Experts have described year 2020 as one of the worst years in recent time for the aviation sector, not just for Nigeria but globally, as a result of the novel coronavirus (COVID-19) forcing nations to shut down airspaces in a bid to contain the spread of the virus.
Nigeria’s airspace was shut down for about four months, which affected airlines’ operations and passenger traffic, depleting fleet size. The woes of the operators have been further compounded by naira devaluation, due to fall in oil revenue and lack of foreign earnings.
Since the resumption of domestic flight operations in July, airlines have struggled due to a slowing economy and naira devaluation, resulting in increase in cost of operations and services.
Airlines buy spare parts, lease planes and sometimes pay service providers in dollars, but are paid in naira for tickets sold to passengers. The devaluation of the naira has since forced them to increase airfares to cushion the effect of the naira to dollar variations on their operations.
Hadi Sirika, minister of aviation, had said the aviation sector was the most hit by the coronavirus pandemic, saying many airlines might not survive the crisis.
Airline operators disclosed that over 120 aircraft were parked at various airports across Nigeria, with airlines requiring to pay accumulated cost on leased aircraft, staff salaries, allowances for crew, parking and maintenance fees, and recurrent training.
Airlines lost an aggregated N10 billion monthly as a result of the pandemic, according to the airline operators. This implies that in four months, airlines lost N40 billion as a result of the airport closure.
The minister of aviation had put losses incurred by all government agencies in the aviation sector as a result of the pandemic at N7 billion monthly, implying that for the four months, all government agencies lost N28 billion as a result of the airport closure.
A document titled: ‘The Future of Aviation in Africa: Focus on Nigeria’ by Tolu Odutola indicated that FAAN had been most affected, in cognisant of the fact that it had a workforce spread across a total of 22 airports in the country, and without an alternative source of revenue.
Other agencies with similar predicament included: the Nigerian Civil Aviation Authority (NCAA), which is the apex regulatory body for aviation, and whose monthly overhead stands at N750 million; the Nigerian College of Aviation Technology (NCAT), which requires N150 million monthly; the Nigerian Meteorological Agency (NIMET), which requires N290 million monthly, and the Nigerian Airspace Management Agency (NAMA), which requires more than N500 million monthly, to sustain overhead expenditure.
These agencies are funded through budgetary allocations by the Federal Government and their internally generated revenue.
The crisis has left the agencies solely at the mercy of allocations by the Federal Government, whose revenue has equally plummeted substantially due to the drastic global fall in oil prices. This is further compounded by the downturn in the travel and tourism industry, which has been left on its knees by the pandemic.
Prior to the COVID-19 crisis, aviation had contributed $1.7 billion to Nigeria’s GDP, offering employment support to 241,000 persons. Figures by the Nigeria Bureau of Statistics indicate that by the end of Q4 in 2018, aviation was the second fastest growing sector in the country, taking the lead by Q4 in 2019.
The Association of Aviation Ground Handlers (AGHAN), which is made up of Nigerian Aviation Handling Company (NAHCO) plc, the Skyway Aviation Handling Company (SAHCO) and Aviation Handling Services (AHS), forecasts N20 billion loss in revenue generation in 2020 due to the COVID-19 pandemic, which has hammered global economy since the beginning of the year.
Adigun Olaniyi, chairman, AGHAN, in an interview with BusinessDay, decried the advent of COVID-19, saying it had grounded handling businesses in the sector. He stressed that the unlocking of the economy by the Federal Government did not indicate the end to the crisis in the country.
Susan Akporiaye of National Association of Nigerian Travel Agencies (NANTA) told BusinessDay that for four months travel agencies lost N45 billion in ticket sales, when compared with sales from last year.
Akporiaye disclosed that an estimate of 50,000 jobs had been lost already, adding that as a result of the lockdown, all travel agencies were temporarily unemployed.
Way forward
Nogie Meggison, the AON president, suggested an option of approving corporate bonds through the CBN, and 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, the 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 defaulting, if it looks at options of supporting the aviation industry,” Meggison said.
Seyi Adewale, CEO of Mainstream Cargo Limited, suggested that the starting point would be to begin to plan for the next pandemic because this had become a recurrent feature that affected the aviation subsector more than other sectors within the polity.
“Airlines, airports, fuellers and many other aviation services providers need to review their risk management documents and Standard Operating Procedures (SOP) to include proactive, preventive, containment and mitigation actions against the next Bio-Threat,” he said.
