Domestic airlines in Nigeria have pleaded with the Federal Government to come to their aid by providing funds that would help cushion the effect of the financial losses they have suffered as a result of the COVID19 pandemic. The Airline Operators of Nigeria (AON), the umbrella body for Nigerian airlines said in a statement that domestic airlines have lost N360b and urged the Federal Government to consider urgent stimulus grants or palliatives to help the airlines from going bankrupt.
The AON in a statement signed by Chairman, Captain Nogie Meggison also advised the aviation agencies to take a cue from the Central Bank of Nigeria (CBN) which acknowledged the adverse impact of the virus on the global and Nigerian economies and seek ways to help airlines cushion the effect of the pandemic. The statement reads: ”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 to about 9% 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, staff salaries, allowances for crew, parking and maintenance fees, and recurrent training. At present, the domestic airlines have lost an estimated N360billion 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 revenues this year. Aviation service providers including Airports, fueling services providers, ground handling service providers, security services providers, catering services providers and many more would be badly hit this year 2020 according to IATA.
“With these troubling statics likely to threaten the existence of many domestic airlines in Nigeria who are still grappling with over 32 multiple charges, the AON wishes to commend the CBN for announcing a moratorium of one year on all 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.
“AON is therefore seeking government stimulus packages and incentives to mitigate the negative impact of this pandemic on the aviation industry in Nigeria and by extension the domestic airlines. This should include deliberate sourcing, loans, grants, tax waivers, special forex windows and rates, reduction of airport taxes or surcharges, and waivers.
“Another option could be approving corporate bonds through the Central Bank of Nigeria, (CBN), completely waiving some charges to guarantee the survival of airlines and avoid over 100,000 direct job losses post COVID-19.
“We are aware that Russia, US, Canada, Britain and some other countries have come up with one measure of support or another for their airlines and Nigeria will not be at default if it looks at options of supporting the aviation industry.
“Domestic airlines are the only operators still paying VAT on commercial air transportation, which is not obtainable anywhere in the world. We have said this countless 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 the impact that this pandemic will have on the economy, the VAT will continue to be an increased burden on Nigerian travelers.”
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.”