By Abel Eno
I don’t think that even the worst critic of Nigerian systems and institutions would doubt that regulators of the country’s aviation industry, over the last seven years after the Associated Air crash of 2013, have succeeded in maintaining a safe sky in a manner that now allows air transport passengers to fly on domestic routes with the same ease of mind as they do on international flights. This feat, which no doubt, has come by the courtesy of the enforcement of strict safety regulations by airlines and airports as demanded by the Nigerian Civil Aviation Authority (NCAA) have seen a rise in patronage for local airlines.
That once-held fear of flying coffins tearing through the skies and which could drop at any moment with attendant deaths to crew and passengers appear to have left the minds of many Nigerian air passengers. A visit to any of the country’s airports would reveal the confidence exuded by the thousands of Nigerians who now travel by air even at double the cost paid prior to the outbreak of COVID-19 about March.
What however worries me, and which should be of concern to all stakeholders in the industry, is the way and manner in which the essence of regulation seem to have been focused more in Nigeria to safety issues, while less emphasis is paid on the economics of the airlines even by those who should know that the high mortality rate of the bulk of the country’s airlines are caused by poor economic regulations and not necessarily safety concerns. If this knowledge were to be fully comprehended by the Federal Government and aviation sector regulators, the debate over the need or otherwise of a speedy release of bailout funds, sufficient to reflate the existing local airlines – Air Peace, Dana Air, Overland, Arik Air, Aero Contractors, Ibom Air etc – should not have arisen in the first instance.
In the stead of dissent, it should have been that at the behest of the Federal Government a hand of help was extended to the airlines, rather than what we are witnessing where the airlines are the ones begging and pleading for a lifeline following flight resumptions after the ease of the COVID-19 lockdown. It is no secret that airlines all over the world had sunk into a deep pit as a result of the impact of coronavirus and were all stretching out their hands from a depth of financial losses for whatever help they could get from their governments. Data from the International Air Transport Association (IATA) shows that over $173 billion of government funds has been released into the global industry in 2020, but with Nigeria not featured on this data.
Clement Idok, an analyst who lent his voice to the dissents by concerned Nigerians on the late decision by the Federal Government to allocate a meagre N4billion to ease the plight of Nigerian airlines, described the government’s gesture as a “belated display of failure to understand nor appreciate the critical role airlines play in the sustenance of the Nigerian economy and its people.” And nothing could be far from the truth in this statement, not when one considers the thousands of Nigerians who earn their living working at the Federal Airports Authority of Nigeria (FAAN), Nigerian Airspace Management Agency (NAMA), Nigerian Civil Aviation Authority(NCAA), Accident Investigation Bureau (AIB),the numerous caterers, taxi/cab drivers, cleaners, ground handling firms, bookshops, canteen operators that one confronts as he or she alights at the Calabar, Owerri, Enugu, Uyo, Jos, Kaduna, Ibadan, Yola, Makurdi, Kano, MMA 1 and 2 Lagos, Port Harcourt and Abuja airports and the fact thay all these jobs could be swept away like flood water washes heaps of sands should the local airlines stop flying into all these airports.
Add this to the fact that the industry contributes 0.6 per cent to GDP and is assisting in no mean ways to the ongoing quest to diversify the economy from over dependence on Petroleum and you realize how imperative it is to support the local airlines amid the devastation to their profits by COVID19. If the government is not taking the cue from around the world to throw in sufficient funds to bailout the airlines, critical stakeholders should keep their feet on the pedal on this cause. “With losses estimated at about N360billion due to the impact of COVID-19, investors in Nigeria’s domestic airline industry have every cause to seek for a well structured government bailout; the type that provides sufficient funds to keep the airlines afloat as profitable businesses immune from the shocks induced by the pandemic,” said analyst, Idok.
“The N4billion bailout proposal by the Federal Government, which has been heavily criticized by the majority of industry stakeholders, including the National Assembly, remains grossly insufficient to resolve the myriad of challenges confronting the Nigerian airlines post COVID-19. Much more is required, including tax rebates and temporary exemptions from some of the current airports and regulatory charges,” he added. Chairman, Senate Committee on Aviation, Smart Adeyemi, who flayed Federal Government’s N4 billion bailout for the airlines, warned that paucity of funds could push operators to cut corners.
“The airline operators in Nigeria are just managing. There’s need to review the N4 billion bailout to the airlines,” Adeyemi said. Comparing the $74 million and $150 million earmarked by Senegal and Rwanda as bailouts for the countries’ airlines, Adeyemi lamented the poor funding for Nigeria’s aviation sector. The lawmaker therefore proposed N50 billion bailout for the airlines instead.
But I am of the view that even N50billion is not enough; a N100billion zero per cent interest cash or funds to support the airlines is not too much a decision for the government to compel the Central Bank of Nigeria (CBN) to make available for the industry. Allen Onyema, CEO of Air Peace, at the launch of the airline’s foray into the international market captured the view of other operators when he said:”I will be making the greatest mistake and also telling a big lie if I admit that this airline can succeed without the support of the Federal Government.”
If governments in other countries already blessed with requisite facilities are bailing out their airlines, there are no excuses for the Nigerian government to sit on the fence on this issue; not when one considers the jobs created by airlines in the country. First, the local operating environment places Nigerian operators at a serious disadvantage ab initio with low fares which does not reflect economic realities. The industry also faces the challenge of the absence of aircraft maintenance facilities in-country, which warrants local airlines spending more than double on aircraft repairs at overseas Maintenance, Repair and Overhaul (MROs) hangers in spite of nil income even as it strives to meet huge staff remuneration, multiple taxes to regulatory and airports agencies, loans at double digit interest rates and exorbitant cost of foreign exchange (forex) for mandatory aircraft repairs and purchase of spares.
If these factors are considered deeply with the safety fears raised by Senator Adeyemi in allowing the airlines to operate without government funds to support routine aircraft maintenances, it would not be out of place to say that nothing is too much to make available for the airlines under the post COVID-19 era as bailout. Not when we have an airline like Air Peace making us proud by its recent launch of flights into South Africa, a feat capable of reducing an estimated $3billion annual loss to capital flight, should government support it and other local airlines to fly into more European, American and Asian countries.
As one writer noted recently, “in a time of recession, which the beleaguered airline industry has been for years now, there is need for more cash flow to avert the collapse of the local airlines as the economy would be in dire straits should they be allowed to go down. After all, they employ thousands of Nigerians direct and indirectly, create revenue for service providers, services to the travelling public and a boost to GDP growth.” The time to act is now; it could be too late tomorrow.
Eno writes from Uyo, Akwa Ibom