Indigenous airlines: Bracing the odds as COVID-19 clips carriers’ wings

Doubtlessly, Nigerian airlines have over the years been contending with inclement operating environment characterized by multiple taxes and charges and high cost of operation, especially the exorbitant cost of aviation fuel (Jet A1), which have made the industry unattractive to potential investors. However, despite the sundry fiscal and other associated challenges, a few investors have […]

Doubtlessly, Nigerian airlines have over the years been contending with inclement operating environment characterized by multiple taxes and charges and high cost of operation, especially the exorbitant cost of aviation fuel (Jet A1), which have made the industry unattractive to potential investors.

However, despite the sundry fiscal and other associated challenges, a few investors have kept the industry going by sheer managerial pro-activeness such that profitability is no longer the primary motive driving their urge to remain in business, but the patriotic zeal to not allow foreign carriers completely take over the nation’s airspace.

Quite unfortunately, the current ravaging impacts of the Coronavirus (COVID-19) pandemic have compounded the challenges facing the indigenous carriers, forcing many of them to cancel flights and also disrupting their projections even when air travellers’ traffic has remained unimpressive over the years.
While Nigeria struggles to battle the outbreak, the disruption to flights caused by the pandemic has exposed Nigerian carriers to acute financial losses with potential negative impact on thousands of jobs if nothing is done by the Federal Government to aid the carriers.
Recently, the International Air Transport Association (IATA) painted what could be likened to a very worrisome picture of what the nation’s aviation sector would become unless some urgent fiscal steps are taken by government to pull the airlines out of the dangerous financial abyss.
IATA projected that the continued flights disruption may result in 853,000 loss in passenger volumes and US$170 million (About N62bn) loss in base revenues in Nigeria.
If the situation spreads further, it said, approximately 2.2 million passengers and US$434 million of revenues can be lost,” appealing to governments in Africa and the Middle East, “as part of a worldwide campaign, to provide emergency support to airlines as they fight for survival.”
Already, Nigerian airlines are feeling the pinch. Prior to the entry of the virus into the Nigerian soil, many airlines around the world especially in Europe have cut down flights by over 50 per cent.
In response to the efforts at containing the pandemic, all the domestic airlines including Aero, Air Peace, Dana Air, Arik Air, Azman Air, Ibom Air, Max Air have all suspended their flights temporarily.
Air Peace, the biggest airline in the country, had initially modified its schedule in response to the pandemic which led to a drastic decline in passenger traffic globally by announcing the suspension of its international flights to Dubai-Sharjar and reducing its operations to the West Coast. The airline also deployed measures to protect passengers and staff against the spread of Coronavirus.
But as from last Saturday morning, all the domestic operations have been suspended.
Air Peace in announcing the suspension of its flights as from Friday midnight said, “It is with a great sense of responsibility that we have decided, in the best interest of our nation, our passengers and workforce, to suspend scheduled flight operations for 23 days effective 23.00hrs on Friday (an hour before midnight on Friday) the 27th day of March, 2020 as a result of the Covid-19 pandemic,” its Chief Operating Officer, Mrs. Toyin Olajide said in a statement.
Other airlines also made similar announcement in support of efforts to curtail the spread of the pandemic.
But the airlines have also offered their facilities for the Federal Government especially on the movement of medical supplies.
“While the suspension is on, we are, however, willing to do special flights both for the government and our people, ” Air Peace added.
With about 200 flights on a daily basis, all the domestic carriers would be losing billions of naira during the period of the shutdown. Air Peace which carries over 70 per cent of the daily flights operating about 90 daily flights is estimated to lose billions of naira throughout the period of the suspension.
The indisputable fact is that these are even harder times for Nigerian carriers and their survivability is said to be hinged on the support from government in this trying period. This, according to observers, is imperative to protect thousands of jobs provided by the sector.
The Central Bank of Nigeria (CBN) has been reeling out measures to douse the adverse economic impact of the pandemic. The Apex bank announced a N1.1trillion intervention fund to support critical sectors of the economy.
The CBN Governor, Godwin Emefiele, said about N1trillion would be used to support the local manufacturing sector and boost import substitution.
But stakeholders in the aviation sector say the airlines and the allied service providers including fuel suppliers, caterers, the travel agencies require long term intervention to aid recovery from the financial strains the COVID-19 pandemic would trigger.
Chairman of Airline Operators of Nigeria (AON), Capt. Nogie Meggison urged Nigerian aviation regulatory authorities to follow the CBN example by providing support for the domestic airlines which are the real drivers of the industry and providing thousands of jobs.
He said: “Nigerian airlines are suffering heavily from the impact of the Corona Virus issue as the passenger numbers have dropped drastically and our overheads remain the same on many fronts and even increasing significantly on other fronts. Like we all know Nigerian airlines trade in Naira but we do our business in Dollars and the Naira has come under pressure since the Corona Virus pandemic.
“The Agencies should therefore help the airlines by immediately streamlining the over 32 multiple charges given to airlines which are mostly double billing. Government should also bear 100% cost of disinfecting all aircraft for this period…
“What we are asking for is not unprecedented. For instance, in the United Stated of America, airlines are seeking a $50 billion bailout. As part of its response, an Emergency Stimulus Package was passed by the US Senate and House and they reduced interest rates to 0.25%. Also, the bill granted their airlines tax credit for their losses during the Pandemic.”
President of Aviation Roundtable and Safety Initiative (ART), Dr. Gbenga Olowo said government would have no option than to come to the aids of the airlines.
He said, “Government guarantees and indemnities would be useful for identified credible operators. Who are the ones bleeding as a result of the COVID-19 pandemic? Principally the Airlines and its service providers…fuellers, Travel Agents, Global Distribution System, On board meal providers, etc. How do we protect jobs in aviation in Nigeria? Most workers may lose their jobs at this difficult period but Continued Training and Human Capital Investment remains the key to job protection.”
Director of Research and Strategy and Corporate Travels, Zenith Travels and Consult, Mr. Olumide Ohunayo said government must come to the aid of all registered carriers whose operations would be affected by the disruptions caused by the COVID-19 pandemic. He said there could be financial incentive, loan or corporate bonds through the CBN or tax rebate to airlines and other allied services. According to him, government should also waive some of the charges imposed on the carriers. These, he said, would provide the requisite palliatives to the operators in this trying period.