FG mulls ‘seat -for debt’ deal to recover airline debts

By Anan Geolengs

The Federal Government is considering a “Seat-for-Debt” arrangement to recover outstanding debts owed by domestic airlines to aviation agencies, the Ministry of Aviation and Aerospace Development has disclosed.

Under the proposed framework, airlines would create a centralized digital wallet equivalent to their debt and allocate seats through the wallet, instead of making direct cash payments to agencies such as NCAA, NAMA and FAAN.

A senior source in the ministry said on Monday that the initiative is designed to provide government with a continuous debt-recovery mechanism while enabling airlines to preserve cash for critical operations.

“It is being considered as an alternative to aggressive enforcement measures that could disrupt airline services,” the source said.

The proposal was presented to ministry officials by QuickAir Networks Ltd, a technology firm led by Dr Segun Oyebolu, an aviation technology expert with over 40 years’ experience in airline stock distribution, settlement and financial engineering.

Oyebolu, who was part of the team that designed the current IATA BSP, said the debt-for-seat model would allow airlines to exchange their “perishable assets” – unsold seats – for debt owed to government.

He noted that due to high operating expenses, many airlines were cash-strapped, making a flexible seat-sale arrangement a more viable option.

“In practical terms, each airline will create a digital wallet holding the equivalent of its outstanding debt as of today. The wallet will be accessible to the Ministry or its designated distributor, QuickAir,” he explained.

He added that QuickAir’s distribution platform would then sell the assigned seats to government agencies, corporates and other bulk buyers at discounted rates.

To prevent fresh accumulation of debts, Oyebolu proposed a “Pay-As-You-Issue” settlement engine.

He said since about 70 per cent of domestic flight tickets are sold online, the engine would automatically remit the 5 per cent Ticket Sales Charge to NCAA’s designated account in microseconds, while 95 per cent goes to the airline.

“This settlement engine works in microseconds such that there will be no visible delay in remittance of funds to hamper airline operations,” he said.

During a technical demonstration, Oyebolu showed that QuickAir’s infrastructure can interface with all 14 active domestic airlines in Nigeria for ticket distribution and settlement.

He said the company was ready to deploy immediately once airlines under the Airline Operators of Nigeria, AON, umbrella agree to implementation.

The Chairman of QuickAir Networks Ltd, Engr Suleiman Ibrahim, said the company was not driven by financial gain at this stage.

“We are willing to work with the Ministry and we will be pleased with whatever the Honourable Minister deems fit as fair compensation for assisting the country to solve this intractable problem,” he said.

Ibrahim thanked the Minister, Permanent Secretary, directors and agency representatives for the opportunity to present the solution, saying QuickAir was determined to help eradicate financial conflicts between government and domestic carriers.