Aviation, Featured

As Nigerians await the resumption of international flights on September 5, it is important that the federal government, as well as the Central Bank of Nigeria, provide urgently the ‘Aviation-specific financial relief measures’ for the survival of one of the key drivers of the economy

By Goddy Ikeh

THE Nigerian aviation sector was one the sectors worst hit by the ravaging coronavirus pandemic. Hadi Sirika minister of aviation, said in one of his briefings at the daily Presidential Task Force on COVID-19 briefing that the Nigerian aviation sector was losing about N21 billion monthly since the outbreak of Covid-19 in the country.

He noted that the huge loss is associated with lack of activities at the sector, whose income solely depends on flight operations.

“In civil aviation, we are in a very difficult moment like everyone else. All of these things started because someone travelled and unfortunately came back home with it (ailment) and the consequence is what we have been going through.

“We are the worst-hit than any other sector. Based on the trend of events before COVID-19, the total loss is about N21 billion approximately plus about N3 billion tangentially and this is divided in this form: N7 billion for aviation agencies which they lose in a month, N10 billion for airline and N4 billion for ground handling, catering and others and the tangential N3 billion,” he said.

“We are the worst-hit than any other sector. Based on the trend of events before COVID-19, the total loss is about N21 billion approximately plus about N3 billion tangentially and this is divided in this form: N7 billion for aviation agencies which they lose in a month, N10 billion for airline and N4 billion for ground handling, catering and others and the tangential N3 billion,” local media reports quoted the minister as saying..

According to the minister, statistics from the International Airline Transport Association (IATA) on COVID-19’s economic impact on Nigeria has revealed a revenue loss of $994 million.

“Also the figures from the International Airline Transport Association (AITA) Economics gave economic impact in Africa’s largest aviation market and that for Nigeria; airline revenue loss is $994 million. In terms of employment at risk in Nigeria, it is 125,370 and loss of contribution to the GDP is $885 million.

“These are IATA figures and because the sector has to do service delivery and it has not been able to render services, then the revenue is lost because the service has not been rendered and that means I have lost it,” he said.

He explained that the aviation sector was the fastest growing sector in the country before the outbreak of COVID-19.

With the resumption of local flight operations in the second week of July, the expectation is that the sector will be on the path of gradual recovery. But this did not happen. Rather some of the airlines announced that they would be sacking some of their pilots and engineers due to the effects of the pandemic on the industry. For instance, Air Peace announced the sack of 70 pilots and implemented pay cuts ranging from one percent to 40 percent. According to a statement issued by the spokesperson of the airline, Stanley Olisa, the management of the airline linked the disengagement of the contract of the pilots to the devastating impact of COVID-19 pandemic.

“The Management of Air Peace wishes to state that it has taken a very painful but rightful decision, in the circumstances the airline has found itself as a result of the devastating effects of the COVID-19 pandemic on its operations and financial health to terminate the employment of some of its pilots.

“This decision was taken for the greater good of the company and its almost 3000 workforce, the affected pilots inclusive.

“The airline cannot afford to toe the path of being unable to continue to fulfil its financial obligations to its staff, external vendors, aviation agencies, maintenance organisations, insurance companies, banks and other creditors hence the decision to restructure its entire  operations with a view to surviving the times” the statement said.

It, however, stated that the disengaged staff would have a place in the airline when things return to normal if they so wish.

But the aircraft pilots and engineers vowed to resist the termination of the employment of the pilots by the management of Air Peace.

Speaking through their umbrella body, the National Association of Aircraft Pilots and Engineers, the aviation workers insisted that due process was not followed by the carrier in carrying out the exercise.

Another airline, Bristow also announced the sack of 100 pilots and engineers. The announcement was made on the second day of the industrial strike action embarked upon by its workers under the aegis of the National Association of Aircraft Pilots and Engineers, who were demanding equitable salary remuneration.

A statement from the management of Bristow said: “The combined effects of these ‘arising’ has resulted in very significant reductions to our business particularly a reduction in the number of contracted aircraft in Nigeria. As a result, the company must now restructure all aspects of its business model (both Rotary & Fixed Wing), including an extensive review of its operations and we continue to drive efficiencies, but with zero compromises to safety and our core values.

“One of these measures includes the right-sizing of the business to ensure that the company has the optimal level of personnel to continue the safe delivery of its services to its clients, whilst allowing the appropriate capacity for future growth. Accordingly, and with much regret, the company has taken the very difficult decision to release over 100 pilots and engineers (both National and Expatriates) over the next couple of weeks,” the company said.

Reacting to the announcement, the National Vice President, National Association of Aircraft Pilots and Engineers, Capt. Yakubu Dukas vowed to fight the decision of the management of Bristow to sack their pilots and engineers.

In addition, the National Association of Aircraft Pilots and Engineers issued a two-week ultimatum to airlines that had sacked or plan to sack their pilots and engineers under the guise of COVID-19, to reverse the decision.

Its President, Abednego Galadinma, told journalists in Lagos that the pilots and aircraft maintenance engineers had resolved to withdraw their services to all airlines, if their colleagues were sacked.

Galadinma criticised Bristow helicopters for sacking 100 pilots and engineers due to the COVID-19 pandemic, saying that the company was not saying the truth, since it operated throughout the lockdown period, servicing the oil and gas sector as an essential service provider. He urged the Nigerian Civil Aviation Authority to, as a matter of urgency, prevail on the airlines to stop the unilateral dismissal of pilots and engineers.

“We demand that Bristow and Air Peace should immediately recall all sacked pilots and aircraft engineers until all labour issues are resolved or be grounded by NCAA because of attendant safety concerns created by their action.

“As a result of the known consequences of these illegal actions and our commitment to patriotic fervour, we shall be forced to withdraw our guarantee of industrial peace within the industry if this call is not heeded within two weeks.

”Our union will be left with no other option but to withdraw the services of pilots and aircraft maintenance engineers across all the airlines,” the News Agency of Nigeria, NAN, report quoted Galadinma as saying.

In the same vein, the Nigeria Labour Congress, NLC, also urged the management of Turkish Air, Air Peace and Bristow Helicopters to reinstate all the sacked workers within two weeks.

Ayuba Wabba, the NLC President, condemned the recent sack of 75 Pilots by Air Peace and 100 pilots/engineers by Bristow Helicopters.

Wabba said in a statement that the NLC also rejected sack of the National Union of Air Transport Employees, NUATE, executives working with the Turkish Air.

“We call on the management of Turkish Air, Air Peace and Bristow Helicopters to reinstate all the sacked workers within two weeks.

“As agreed between labour and employers association, social dialogue should be used to resolve industrial concerns instead of the current resort to unilateralism.

“We will not hesitate to mobilise the weight of the entire Nigerian workforce to the premises of Turkish Air, Air Peace and Bristow Helicopters if our demands are not met,” he said.

The NLC President said that the sack was traumatic for workers, who were still reeling from psychological and socio-economic difficulties imposed by the recent lockdown measures.

He said that the sack of Air Turkish, Air Peace and Bristow Helicopters workers was “highly insensitive, callous, and unjust’’.

Waba said that the unilateral sack of executive members of the National Union of Air Transport Employees (NUATE) working with Turkish Airline was particularly distressing.

“These workers were sacked for fighting for the rights of Nigerian workers in Turkish Air. This is very reprehensible. We wish to remind Turkish Air that unionised workers cannot be punished or sacked for participating in trade union activities. This action is aimed at frustrating unionisation in Turkish Air and to enslave Nigerians working with Turkish Air,” he said.

Although there has been relative peace in the industry after the intervention of the minister of labour and employment, Senator Chris Ngige. But it is doubtful how long the workers and the airlines will maintain the peace in the light of the persistent hardship due to the pandemic.

Meanwhile, the Central Bank of Nigeria, CBN, has announced a credit relief of $136.6 million to businesses affected by the coronavirus pandemic in the country.

Godwin Emefiele, governor of the CBN, said that households, small and medium-sized enterprises, airline service providers, hotels, health care merchants would benefit from the fund.

“The CBN hereby establishes a facility through for households and small- and medium-sized enterprises, SMEs, that have been particularly hard hit by Covid-19,” he told a news conference recently.

He, however, noted that the pandemic has “significant adverse consequences” for the global and Nigerian economies, including crude oil supplies, stock, sporting events, financial markets, entertainment and hospitality industries.

Other interventions announced by the bank include reduction of interest rates for the loan from 9% to 5% retroactively to March 1.

But this figure of $136.6 million to this group of enterprises, including the aviation sector, may not meet what the aviation sector needs to return to normal operations. Earlier in May this year, the International Air Transport Association, IATA, had called for aviation-specific financial relief measures from the Nigerian government to address the severe impact of the COVID-19 crisis on the air transport sector.

Air transport was grounded to a halt in the effort to stop the spread of COVID-19. It noted that prior to the pandemic, the aviation sector contributed $1.7 billion to Nigeria’s GDP and supported 241,000 jobs. IATA estimates that the COVID-19 crisis has put 124,000 Nigerian jobs at risk and some $900 million of the country’s GDP.

While noting that the Nigerian government has introduced broad economic relief packages to mitigate the devastation caused by COVID-19, it urged the government to implement specific financial relief measures for the aviation sector to ensure that the sector would be capable of driving the recovery.

Muhammad Albakri, IATA’s Regional Vice President for Africa and the Middle East, noted that given the importance of air transport for Nigeria’s economy and connectivity. “The government must not let aviation fail. The industry faces a liquidity crisis. Without a viable aviation sector Nigeria’s eventual recovery from COVID-19 will be longer and even more painful. Aviation-specific financial relief measures are urgently needed as a matter of survival.”

According to Albakri the Nigerian government should consider implementing some or all of the following relief measures:

They include direct financial support to passenger and cargo carriers, Loans, loan guarantees and support for the corporate bond market by the Government or Central Bank, Tax relief – rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020.

Others are financial relief on airport and air traffic control (ATC) charges and taxes, Reduction, waiver or deferral of government-imposed taxes and fees, and Foreign exchange availability.

“As the aviation industry looks to restart, it is important that key regional players like Nigeria are ready and able. Aviation is a strategic pillar for social and economic development. Supporting aviation now will mean that Nigeria’s economy can pick up from where it stopped and drive forward,” Albakri said.

Apart from the catalogue of requests from IATA, the reopening of the international flights will also assist in driving the recovery of the sector. However, the reopening of international flights was recently shifted from August 29 to September 5. Since the resumption of domestic flights in the country in July, there has been seamless operations, especially with the observation of the protocols announced by the Nigeria Centre for Disease Control, NCDC, and the Presidential task force on Covid-19. Although, the sector recorded a helicopter crash on Friday, August 28 in Lagos that killed three crew members, there was also the good news of the reopening of the Akanu Ibiam International Airport Enugu after several months of closure for the expansion and resurfacing of the runway.

As the nation’s aviation industry looks set to resume full operations soon, it is important to provide more bail out facilities for the sector since it is a strategic pillar for socio-economic development of the country.

– Aug. 31 2020 @ 16:55 GMT |

Tags: Can Nigeria’s troubled aviation sector survive with timid credit relief?