The Airline Operators of Nigeria (AON) would like to use this medium to salute Government’s courage to control the spread of the Corona Virus in the country.
While we do not throw caution to the air over the severity of the COVID19 Pandemic, we are worried that the pandemic restrictions have led to an almost complete shutdown of economic activities around the country, closure of Abuja/Lagos airports and suspension of aviation activities which are critical drivers and catalysts of the Nigerian economy.
While we totally agree with the wisdom of government to control the pandemic through the sit at home order and putting the health and life of Nigerians first, we must also recall the saying that; “While you are crying you must also see ahead.”
Thus the International Air Transport Association (IATA) also noted that the COVID-19 crisis will see airline passenger revenues loss by $314 billion in 2020; putting at risk 25 million jobs that are dependent on aviation globally.
Also, as a result of the COVID19, Nigeria aviation has an exposure of about 251,000 direct job losses according to IATA including the various parastatals, Ground Handling and support Service Providers, etc.; as the failure of airlines will obviously bring down the support structure as well.
Further more, the International Monetary Fund (IMF) has projected that Nigeria’s economy will recede by 3% in 2020; leading to the worst recession in 30 years according to the April 2020 World Economic Outlook Report recently released in Washington USA.
The lockdown is a double blow for the Nigerian economy due to the drop in the price of oil which is the mainstay of the country to below $15, and the negative impact of the “COVID19 STAY AT HOME order that has virtually suspended all economic activities.
From the fore going therefore, it is clear that the Nigerian economy and indeed the aviation industry requires urgent government articulation of plans if the jobs of our youths must be preserved post COVID19.
To ensure the quick recovery of the Nigerian economy after the lockdown or pandemic therefore, there is need for government to begin to put in place measures that will guarantee the survival of airlines which is the main catalyst and a pivot to the quick recovery of the Nigerian economy.
IATA recently announced that on a global basis, an estimated emergency aid of up to $200 billion is required for airlines to recover from the impact of the virus.
In response to this reality therefore, it is a known fact that Governments around the world have taken the bull by the horn and taken the initiative by putting aviation in the forefront of their country’s recovery and putting in place support for the sector as a major tool to jumpstart their economy.
For instance, the US Government granted a $58 billion bailout to the airline industry as well as loans and grants for airlines.
Similarly, UK airlines asked for 7.5 billion Pounds; while India made available $1.6 billion rescue plan for aviation.
Also, Singapore announced $112m for aviation, while Australia granted a bailout plan of AUD298m for the sector.
Also, the Airport Authority of Hong Kong (AAHK) put plans in place to buy 500,000 airlines’ tickets as well as buying back airport services equipment and the reduction of landing and parking fees, thus bringing the total stimulus package of the airport’s support to USD593,548,388. (HK$4.6 billion) as a way of cushioning the lull experienced by the airlines and the drastic drop in passenger traffic at the airport. This is just to mention a few as the list goes on.
Similarly, the Nigerian aviation industry is isolated from this global as it has equally suffered seriously during this difficult time with the jobs and livelihood of many aviators threatened because of the sudden suspension of aviation activities, and the massive drop in passenger numbers due to the pandemic scare prior to the stay at home order, despite their operational costs and overheads remaining the same.
Furthermore, IATA notes that in Nigeria the COVID19 attributable disruption could lead to over 853,000 loss in passenger volumes and $170m loss in taxable base revenue’s, and should the situation persist, loss of passenger volumes would rise to over 22 million with a consequent loss amounting to about $1 billion in revenue.
This therefore calls for a proactive and immediate action by government to put certain relief measures in place to safeguard the Nigerian economy after the pandemic and ensure survival of the sector once the pandemic is over and economic activities resume.
As a way forward, we suggest that government could take a cue from the American model of offering 50% funding and Grants, and 50% Palliatives through waivers and suspension of taxes, levies and fees etc.
We appreciate the CBN’s approval of N1.1Trillion stimulus and the recent N50Bn COVID19 Intervention Fund to jumpstart the economy. AON would appreciate immediate and simple access of the funds to Aviation at an interest rate of not more than 5%.
Also, some quick low hanging fruit palliatives that the Federal Government may consider to mitigate the impact of the pandemic on the Nigerian economy and the aviation sector include:
- Implementation of President Muhammadu Buhari’s Executive Order on Removal of VAT from all forms of transportation; as domestic airlines are still the only form of Transportation paying VAT.
- Suspension of all NCAA, FAAN, and NAMA charges for domestic operations within the country for 180 days.
- Subsidy for payment of workers salaries at least to cover 6 months from March to September 2020 so that staff are not sacked.
- Support towards augmenting insurance premiums which are dollar denominated, as well as augmenting payment for international leases and rentals on the over 120 grounded commercial aircraft that must be paid.
- Access to Foreign Exchange at the first tier rate given to Agric, Pilgrims etc.
We believe the above measures are practical steps that will be a win strategy for all players in the sector and that will jumpstart the wheel of the Nigerian economy to keep moving as it will cushion the impact on the financial exposure of the Nigerian economy.
It is our firm conviction that it is better to keep the aviation industry going today than to kill the goose that lays the golden egg at the expense of over 251,000 Nigeria Aviation jobs and recovery of our fragile economy today.
We therefore call on Government to use its machinery to kindly consider and immediately approve the above rescue plan for recovery of the Nigerian Economy and the Nigerian aviation industry post COVID19 and to support domestic airlines to survive which is a catalyst of any economy worldwide.
Captain Nogie Megisson, Chairman, AON