November 3, 2020

Senate, FG disagree over N5bn bailout for airline operators, others


…N5bn bailout grossly inadequate — Senate

…We can’t afford more than that, we have challenges — FG

 …Says AON owing FG $6,993,234; N19.365bn

By Henry Umoru

THE Senate and the Federal Government disagreed sharply yesterday  over the N5 billion  bailout approved for airline operators and other businesses in the aviation sector to mitigate the impact of COVID-19 pandemic on their operations.

While the Senate asked the Federal Government to raise the bailout fund, saying it was too small, the Federal Government said it could not go beyond such amount, as it had other challenges to contend with.

Speaking at the beginning of a three-day public hearing on six aviation executive bills in Abuja yesterday, Chairman, Senate Committee on Aviation, Senator Smart Adeyemi, All Progressives Congress, APC, Kogi West, who stressed the need for an upward review of the bailout funds for airline operators, said what the government was offering as bailout was too little to make any meaningful impact.

The three-day public hearing on six executive bills is aimed at fine-tuning regulatory issues as well as effective management of agencies in the aviation industry, especially the twin bills for an Act to repeal and enact the Civil Aviation Act, 2006 and the Nigerian College of Aviation Technology Act 2010.

Adeyemi, who maintained that the bailout for the airline operators was   a far cry from what would be required  to finance aircraft maintenance and retain workers, said:  “ I do not think that N4 billion is what we are talking about. I think the FG should give the industry all the attention it deserves.

“N4 billion is not enough. Yes you might say they are in business but their business is the soul of our economy.

“Let me take this unique opportunity to call on the Federal Government to explore the possibility of providing bail out funds for airline operators. The outbreak of the COVID-19 is a global and on-going pandemic and countries all over the world are providing bail out funds for airline operators.

“Certainly, the aviation industry was the most affected by this virus attack and, therefore, needs all the support possible to resuscitate the industry. In the absence of this, so many airlines will struggle to stay in business or worst still, be forced to withdraw their services.

‘’Bail out funds will mitigate the devastation and also discourage operators from cutting corners as the consequences can only be better imagined.

“The N4  billion approved for the airline operators is too small, going by what is happening globally in the aviation sector. If we really want to keep the airline operators in business, and we don’t want them to close shops and go home, the Federal Government should shore up the amount it wanted to give to the airlines operators.

“For a developed nation like Nigeria, we need to encourage the airline operators to remain in business. The situation would be worse if we fail to support them and they would have to be cutting corners. The Minister should still extend our demands to the executive council and see how CBN could come in in that regard.”

Adeyemi advised   the government to provide sufficient bail out to the airline operators to prevent them from cutting corners in their operations, adding that “such bail out will ensure they (airline operators) don’t cut corners; the implication of which is better imagined.”

On his part, the Minister of Aviation, Senator Hadi Sirika, had informed the Senate panel about Federal Government’s plan to provide N4 billion for airline operators and another N1billion for other business owners in the aviation sector, as part of its intervention to cushion the effects of COVID-19 pandemic.

READ ALSO: Aviation unions worry over non release of intervention funds to sector

He said  government’s decision was based on the recognition of the pivotal role of the aviation sector to the Nigerian economy.

According to him, though the decision is laudable, the government cannot afford to raise the said bailout above the present position because of the present challenges it is confronted with.

Sirika added that the Federal Government would require the backing of the Senate for necessary appropriation in that regard in the 2021 budget.

Meanwhile, during presentation of positions on the bill, Airline Operators of Nigeria, AON, told the committee that the cost of imposing five percent contract sales and service charge was on the high side, noting that five percent had been in law since 2006 and that it should be reduced to at least one percent.

AON, which was represented by its consultant, Chinasa  Unaegburam, said: “We are proposing that we have our fees at cost recovery, so the aim is to ensure that these agencies are managed efficiently.

‘’That there is accountability and transparency. Putting these factors in place, we can then justify the retention of this five percent. But today, members of AON are groaning.

“We propose 1.5% but it is subject to negotiation. The operators have to operate efficiently which is a very important issue for the operators, two year imprisonment on non-remittance of charge.

‘’An airline should not be subject to a jail term from non remittance of charge. The whole section should be expunged.”

Reacting to this, the Aviation minister said:   “We have concerns and they are very genuine. NCAA operates on cost recovery basis. They (AON) are owing us  $6,993,234; N19,365,374,686 billion.

‘’She is proposing that the percentage goes down and the money is not there. These are monies we get from tickets and they ought to be remitting this money so that we can train more inspectors and keep the industry safe.  We are here so we can get a very robust Civil Aviation Act.”

On assumption that some airports were not viable, the  minister said:  “I don’t want to believe that there are some airports that are not viable. A case study has been established in the country.

‘’We have to create activities around the country, especially when airports are national security assets.  We are going to see a boost in the civil aviation sector when the new airports are established.

‘’When we add 10 more airports to the existing ones, it will boost economic activities.   I don’t mind having airports in every city or state. We will do everything possible to establish and sustain them.”

The President of the Senate, Senator Ahmad Lawan, who was represented by the Deputy Leader, Senator   Robert Ajayi Boroffice, APC, Ondo North, said the six bills were consistent with current efforts by government to improve  standards in the aviation industry.