FG considers using future ticket sale to settle airlines’ debts owed to agencies

The federal government is considering a proposal that would allow domestic airlines to settle outstanding debts owed to aviation agencies through future ticket sales rather than immediate cash payments.

The proposal, developed by QuickAir Networks Limited, was presented to officials of the ministry of aviation and aerospace development on July 22 after the company was invited to make a presentation on its “National Ticket-for-Cash Aviation Revenue Recovery Programme”.

Under the proposed arrangement, airlines would create digital wallets equivalent to the value of their agreed debts to agencies including the Nigerian Civil Aviation Authority (NCAA), Nigerian Airspace Management Agency (NAMA) and Federal Airports Authority of Nigeria (FAAN).

The value in the wallets would then be converted into seat inventory and distributed through QuickAir’s platform to travel agencies, corporate organisations and government institutions, with the proceeds used to recover the airlines’ outstanding obligations.

Segun Oyebolu, who led QuickAir’s presentation, said the arrangement would provide airlines with an alternative to immediate cash payments at a time when high operating costs are putting pressure on their finances.

“In view of the cash-poor situation of these various airlines arising from higher than normal operating expenses, it is better and more reasonable and will be a very attractive option for the airlines to start paying the debts owed government via flexible seat-sale arrangement,” Oyebolu said.

He said the arrangement would be ineffective if airlines continued to accumulate new debts, proposing an automated system through which government charges would be deducted as tickets are sold.

“Since about 70 percent of domestic flight tickets are sold online, QuickAir will provide an enabling settlement engine that will ensure that as customers of airlines made payments online, the five percent ticket sales charges will be automatically remitted to the designated account of the NCAA while 95 percent of the sale shall remit immediately to the airline,” he said.

Oyebolu said the automated settlement would take place within microseconds and would therefore not cause a noticeable delay in airlines receiving their funds.

’QUICKAIR READY TO DEPLOY INFRASTRUCTURE’

During the technical session, QuickAir demonstrated its existing ticket distribution and settlement platform, which it said could connect with the systems of Nigeria’s 14 active domestic airlines.

The company also demonstrated its accounting backend, showing transaction records and revenue generated through the platform.

Oyebolu said the company was ready to deploy the infrastructure once airlines under the Airline Operators of Nigeria (AON) agree to the proposed arrangement.

The ministry had, in a letter dated May 29, invited QuickAir to present its proposal following the company’s submission on a national ticket-for-cash aviation revenue recovery programme.

Suleiman Ibrahim, QuickAir’s chairman, said the company was prepared to work with the ministry and other aviation stakeholders to resolve the recurring financial disputes between government agencies and domestic airlines.

Ibrahim said the company’s objective was to help “eradicate the point of financial conflicts between government and operating domestic carriers”.