Aviation Supply Chain in Nigeria: Expert Insights on Parts Availability, Forex, Fuel, and the Road Ahead

Transportation Agenda Magazine brings you rare insights from an in-depth interview Abike Awojobi had with Mr. Olanrewaju Phillip, Head of Supply Chain & Logistics at Arik Air. With a career spanning over two decades and a pivotal role in one of Nigeria’s iconic airlines, Mr. Phillip takes us behind the scenes of airline logistics — the intricate network that keeps aircraft mission-ready, parts strategically positioned, and crews seamlessly connected across a flight schedule that ferried millions of passengers.

When we talk about supply chain and logistics, especially in aviation, aircraft can be grounded due to parts unavailability, yet airlines often hold large inventory that ties up capital. How do you balance the need for spare parts readiness with inventory costs? 

This where the expertise of the supply chain /material managers come into play. The pattern of purchase must not necessary impact negatively or drain the cash flow of the company. There are few ways to balance part availability with cost. They are as follows.

1. Priorities purchase process of AOG/NO-GO relate parts. They are mostly called home Based stock. Ensure these parts are readily available at all times in your store as they guarantee continuous revenue operations.
2. Priorities purchase of Minimum Equipment (MEL). Ensure these components are sources for in a timely manner as recommended by the regulatory authority.
3. Depending on your fleet, if possible, have a pool support agreement in place to cater for AOG situation.
4. Sign up component repair agreement with OEM’s approved MRO to repair your defectives or removed components.
5. Work closely with the planning dept. for upcoming tasks. So, you are purchasing these materials as the need arises.
6. Have a dedicated freight or courier service provider.

If well-coordinated, these 6 points will ensure parts are always available for revenue operations without necessarily impact the cash negatively.

Since aircraft parts are priced in dollars and the naira has experienced depreciation, how do Nigerian carriers manage forex exposure, especially with Central Bank of Nigeria (CBN) policies affecting import timelines? 

Well, I’m not the CFO of the company, but from the feedback we got from the treasury team, forex has been stable for now compared to few months back. This stability has reduced the severe scarcity we experienced in the past and help us meet our obligation as at when due.

International OEMs and suppliers often perceive Nigerian airlines as high risk due to payment histories and market volatility. What strategies can build credible and sustainable relationships?

Well, the perceptions of an “’High risk’” region often arise from the corporate assessment carry-out by insurance firms in the proposed region, However the assessment and classification of a region as a high-risk investment destination might not be totally correct sometimes since the focus is on few elements. In any case, the Ministry of Aviation & Aerospace development in conjunction with the Nigerian Civil Aviation Authority is doing their best in ensuring Nigeria regain her lost glory with global suppliers/OEM’s & service providers. Key among the steps taken is the recent signing of Cape Town Convention & Protocol as put forward by ICAO. Now that Nigeria is a signatory to this convention, international assets owners can now conveniently re-claim & re-export their asset(s) with local operator without going through the legal bottle necks. This is made possible through a document IDERA (Irreversible Deregistration and Export Authorization) signed by both the lessor and the lessee with the authority as witness. Also, Nigeria had her Inaugural International Airshow recently in Abuja, this is another statement from the government that the country ready and well position for international business. We have the traffic and the potential to attract major global players. All of these are steps taken to restore confidence and show our commitment in the global industry.

Aviation parts importation involves several clearance points. Where do bottlenecks occur and what reforms could improve supply chain velocity?

Well, the federal government has done tremendously well by providing import duty waivers to commercial Airline operators. However, there are few things to be done accelerate port clearance process.

1. Reduction/merging of multiple government agencies at the port. As at today we have about 7 agencies involved in part clearance. DSS/DMI, NAFDAC, SON, EOB (anti bomb) quarantine & Nigerian Custom service. These body placed a huge burden in clearance process, and it will be since as duplicate of function. If they are reduced or merge together at it will serves us valuable time and reduce our expenses.
2. Review of IDEC component list. IDEC (Import Duty Exemption Certificate) component list contained details part number & HS Codes or aircraft components that enjoy waivers from the Min. of Finance. Well, this list is considered to be obsolete and most parts phased out by OEM’s and replaced with modern parts are not included in the last. Most time this bring some sort of forth and back between freight forwarders and custom officials.
3. Reduction of the bureaucracy around End-User permit for DG. The process of obtain End User permit for aircraft parts that are classified as DG is huge. The process is almost impossible for airline to secure this permit making airlines vulnerable most times.

Nigeria faces inconsistencies in Jet A1 supply, quality control concerns and price volatility. How can airlines ensure reliable fuel supply and what structural reforms are needed? 

Well, that sector has been deregulated, already and that is fine for the economy, it’s good that government provide enable environment, so other local play is encouraged to refine ATK locally there by reducing reliance on importation and marketer monopoly. Also, the NCAA should be strengthening to provide oversight function regulatory function on the process, monitoring the fuel quality/ricing & the distribution process. If possible, Airline that have the facility should be given opportunity to stockpile their fuel when price is stability.

What are the main coordination challenges with third-party ground handlers and logistics providers at Nigerian airports?

Arik Air have a functional inflight catering facilities as such cater for her own operation. Same with ground support equipment. Arik Air has invested a lot on aircraft support equipment and as such can do self-handling on some station. In any case, where third parties are involved, we have experienced a situation old equipment are deployed for turnaround operations and this impact negatively reliability and on-time departure. Also, we have experienced a situation where lack of adequate continuous training of equipment operators eventually damages the aircraft. Making the subject aircraft not airworthy for some time and revenue is lost.

Modern aviation supply chains use technologies like ERP systems, predictive analytics and real-time tracking. What barriers exist for Nigerian airlines?

There aren’t any technical barriers at all. The decision to automate an airline process rely sole with the management t of that Airline. Ability to commit the needed fund and deploy equipment is like taking a bull by the horn. In the case of Arik Air, we just concluded a fresher training on the ERP OASES (Open Aviation Strategic Engineering System) that we use for operation.

This ERP consist of several modules like Inventory & Material module, planning & reliability for tracking life components etc.

 What are the most effective cost optimization strategies for Nigerian carriers that do not compromise safety or reliability?

Answer: Strategic long-term agreements with OEMs, such as placing back orders with OEM. Also, from commercial point of review, signing an interline or re-protections agreement with other airline, engine & fleet renewal plans.