Arik Explains N12bn FAAN Debt

After the suspension of its operations for 24 hours over the disruption of its service by workers of the Federal Airports Authority of Nigeria (FAAN), Arik Air on Tuesday said from the time it started operations in 2006 till February this year, it had paid FAAN over N18.9 billion.

The airline said FAAN acknowledged that it only received N11.4 billion from the airline and said it recognised the surplus in its account but the payment of that surplus was not credited to Arik.

This came as the Minister of State for Aviation, Mr. Hadi Sirika, on Tuesday gave the managements FAAN, the Nigerian Airspace Management Agency (NAMA) and the Arik Air Group two weeks within which to resolve all issues relating to indebtedness between them.
 

The airline resumed services yesterday after the disruption of its flights at the General Aviation Terminal (GAT) of the Murtala Muhammed Airport, Lagos, over alleged N12.5 billion debt, as claimed by the union leadership.

The airline said the problem it has with FAAN stemmed from the latter’s inability to keep proper documentation of its charges, like accurately recording charges on a particular flight with its registration number, the time it landed, the take-off weight, day and time of flight and departure and destination.

The Managing Director of Arik Air, Mr. Chris Ndulue, who disclosed this to journalists during a media conference at its head office in Lagos, said this was the standard way other airport service providers all over the world; documented their charges so that the customer would know how much it owes and the services that incurred the charges.

Ndulue alleged that FAAN arbitrarily allots figures on bills without the necessary data to back the figures and described the disruption of its operations by FAAN workers as a violation of the legal attempts to reconcile figures between the authority and the airline in the court of law.
 

He said  it  was startling that FAAN could not account for the outstanding N7.5  billion that mysteriously disappeared from its account, of which the agency agreed that there was surplus money in its account but was not sure who credited its account with the surplus sum.

Though, he did not disclose huge sums lost to its disrupted flights last Wednesday by the workers, the  Arik Air boss said the airline was deliberating other measures to seek redress over the matter, adding that the airline’s management met the Minister of State, Aviation, Senator Hadi Sirika, to formally protest the illegal action and latter pledged that he would help to redress the issues.

He said the airline over time made efforts to work out an amicable resolution of the disputed figures through legal representations in response to a suit filed at the Federal High Court, Lagos by FAAN.
FAAN, he said, had not been forthcoming with details on how to resolve the impasse despite ministerial interventions through committees set up to reconcile the figures.

He said the resort to self help by FAAN workers and aviation union members to attempt to recover alleged debts through intimation would not force Arik Air to pay for services that have not been formally documented, adding that the airline would continue to explore existing legal instrument and channels to fight for its legitimate claims.

Ndulue said FAAN had initially concluded plans to impound its aircraft; but jettisoned the idea and then went and incited the union to disrupt its operations.
 

The latest move of using unions to disrupt the operations of an airline, he said was contrary to laid down rules to resolve conflict between organisations.

“FAAN claimed that we are owing them several amounts, which keep changing.
“They even planned to impound our aircraft, but changed the plan. Only last Wednesday, without notice, FAAN workers disrupted our operations.

“We refused to be intimidated by such underhand methods. We will not be frustrated to pay for services we cannot prove we have been provided without any documentary evidence. These illegal attempts are in violation of existing reconciliation moves both at the courts and the Ministry of Aviation.
“We wonder why FAAN will violate on-going negotiations and reconciliation. This is unlawful and unwarranted.

“We want FAAN to tell the world what happened to the N18.9 billion we paid since inception, for which they could only acknowledge only N11.4 billon.
“What happened to the outstanding N7.5 billion Did the money disappear mysteriously?” Ndulue asked.
Meanwhile, in a statement signed by Mr. James Odaudu, Deputy Director, Press and Public Affairs, on behalf of the minister, he  said the directive was the outcome of the minister’s meeting with the management of Arik Air in his office in Abuja yesterday.

Sirika directed the parties to report back to him after 14 days period with a resolution on amounts owed, payment plans and the way forward.

The minister regretted the alleged indebtedness by Arik Air which has led to disagreements with some trade unions within the regulatory agencies.
He stressed that the government would not condone lawlessness within the industry, adding that all airline operators must conform to industry rules and regulations which include the prompt payment of applicable fees and fines as at when due.

He said the goal of the present government is to develop an aviation industry that is founded on the principles of safety and security of not only the regulators and airline operators, but also passengers and their luggage.

 In a remark, the Chairman of Arik Air, Mr. Arumeni Johnson, was quoted in the statement as decrying the regularity and impunity with which trade unions operating at the airports disrupt the airline’s operations under the guise of its indebtedness to their organisations.

 He said such practices, if not stopped by the authorities, was capable of running down the industry. Johnson described his airline as a responsible corporate citizen that is always ready to meet its obligations to its passengers and service providers.

He said: “Is it now the duty of the union to seek payment of money owed aviation agencies? The union has clearly gone beyond its mandate and we implore the minister to intervene.”

Also, the Nigerian Civil Aviation Authority (NCAA) has directed all airlines (domestic and charter) operating in the country to forward in full unremitted funds accruable to the authority without further delay or face immediate sanctions.

 This directive was handed down at a meeting held Wednesday with the operators on non-remittance of five per cent ticket, cargo and charter sales charges (TSA/TCA) held at the authority’s Headquarters Annex in Lagos
The Director General of the NCAA, Captain Muhtar Usman, presided at the meeting in company of the authority’s top management staff.

 According to the DG, the directive was with regards to the five per cent TSA/TCA collected at source from the air passengers by the airlines on behalf of the federal government of Nigeria.

“It is imperative that all unremitted funds must be forwarded in full to the NCAA immediately. The airlines must desist from using these funds ‘held in trust.’ The ongoing five per cent ticket/cargo/charter/sales charges automation of payments, which offers real-time transparent transactions must be completed within two months. This will remove endless reconciliation of data and reduce high debt profile of airlines to NCAA,” NCAA spokesman, Sam Adurogboye said.

EmeraldRuth Blog: Arik Explains N12bn FAAN Debt