Over 120 airplanes are parked at airports nationwide, unable to fly due to COVID-19 lockdown. They have incurred losses estimated at N360 billion. With a stimulus package from the government, experts say, the airlines will survive, KELVIN OSA-OKUNBOR writes.
Air transportation is a critical condition.
Indigenous airlines, whether in the schedules, private /cargo category, ground handling companies, airline catering firms and other players, have been adversely hit by the effects of coronavirus, also known as COVID-19.
COVID-19 has left in its wake a catalogue of challenges – airspace closure/restriction, closure of airports with its attendant consequences on the economy.
Besides loss of revenue for indigenous carriers, which would have accrued from ticket sales and cargo operations, the industry is still grappling under the effects of limited scale of operations, which will question the effectiveness of some airport and air navigation equipment due to scarce use.
To get out of the woods, the Airline Operators of Nigeria (AON) has called on the Federal Government to consider a stimulus grant or palliatives for domestic airlines to cushion negative effects of post- Covid-19.
Its Executive Chairman, Captain Nogie Meggison, in an interview, urged the government to direct the Central Bank of Nigeria (CBN) to extend stimulus package to indigenous carriers as part of measures to ameliorate the adverse impact of the virus.
Specifically, Meggison said aviation agencies should take a cue from the CBN and seek ways to help airlines cushion the effect of the pandemic.
According to the AON chief, ” It is instructive to note that about four weeks before domestic airlines decided to take the difficult decision to suspend both local and international flights to support the government’s effort to curtail the virus, passenger traffic had declined drastically, leaving the domestic airlines in dire financial strait while raking avoidable cost.
”At the moment, over 120 aircraft are parked at our various airports across the country, with airlines required to pay accumulated cost on leased aircraft, salaries, allowances for crew, parking and maintenance fees, and training. At present, the domestic airlines have lost an estimated N360 billion and still counting with no end in sight.
”The AON, unequivocally, aligns with global concerns and reports, which puts aviation sub-sector has the worst hit, as a result of the various containment efforts and strategies world over coupled with the recent announcement by the International Air Transport Association (IATA) that passenger airliners could lose up to $133billion in revenue this year.
Aviation service providers, including airports’ fuelling service providers, ground handling service providers, security services providers, catering services providers and many more would be badly hit this year, according to IATA.
”With these troubling statistics likely to threaten the existence of many domestic airlines in Nigeria, which are still grappling with over 32 multiple charges, the AON wishes to commend the CBN for announcing a moratorium of one year on principal repayments of intervention loans effective March 1, 2020; reducing interest rates from nine to five percent per annum for one year; and creating a N50 billion targeted credit facility to cushion the impact of the virus on businesses post-covid-19.
”Airline Operators of Nigeria, (AON) is, therefore, seeking government stimulus package and incentives to mitigate the negative impact of this pandemic on the aviation industry in Nigeria and by extension the domestic airlines.’’
These, the AON says, should include deliberate sourcing, loans, grants, tax waivers, special forex windows and rates, reduction of airport taxes or surcharges, and waivers.”
The AON leader also suggested that another option could be approving corporate bonds through the Central Bank of Nigeria, (CBN), waiving some charges to guarantee the survival of airlines and avoid over 100,000 direct job losses post-covid- 19.
Meggison said: ”We are aware that Russia, United States, Canada, Britain and other countries have come up with one support or another for their airlines and Nigeria will not be at default, if it looks at options of supporting the industry.
”The industry remains the only sector, whehere operators still pay VAT on commercial air transportation. It is so in other pparts of the world.
We have said this many times that the VAT is adversely affecting the sector by subtly reducing the number of those who can afford air travel due to high fares, and in view of the impact that this pandemic will have on the economy, the VAT will continue to be an increased burden on travellers.
‘’The AON, therefore, calls for the immediate implementation of VAT removal in line with global best practices.
“Air transport is a huge contributor to the GDP of Nigeria, and we are appealing to the Federal Government to urgently consider the intervention to assist airlines at this difficult time.”
Also, Chief Executive Officer (CEO) Belujane Konzults, Mr Chris Aligbe, said the government should cushion the severe effects of COVID- -19 on aviation.
Aligbe canvassed a loan of less than five per cent paid over 15-20 years for airlines.
Speaking in Lagos, the former Airways spokesman canvassed the allocation of capital resources to agencies like the Federal Airports Authority of Nigeria (FAAN) which depends on the flights to generate revenue to run the 22 airports under its purview.
According to him, “Every aspect of the industry is impacted, particularly because the revenue in the industry depend on the flights whether it is aeronautical or non-aeronautical. The more flights you have into an airport, the more likely businesses will develop around the airport.
“But FAAN engages in business and its business is dependent on a lot of flights that come in; the landing and parking charges, the rentals, and all other businesses whether you are talking about airport charges, whether you are talking about toll gate charges, duty free shops or eateries, restaurants, it all depends on whether the people are coming, it depends on the travelling passengers and more importantly it depends on meeters and greeters.
“Now FAAN cannot get that because flights are not coming, all businesses are shut down and, more importantly, on the side of FAAN, they are losing both aeronautical and non-aeronautical revenue. They have lost it and there is no other place for them to generate any fund.”
The aviation consultant, however, averred that despite the intervention, it could take them two years to bounce back and expand. He said within this period, the government could push the national carrier project to generate employment in the industry immediately after the covid-19 pandemic.
“Coronavirus will come and go, the industry will have to, not just continue, but the industry will have to grow; it should not be left to stagnate. If the industry stagnates, its contributions to economy will stop, he added.
Also, a United States Federal Aviation Administration ( FAA) and Nigerian Civil Aviation Authority (NCAA)-licensed flight dispatcher and ground instructor Mrs Victoria Jumoke Adegbe said the effects of COVID-19 had impacted negatively on indigenous carriers forcing them to hang by the thread.
Mrs Adegbe, who is Chief Executive Officer (CEO) of Insel Networks, said many aviation businesses were facing collapse.
She said many indigenous carriers were hanging by the thread because the managers would have to grapple with aircraft lease rentals, aircraft man tenancy and other sundry expenditure when they resumed operations.
Adegbe said: “COVID-19 has brought drastic changes to the global aviation sector. Businesses are collapsing, some have imminently gone extinct and a few others are hanging by the thread.
Millions of people have lost their sources of livelihood. Strangely, an airline in Nigeria said it will not be paying its workers during the period of the lockdown.
“In Nigeria, a lot of airlines are showing suicidal symptoms as they can no longer meet their obligations. In line with the recommendations of the International Air Transport Association, I propose financial support to passenger and cargo carriers as compensation for reduced revenues and liquidity attributable to travel restrictions.
“These could be loans, loan guarantees and support from corporate bond market by governments and the Central Bank.
There could also be rebates on payroll taxes paid to date in 2020. An extension of payment terms for the rest of the year along with a temporary waiver of ticket traces and other government imposed levies.”
Meanwhile, the Institute for Tourism Professionals of Nigeria (ITPN) has urged Federal Government to give attention to the tourism industry by introducing economic stimulus for the sector.
Besides, the Institute said government should make available other palliatives and intervention initiatives.
Its National President, Chief Abiodun Odusanwo said the tourism sector was hardest hit by COVID-19 because it restricted economic movement of people and services.
