(Updated) Controversies trail status of Cally Air aircraft



Posted by Sade Williams


Controversies are currently brewing over an alleged plan to concession Cally Air assets by the Cross River State Government.

The airline started operation barely two years ago under the management of Aero Contractors.

Documents obtained by The Trave Port show that the airline, which is being managed by Aero Contractors is at the centre of controversies between the outgoing governor of Cross River State, Mr. Ben Ayade and the incoming governor, Price Bassey Ottu on one hand and Aero Contractors on the other.

It was learnt that while the outgoing governor wanted its aircraft, Boeing 737-300 with the registration number: 5N-BYQ to be brought to Calabar for commissioning and eventual “concessioning” exercise, it was learnt that the incoming governor allegedly suspected foul play in the entire arrangement.

Apart from this, the outgoing governor had earlier  listed some of the state’s assets to be concessioned to private firms and included Cally Air as one of such assets.

The plan to concession the state’s assets did not however, go down well with some of its indigenes as one Mr. Mba Ukwenu, Senior Advocate of Nigeria (S.A.N) immediately sued the State Government in court to stop it from going ahead with its plan.

A source close to the State Government confided in our correspondent that the Cross River State Government planned to “concession” the airline to its consultant and asset manager, IRS Airlines Limited.

Also, Aero Contractors, which has been operating and managing the airline since it signed a Memorandum of Understanding (MoU) with the State Government on April 30, 2021 for operations and maintenance of the airline until recently, is reluctant to release the aircraft to the State Government over an alleged breach of agreement by the government.

Our correspondent gathered that the government owed Aero Contractors over N900 million for services rendered to it on the operations and maintenance of Cally Air for over 24 months.

The MoU was signed among Cross River State Government, IRS Airlines Limited and Aero Contractors for the operation, commercial profit and maintenance of two Boeing 737 aircraft.

According to the MoU, which was sighted by our correspondent, the Cross River State Government, acquired two airplanes; 5N-BYQ and 5N-GRS, and selected IRS Airlines Limited as its consultant and asset manager, while Aero Contractors was designated as the operator and expected to provide licenses, permits and certificates necessary for the airline to operate a passenger transport aircraft.

The B737-300 with the registration number: 5N-BYQ is still parked at the Aero Contractors hangar, while the other B737-300 with the registration number: 5N-GRS is at the graveyard of the Murtala Muhammed Airport (MMA), Lagos due to its non-airworthiness.

Our correspondent learnt that about two weeks ago, representatives of Cross River State Government, led by Jake Ottu Enyia and Mr. Udiba Effiong Udiba, Commissioners for Aviation and Asset Management and Recovery, respectively, held a meeting with the management of Aero Contractors management on the possibility of returning the aircraft for concessioning,

The Aero Contractors management agreed to the deal, but raised concerns over the N900 million debts owed by the government.

When contacted, a source close to Aero Contractors confirmed the development with our correspondent, but declined to give more details.

The source told our correspondent that due to some disagreement with the State Government, Aero Contractors had suspended the use of the aircraft, which is at present still parked at its hangar.

Another source in Aero said: the arrangement was not tidy. There are so many agents. I was not there when it was concluded. If I were there, I would have asked for a full dry lease of the two aircraft, which will enable us manage them 100 per cent and pay to the state government but they extended the arrangement to a third party, which they dubbed coordinator. I didn’t understand that. The arrangement is not favourable to Aero. I learnt it is also not favourable to Cross River state government. So, the arrangement is not transparent and sustainable and that’s why we may not operate the aircraft again; unless they are given to us on dry lease, which is arrangement that is obtainable all over the world’

According to the source, the Cross River Government failed to pay the airline for maintenance of the aircraft while the sharing formula agreed by the duo was not equally honoured.

It was lrarnt that the agreement stipulated that as the operator, Aero Contractors would be entitled to 10 per cent of net sales after deductions of all taxes and charges and all operations expenses as well as any fixed amount due to Aero.

For IRS Airlines Limited; it is expected to get 5 per cent, while Cross River State Government would earn 85 per cent on the same conditions attached to Aero Contractors.

The source said: “The agreement between Aero Contractors and Cross River State Government has broken down over non-adherence to the MoU. The State Government did not pay for the maintenance carried out on the aircraft in the fleet of the airline, which is over N900 million.

“Also, the State Government told the management to handover the aircraft to IRS Airlines Limited and prepare it for concessioning. But, the management insisted on the payment of debts owed before such a state could take place. As I am talking to you now, nothing concrete has been reached.”