Aviation loses N63b to COVID-19

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Aviation loses N63b to COVID-19
June 22, 2020

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The aviation industry lost over N63billion to the ravaging effects of coronavirus pandemic, a report by the Ministry of Aviation has shown.

Describing the air transport value chain as the hardest hit to the deadly virus, the report said over 90 per cent of operations and activities were adversely affected resulting in monthly losses valued at N21 billion.

The report sighted by The Nation indicated that the ravaging effects of the virus in the sector has forced government  to consider working out a recovery plan aimed at providing financial support where necessary to sustain air connectivity for passenger operations and cargo  flights.

Besides, the financial support proposed for the industry, the report indicated that the government is rejigging its plans to fast track the establishment of a private sector driven national carrier, which is expected to  generate significant revenue and contribute to Gross Domestic Product (GDP).

The project is expected to create activity in the wider economy for suppliers, importers, exporters and manufacturers.

“The objective and guiding principles is to save existing aviation industry organisations and jobs, through a targeted stimulus package as well as fast-track the establishment of a private sector driven national carrier.

“There is need to strengthen the aviation sector so that it survives and creates job opportunities and supports general economic activity including transport logistics.

“The project elements will include extend grant support, including pay roll support to the aviation industry including airlines, handlers, caterers and related services,” the report said.

According to experts familiar with the matter, the report proposed the provision of single digit soft loans, with long-term repayment plan, deferred payment of taxes and filing dates.

“The government is working to ensure the removal  of Value Added Tax from airline tickets as approved by Federal Executive Council. It seeks the provision of COVID-19 tests for all passengers and crew.

“It seeks waiver of airport rent fees to all airport operators for the duration of the lock down plus one month. Facilitate the processes for establishing of private sector driven national carrier with the Federal Ministry of Aviation as the implementing structure,” the report added.

The report put an estimated N27 billion as a bailout package for the sector, which should be delivered within 12 months.

Speaking on the report, President, Aviation Safety Round Table Initiative (ASRTI) Dr. Gabriel Olowo described the grant as paltry, saying it would do very little to address airlines and their allied losses. Although he commended the move, he nevertheless stressed that the industry’s need should be equitably prioritised.

He advised that the identified seven project elements in the aviation industry should not go together in a swoop under the N27 billion estimated cost, urging the government to prioritise those that are key to a robust aviation sector in the country.              –

“Individual projects that are not COVID-19 related should attract special focus and special funding. All the project elements are key to a robust aviation sector in Nigeria. The government’s action is commendable. It is very necessary and is a good attempt, given the national income constraints during the year,” Olowo said.

“The $58.7 million is a paltry sum to cushion total negative impact of COVID-19 in quarter  two and quarter  three  of 2020 and may not sufficiently address airline and its allies loss of business.

“The industry needs must be equally prioritised. Project elements should not be ambiguous but clearly defined,’’ he said.

“Whereas Lagos Airport, which constitutes more than 40 per cent of FAAN income , is suffering huge expansion neglect requiring a deliberate policy to make it a West African Hub is needed to stimulate  non aeronautical revenue.

“If Nigeria fails to develop Lagos Airport into a regional Hub for West Africa, Ghana, Cote D ‘ Ivoire and Togo will pursue hub status for Accra, Abidjan and Lome.

“Hub competition with Lagos Airport by other Nigerian airports can never thrive as much as Lagos Airport because of its geographical location.”