement, this proposal would allow airlines to exchange tickets for cash payments to organizations such as the Nigeria Civil Aviation Authority, NCAA, and Federal Airports Authority of Nigeria.

According to a senior source within the Ministry of Aviation and Aerospace Development, airlines under this scheme would establish digital wallets to hold the exact amount they owe the agencies. Once these wallets are set up, a five percent Ticket Sales Charge, TSC, will be automatically transferred to the National Aviation Commission Agency (NCAA) while the remaining ninety-five percent will be directly sent to the airline. The remaining tickets can then be sold to the public at a discounted rate.

The proposal follows a presentation by Dr. Segun Oyebolu, an aviation technology expert from QuickAir Networks Ltd, to Ministry officials. Oyebolu suggested that this debt-for-seat approach could alleviate airlines' cash crunch, which is exacerbated by high Jet A1 fuel prices and foreign exchange pressures. However, he emphasized that the plan hinges on airlines maintaining a debt-free status, as any accumulation of new debt would render the arrangement ineffective.

Airlines, burdened by a cumulative debt of over ₦60 billion to aviation agencies and fuel suppliers, credit the financial crisis to escalating fuel costs and forex constraints. Meanwhile, government agencies cite unpaid Ticket Sales Charges as the root of the problem, which have led to protests from aviation labor unions, including NUATE and ANAP, over the withheld charges.

The Nigerian Minister of Aviation and Aerospace Development, Festus Keyamo, revealed that one airline owes N14 billion to the government, warning that the mounting liabilities are hindering the provision of essential aviation services.