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How COVID-19 Compounds Challenges Faced By Aviation Sector In Nigeria

As the survival (or otherwise) of the aviation sector remains a serious source of concern to the industry stakeholders, the tension further becomes heightened as the trajectory of Covid-19 across the globe remains intractable, especially within the regions of African.

The enormity of effect is unprecedented especially in the case of Nigerian industrial sectors which have unfortunately been operating in an environment already bedevilled by a perennial financial crisis, subjecting sectors of the economy to existential struggle.

According to a report, the International Air Transport Association (IATA) projects the expected economic losses for African airlines due to the pandemic at USD6 Billion. The body also predicts about 3.1 million job losses across Africa. 

While Airports Council International (ACI) figures show 51% decline in total airports revenue for the African region, Airline Operators of Nigeria (AON), mid-April said its members had lost roughly USD1 Billion to the lockdown of airspace in Nigeria.

The aviation sector in the entire African region has always had underline ailments, ranging from tight financial commitment to often severe administrative problems. And now with the pandemic, the crisis has increased the risks within the aerospace industry.

Nigerian minister of aviation has expressed fear that some of the country’s airline’s operators might not survive the crisis, except there’s a holistic approach to remedy the crises imposed on the sector by the global pandemic.

In Africa, the aviation industry contributes $55.8 billion to Africa’s gross domestic product (GDP) yearly. This feat suffered a lethal fate as countries imposed restrictions on mobility amid the crisis.

The Nigerian government, on March 13, grounded the civil aviation operations to slow down the spread of the pandemic. The aviation sector is a key driver in the nation’s economy. This unavoidable action by the government thus made the industry one of the hardest hit. Thereby recorded for the sector what has been described as a colossal loss.

A look into Nigeria’s aviation sector reveals that the sector currently contributes N149.4 billion, an estimation of 0.12% (as at 2018) to the economy. Going by the move to increase the GDP by 1%, Nigeria could see more than 700% increase in two years by the end of 2020.

But to the clearinghouse of over 280 world’s airlines, IATA, the covid-19 regime has made the sector suffer a loss of over $900m and also put over 124,000 Nigerians jobs at risk across the industry’s value chain. The evidence of this has equally been brought to fore as the ‘new normal’ in the industry emerged. This devastating reality now constrains most of the local airlines to either force their workers to embark on unpaid leave, slashed salaries or dismiss their workforce.

The New Normal

In a virtual event organized by Aviation Safety Round Table Initiative (ART), the Director-General of the NCAA, Captain Musa Nuhu reel off the new protocols mandatory on any operational flight in the country.

Moreso, reports have emerged stating the effects the new order is having on the pockets of the aerospace users. Although ahead of the full resumption of operations, the Secretary to Federation, Mallam Boss Mustapha had prepared the minds of the public to the inevitable increment in the aviation service. 

According to him, prices of things have surged since the coronavirus outbreak. “Prices have increased generally. The prices of things prior to COVID-19 is different from what it used to be. And because of the protocols that are going to be introduced in the whole aviation business, you will definitely expect an increase in the prices,” he said.

Workers Fear Layoffs

“I knew the pandemic would have devastating effects on us in the aviation industry, particularly pilots. What I did not know was that I would be among those who would lose their jobs”, a former pilot recounted his job loss ordeals in an interview.

Lagos Chamber of Commerce and Industry (LCCI), in a breakdown of a survey the chamber conducted on business owners, concludes that the unemployment rate is expected to increase. The chamber projects 40-45 per cent by end of 2020. Although this slightly differs from the Labour Minister’s figure of 33.5 per cent. In any case, this projection, to the chamber, is imminent as the helpless firms take the option of cost-cutting measures.

“This has a ripple effect on the Gross Domestic Product given that private consumption by households accounts for about 60 per cent of national output,” LCCI further said.

In early October, AITA also expressed fear of possible 6million aviation-related job retrenchment in Africa and the Middle East.

Already, in April, major local airlines in the country informed their workforces of their financial incapacities to fulfil the obligations of the workers’ earnings. Some members of staffs of Air Peace, Arik Air, and Dana Air lamented over fears of losing their jobs, or their monthly earnings, as they were told to either not expect full salaries, or any salary at all by the end of the hitherto so-called ‘Black April.’

However, in August, the FG dossed off the tension of possible job losses when the Minister of Labour and Employability Chris Ngige during a conciliatory meeting with both the employees and the employees of the airlines to have a ‘social dialogue’. The minister further said: “The government on its part will honour its obligation to the industry by providing palliatives in the form of tax reduction, tax exemption, and elimination of customs duties on aircraft spares and logistics. “The Central Bank of Nigeria will also provide (a) stimulus package to encourage the operators in the industry.”

The Bailout

International communities have pleaded for a bailout package to mitigate the devastating effects of the pandemic on the sector. International Civil Aviation Organisation (ICAO) pleaded with the Nigerian government to implement specific financial incentives for the aviation industry to fast track the recovery process of the sector. AMCON’s Executive Director, Aminu Ismail, also pleaded that the incentive is necessary to save the sector and maintain its viability even as the global crisis persists.

Also, IATA’s Director of Advocacy and Strategy, Africa, Funke Adeyemi, at a webinar, in the middle of June said the association was working hard to get African Heads of State and organisations to give the needed financial assistance to the airlines.

Adeyemi relays that analysis recently showed: “If by the end of July, airlines do not get financial support in the form of direct cash injections; about 50 to 90 per cent will be insolvent globally, and Nigeria is not an exception.”

In response to these pleads, FG, mid-September announced the sum of 27 billion Naira as a palliative for the sector to cushion the effects of the pandemic. However, the Director-General of NCAA Captain Musa Nuhu reiterated the government’s policy, saying only the functional airlines can benefit from the palliative.

“Any airline can apply, whether functioning or not but it is a policy that participating airlines must be functioning and with Air Operators Certificate, AOC. I also believe that the AON has its own rules and they know the criteria, I believe the AON will not put forward a non- functioning airline,” Nuhu said.

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