The Asset Management Corporation of Nigeria has said that in order to reduce the high mortality rate of domestic airlines, the Nigerian Civil Aviation Authority must begin to enforce sound corporate governance.
Kuru, who spoke at a colloquium organised by the Nigeria TravelsMart in Lagos, said as a complex and capital intensive business, airlines required high level of competence and discipline, adding that many reasons might account for the failure of airlines but lack of good corporate governance ranked among the highest.
He stated, “I have seen a long list of 42 airlines that have graced our airways with a lot of fanfare but collapsed afterwards to the shock of many. These include national carriers, many domestic airlines and cargo airlines. Interestingly, I have looked particularly from the date they commenced operations to the date they ceased operations and noticed with sadness that they operated for mostly less than 10 years.
“As I speak, the industry remains in the throes of airlines burdened with debts, under administration or in borderline of collapse. The only time airlines are viable in Nigeria are usually at the point of take-off. Indeed, we have become so used to failure that no matter how well an airline seems to be running, we are economical with praise because we do not know if it is just another bubble.”
Kuru said the failure rate of airlines had raised questions in the minds of stakeholders on why they fail.
Kuru added, “Operators will readily point to lack of adequate government support, the burden of taxes, poor infrastructure, etc. These could be fair points. However, from our first-hand experience, we see that the cardinal point behind the failure of a good number of these airlines is because they were established without deep-rooted corporate governance principles that can make the companies last and prosper.
“That is why I want to use this opportunity to appeal to the Nigerian Civil Aviation Authority and other regulatory agencies in the aviation industry to show courage and ensure that sound corporate governance systems is enforced. A starting point can be the domestication of the draft Nigerian Code of Corporate Governance, 2018.”
According to him, the draft Nigerian Code of Corporate Governance, 2018 issued by the Financial Reporting Council of Nigeria contains 28 principles identified for effective corporate governance in companies, and is applicable to all public companies.