By Nnolim Nnaji
THE just concluded public hearing on the amendment bills for the review of some aspects of the Civil Aviation Acts has brought to the fore the impending crisis in the aviation industry which require urgent attention. The industry is in dire need of urgent intervention to save it from imminent collapse.
There is no gainsaying that aviation is the bedrock of the national economy. It is important to note that aviation is regarded as a strategic industry, not only for its potential for economic growth but also for its crucial role in national development and regional integration.
The most important contribution aviation makes to national economy is through its impact on the performance of other sectors and as a facilitator of their growth. The industry is the tonic on which many other sectors depend. Unfortunately, this vital sector that acts as stimulus to the rest of the sectors of the economy is facing extinction, the consequence of which will be very detrimental to the overall economy of the country if not immediately addressed.
In 2019, the contribution of the aviation industry to the nation’s gross domestic product, GDP, was put at N198.62 billions, according to a release from the National Bureau for Statistics, NBS. In fact, aviation was adjudged the fastest growing sector for the 2019 despite the harsh operating environment. This was projected to be surpassed in 2020 but for the advent of the coronavirus pandemic which dealt a devastating blow on the industry.
Before the outbreak of COVID-19, the industry players, especially the airlines, were already crying for intervention from government to help them surmount the various challenges confronting them. The public hearing we held for the six aviation bills between November 17 and 19 provided the ample opportunity for the indigenous airline operators to voice out their problems which we believe should not be treated with levity if we must move the industry and the economy forward.
The operators listed the challenges which they claimed have been crippling their operations as follows: •Non- implementation of the executive order on zero customs duty and zero VAT on importation of commercial aircraft and aircraft spare parts; •non-implementation of the executive order on the removal of VAT from air transportation; •inability to access forex, •high cost of capital and lack of single digit lending interest rate for airlines; •replacement of NCAA’s five per cent ticket sales charge, TSC, with a fixed charge similar to FAAN passenger service charge, PSC.
- Multiplicity of taxes, fees and charges, •urgent review of NAICOM Act on aviation insurance and exceptional permission to grant; •the externalisation of insurance placements for domestic airlines in the country on an exceptional basis in the interest of air transport safety due to inability of Nigerian insurance companies to cover aviation risks; •multiple entries and multiple frequencies granted to foreign airlines and depletion of the domestic airline market with loss of jobs;
- •unnecessary delays for weeks in clearing of AOG spares parts for aircraft; •high operating cost (continually rising cost of Jet-A1); •ease of doing business; •over regulation of domestic airlines; •inadequate night landing facilities in most of the airports, thereby affecting the operating flight hours daily.
As parliament, we are going to look into these demands and more, especially to find out why the Nigeria Custom Service would not respect the President’s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines. The multiple entries for foreign airlines is equally an important concern raised by the operators which must be looked into.
If developed countries could give bailouts in billions of dollars to airlines to cushion the impact of corona virus with all incentives at their disposal you can understand what our operators are going through without help. America, Canada, Brazil, Rwanda, Senegal, India, China , Korea, United Kingdom and several European countries all injected funds into the sector to support their local airlines and the service providers because they understand the importance of aviation in their national economies.
The International Civil Aviation Organisation, ICAO, the global aviation watchdog had in the wake of the pandemic canvassed for continued financial and regulatory support, particularly financial relief that does not increase industry debt levels through direct cash injections, credit or loans and deferrals or discounts on user charges to support airlines over the restart and recovery period.
However, only the following African countries: Rwanda, Senegal, Côte d’Ivoire, Burkina Faso and recently Cape Verde have responded adequately to this plea, said ICAO Regional Director, Mr. Mohammad All Bakri, in a recent publication of the International Air Transport Association, IATA, journal. Their actions, according to ICAO, have helped save thousands of jobs and will enable some airlines to restart and support the wider economies they serve in those countries.
The IATA Regional Vice President for Africa and Middle East, Mr. Barry Kasambo, in the same publication, also acknowledged that the situation of airlines in Africa is worsening and urged that the measures are essential to minimise job losses and ensure that connectivity can be restored within the continent. “We urge African governments and the development institutions which have committed funding to provide it urgently in a structure that does not weaken already stressed airline balance sheets, before it is too late,” he said.
Here in Nigeria, our indigenous airlines are faced with enormous challenges like high-interest rate on loans, lack of maintenance facilities, high insurance premium, multiple taxation, disadvantageous policies and high cost of jet-A1 (aviation fuel) among others which make it near impossible for them, (local airlines) to break even.
We are not just talking about airlines alone, the service providers, the Federal Airports Authority of Nigeria, FAAN, the Nigerian Airspace Management Agency, NAMA! and the Nigerian Civil Aviation Authority, NCAA, and the rest are also having their own challenges. They need bailout funds to function optimally.
The Aviation sector requires huge capital for infrastructural development, the remittances of 25 per cent of their internally generated revenues, IGRs, should be retained for the next ten years to help the agencies upgrade their facilities.
The Federal Government’s N4 billion bailout to the airlines and some palliatives to the agencies (not yet released) is too small. The Airlines needs at least N50bn bailout funds to cushion the coronavirus effect. We are requesting that other mechanisms should be introduced as a support to avert the collapse of the Aviation sector.
We intend to interact with the leadership of the National Assembly and the Ministry of Aviation on all the concerns raised by the operators and other sundry issues confronting the industry to see how we can address them to avert the collapse of the industry.
It is important that the Federal Government urgently come to the aid of the operators by addressing these needs in the overall interest of the national economy and to relieve the Airline operators’ of frustration and as well avert their threat of shutting down their operations due to lack of funds and hash operating environment.