The eight indigenous airlines in Nigeria, expend about N11 billion on aircraft and passengers’ insurance premiums annually, representing 8% of total value of each aircraft in their fleet.
But, their counterparts in Europe and America, expend a mere 1 percent of aircraft cost as insurance premiums for airplanes and passengers.
The amount of money paid by the Nigerian airlines is different from what business aviation; charter operators and private jet owners pay as insurance premiums on their jets annually.
As at June 2017, the number of business aviation aircraft stood at 68; 34 for private jets and another 34 for charter operations.
For insurance premiums on aircraft, SaharaReporters gathered that the airlines spend N5.5bn as insurance premiums while another N5.5bn is expended as insurance cover for their passengers annually in case of an accident.
The investigation also revealed that 80 percent of insurance premiums are carried out abroad with international insurance companies like Lloyds of London while the other 20 percent is domiciled in Nigeria with local insurance firms who act as brokerage firms.
Also, an investigation carried out by our correspondent revealed that active scheduled aircraft among the indigenous carriers have dropped to just 40 from the initial 75 aircraft about two years ago.
The aircraft compositions are Boeing 737-300 to 800 series, Embraer, Airbus 319, Boeing 747, B767, McDonnell Douglas MD-83, ATR42, ATR72 and 8 DHC aircraft.
Research by our correspondent revealed that an average age of aircraft in the country’s sky is between 16 and 24 years old while a used 1999 Boeing 737-300 aircraft, which 90 percent of the nation’s airlines use for flight operations is valued at $4.5 million in the international market (about N1, 642,500,000 at the exchange rate of N365 to a dollar).
For each aircraft valued at N1.6bn, the airlines pay N131,400,000 (N131.4m) as aircraft insurance premium annually and another N131.4m as passengers’ insurance cover while their counterparts in Europe and America pay just N16,425,000 as insurance cover for their aircraft, which represent one percent of the total value of an 18 years old Boeing 737-300 aircraft.
Some of the major foreign insurance firms Nigerian airlines insure their aircraft are Allianz Aviation Insurance, Aerospace Insurance and Lloyds of London.
A source close to one of the airlines, however, told our correspondent that the nation’s carriers pay high on insurance premiums because Nigeria is still categorized as a high-risk nation to do business by insurance companies.
This is so despite the fact that Nigeria has the Federal Aviation Administration (FAA) Category One Status, which the country attained about eight years ago.
The Managing Director of Aero Contractors, Capt. Ado Sanusi in an interview with our correspondent lamented the high cost of insurance premiums on local airline operators by foreign insurance companies.
He insisted that the problem of Nigerian airlines paying the high insurance premium on aircraft was beyond the local insurance companies in Nigeria.
He posited that the West used high insurance premiums to extort funds from the continent’s carriers, stressing that aviation risk had reduced among the continent’s carriers.
He cited lack of air accident among commercial airlines in the past two years and the high rating received by African carriers from the International Air Transport Association (IATA) as an indication that safety had improved in the sub-sector.
He said: “They call it country risk, but I don’t think it’s a country risk. I just think it’s a way of getting money from Africa by the West. I don’t actually know what they meant by country risk. I think African countries will have to come together to fight this. It’s not only in insurance, even when I am leasing aircraft, they still claim country risk, later, they say stability and mention security.
“From all indications, I feel safer working in Oshodi in Lagos than working in Paris in France because you can be hit by trucks and others. So, what is the security and risk you are talking about? It is better for all the African countries to come together to fight this because this is more than the insurance you are talking about.
“So, as a country and as a continent, we must come together to support our financial institutions and strong insurance companies that have the muscles and money to do it. Unless we do that, they will always come back to you about country risk and then the premiums would be high.
“They will tell you to do training in different areas and they will always tell you to go back to their countries to do such training and you still return to their countries to carry out maintenance of the aircraft in their countries again. They create jobs for their people and return money to their countries.
“This slavery is not happening in China because Chinese has money to insure their aircraft and others they might want to do in their own country.”