Airlines groan over loss of passengers, revenue

Turkish Airlines

…Projected to lose 2.2m passengers to disruption in air travels

…Projected revenue loss- $170m

…Seek special grant/bailout from govt to survive and avert job losses

By Lawani Mikairu

SINCE the outbreak of the dreaded Corona virus, Nigerian airline operators have frequently been in the news bordering how their operation could be regulated to curtail the spread while also allowing them to remain in business.

But the recent closure of borders and suspension of international flights by many countries is putting so much financial pressure on the airlines which will eventually lead to job losses.

According to Alexandre de Juniac, Director-General of the International Air Transport Association, IATA, the disruptions in flight operations are likely to result in 853,000 fewer passengers in Nigeria. IATA in its latest sector report said: “Nigeria would also lose approximately 2.2 million passengers from the disruption to air travel due to the continued spread of corona virus”.

The association, an umbrella body for 290 airlines globally, had in early March “projected 853,000 losses in passenger volume and $170 million loss in base revenue in Nigeria if the spread of COVID-19 continued”.

The IATA director general also said time is fast running out for governments to step in to help. IATA has estimated that a typical airline had just two months of cash at the start of the year and the latest available figures suggest that global air passenger numbers for March are down 50 per cent from a year ago.

Travel restrictions

Support measures are urgently needed. He said assistance should include things such as “direct financial support to compensate for reduced ticket revenue that is directly attributable to travel restrictions. Government or central bank-backed loans and/or loan guarantees will also help, as will temporary tax relief and rebates on taxes paid this year.

In combination, these measures will provide airlines with critical breathing space until the crisis recedes. And where restrictions on entry/exit and quarantines make air services untenable, it is appropriate that governments should suspend consumer regulations that make airlines financially liable for cancellations and schedule changes.”

Aviation stakeholders have called on the Federal Government to immediately make a special grant available to airline operators or instruct the Central Bank of Nigeria, CBN, to make the airlines major beneficiary of its recently announced N50 billion targeted credit facility to cushion the impact of the virus on businesses.

Speaking with Vanguard Spotlight on the need to assist Nigeria airlines overcome the loss in revenue occasioned by the epidemic, Abdullahi Adamu, Director, Consumer Protection Directorate, Nigeria Civil Aviation Authority, NCAA, said the Federal Government will and should assist the airlines.

He told Vanguard Spotlight that this has already been demonstrated by the Federal Government as “the N50bn intervention initially announced by the Central Bank of Nigeria as relief fund for businesses and SME specifically mentioned aviation as one of the sectors to benefit”.

Former Secretary General of the National Union of Air Transport Employees, NUATE, Adeyinka Abioye while also speaking with Vanguard Spotlight said the Federal Government, through the Ministry of Aviation should immediately begin putting appropriate mechanism in place to safeguard the economic interests of industry players.

Abioye said: “As COVID-19 rages globally, we appreciate government’s proactive measures and intervention so far. However, any discerning mind will notice that the aviation sector is now in a state of operational kwashiorkor, so much so that we hardly hear noise of aircraft landing or taking off.

“I will, therefore, appeal to the Federal Government, through the Ministry of Aviation to immediately begin putting appropriate mechanism in place to safeguard the economic interests of industry players, and work out a palliative or bailout as the Ministry or Federal Government deems fit. This is the way to go, under the current circumstances”.

Arik Air was the first to announce the temporary suspension of flights to all its West Africa Coast destinations effective Monday, March 23, 2020. Mr. Adebanji Ola, Communications Manager, Arik Air said: “The management of the airline took the decision after a careful analysis of the novel Corona Virus Disease, COVID-19, which has been declared a pandemic by the World Health Organisation, WHO.”

The Chief Executive Officer of Arik Air, Captain Roy Ilegbodu, said: “The safety and well-being of our personnel and valued customers are paramount at this critical time. We do not want to take chances and this is why we have taken this decision”.

Air Peace airline was the next airline to downsize its flight operations after deploying measures to prevent the spread of the virus. The airline said it is cutting down its number of flights operations per day in response to the adverse effects of the pandemic, Corona virus on flight operations world wide.

According to Mrs. Toyin Olajide, Chief Operations Officer, Air Peace, the airline took the decision after an emergency meeting with its top management staff to review its operations in the face of the disease, which the World Health Organisation, WHO, has already declared as a global pandemic.  She also said the decision to cut down flights is because of a tremendous decline in passenger traffic and the need to cut costs.

“On the domestic scene, we are reducing our frequencies while at the same time, restructuring our operations by deploying our hoppers to more airports. Our international operations into Dubai through Sharjah International airport shall be suspended from next week as the United Arab Emirates, UAE, has shut its airports to nationals from other countries including but not limited to Nigeria,” Olajide added. Before downsizing flight operation, Air Peace announced measures for protecting its numerous passengers and staff against the spread of the virus. The airline’s Safety Manager, Captain Godfrey Ogbogu, made this known in a statement made available to journalists

Ogbogu said that all passengers of Air Peace would be subjected to a thorough hand sanitisation at the boarding gate, adding that the airline has introduced temperature checking for all passengers before boarding. He revealed that any passenger whose temperature reads above 38 degrees, will not be allowed to board while a refund will be issued.

According to him: “We wish to state categorically that any passenger who fails to cooperate will be declined boarding on any of our flights”. Captain Nogie Meggison, Chairman, Airline Operators of Nigeria, AON, has also called on the Ministry of Aviation to take a cue from the Central Bank of Nigeria, CBN, by directing the various agencies under its supervision to immediately put in place and extend critical palliative measures to Nigerian airline operators in order to reduce the burden of colossal loses they have suffered and continue to suffer from the impact of the virus on air travel.

Meggison said: “Just …(on) March 16, 2020, the Central Bank of Nigeria issued a statement acknowledging the adverse impact of the virus on the global and Nigerian economies and announced a moratorium of one year on all principal repayments of intervention loans effective March 1, 2020; reduced interest rates from nine to five percent per annum for one year; and created a N50 billion targeted credit facility to cushion the impact of the virus on businesses.

“Similarly, therefore, we use this medium to call on the aviation agencies through the Federal Ministry of Aviation to follow the same path by taking action to support domestic airlines that are the drivers of our national economy.

Nigerian airlines are suffering heavily from the impact of the Corona virus issue as the passenger numbers have dropped drastically and our overheads remain the same on many fronts and even increasing significantly on other fronts. Like we all know Nigerian airlines trade in naira but we do our business in dollars and the naira has come under pressure since the Corona virus pandemic.

Disinfecting of all aircraft

“The agencies should, therefore, help the airlines by immediately streamlining the over 32 multiple charges given to airlines which are mostly double billing. Government should also bear 100 per cent cost of disinfecting all aircraft for this period and provide thermal scanners and hand sanitizers as well as mobilise more manpower and training of Port Health personnel at our local airports to encourage more people to travel.  What we are asking for is not unprecedented.

For instance, in the United Stated of America, airlines are seeking a $50 billion bailout. As part of its response, an Emergency Stimulus Package was passed by the US Senate and House and they reduced interest rates to 0.25 per cent.

“Also, the bill granted their airlines tax credit for their losses during the pandemic. Our government can do the same, therefore, by granting the above stated reliefs to Nigerian airlines as a way of assisting them during this very difficult time to recover from their losses”.

Already, Comrade Ben Nnabue, National President National Union of Air Transport Employees, NUATE, has raised fears of imminent job losses in the aviation sector. He said it is very obvious that aviation has taken the hardest hit from the corona virus pandemic.

According to him, “the colossal losses arising from this state of affairs has created a very serious labour challenge”. As the airlines, especially the international carriers, and the companies dependent on them count their losses, there is now a present danger that the workforce might take a hit as well. This is a matter of serious concern to NUATE as a labour union. “This type of circumstance calls for sober thoughts.

We use this opportunity to commend the Federal Government who, through the Central Bank of Nigeria, has announced an intervention fund of N1trillion to mitigate the negative impact of the corona virus pandemic. We are grateful that aviation has been named among the beneficiaries, and hopeful that the sector will actually be given the lion share,” he said.

Vanguard

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