OCTOBER 29, 2020

BY  Kamarudeen Ogundele 

The Federal Government has said the national carrier is its top priority in the road map for the aviation sector in 2021.

He stated these at the 2021 budget defence of the ministry and its agencies before the Senate Committee on Aviation at the National Assembly.

The minister said the road map which he noted would be implemented through Public-Private Partnership (PPP) has the establishment of National Carrier as a top priority.

Shedding more lights in an interview with journalists after the budget defense, Sirika said that the much talked about a national carrier, Nigeria Air, was part of the Aviation sector roadmap, which would be delivered before 2023.

He said, “We are on it. The transaction adviser has brought in the outline business case. It is being reviewed by ICRC. Soon after it finishes, it will go to the Federal Executive Council (FEC) and it will be approved. We will not leave this government without having it in place.”

On the need to site another airport in Lokoja, Kogi State capital as an alternate to Nnamdi Azikiwe International Airport, Abuja, he said, “Lokoja is an important northern town. It is a cosmopolitan town, it’s a mini Nigeria and it is extremely very important in the growth and development of our country.”

He added, “We have a lot of agricultural activities around there. There is the fishery, there is perishable item production, and so on. So citing at an airport there is quite apt. For me, it is something we should have done long ago for its importance,” Sirika said.

Sirika said the government was working hard to fix the airports in deplorable conditions based on peculiar priority.

“We have been improving these airports at one airport after another. We don’t have the resources to take them all at once. We are attending to them, we look at an airport and find which is that safety item and which is that item of security that needs attention first before we now turn to other matters.

“Certainly we are making Ilorin one of the best airports because in the first place it was an alternate for Lagos,” he said.

Speaking earlier during the defence, Sirika said the sum of N78.9 billion was being proposed for capital expenditure with emphasis on the implementation of the aviation roadmap.

He listed other projects to be executed to include the establishment of Maintenance, Repair, and Overhaul (MRC) facility, development of Agro-Allied Cargo Infrastructure, the establishment of Aviation Leasing Company, Search and Rescue Unit, and establishment of Aerospace University with the support of International Civil Aviation Organization (ICAO).

The minister, who claimed that aviation was the fastest growing sector in Nigeria, said the Federal Government was in the process of taking over some airports from states.

This committee chaired by Senator Smart Adeyemi bemoaned the deplorable conditions of some airports in the country.

Sirika said the government had done well by implementing a roadmap in the aviation sector.

According to him, 10 new airports are underway in response to the growing demands in the aviation sector in Anambra, Benue, Ekiti, Nasarawa, Ebonyi, and Gombe, among other states.

He noted that Kebbi, Osubi, and Dutse airports had been taken over by the Federal Government while the Gombe state government had also written the federal authorities to take over the Gombe Airport.

OCTOBER 29, 2020

By Kate Holton, Madeline Chambers

LONDON/BERLIN (Reuters) - Europe began counting the cost of the sweeping restrictions on social life imposed to contain a surge in coronavirus infections while Britain continued to hold out against following Germany and France in ordering a second lockdown.

As the pandemic raced ahead across the continent, Europe has moved back to the centre of the global pandemic, facing the prospect of a prolonged economic slump alongside a public health crisis which has so far seen more than 44 million infections and 1.1 million deaths worldwide.

France and Germany have imposed controls almost as strict as the lockdowns of the first phase of the crisis in March and April, shutting bars and restaurants and restricting movement, while allowing schools and most businesses to remain open.

But Britain, the country with the largest number of coronavirus deaths in Europe, said it would stick with a system of local lockdowns despite a new study which showed cases in England doubling every nine days.

“The judgement of the government today is that a blanket national lockdown is not appropriate, would do more harm than good,” Housing Minister Robert Jenrick told Times Radio.

Germany has set aside some 10 billion euros ($11.82 billion) to help small businesses hit by the new measures but Economy Minister Peter Altmaier said the economy was not experiencing an industrial collapse as it did in the initial phase of the pandemic.

“(The economy) is so strong that we can avoid sliding into a long period of recession,” he said. However he added output would not return to pre-pandemic levels until at least 2022.

Separately, Bank of France Governor Francois Villeroy de Galhau also said the drop in gross domestic product (GDP) expected at the end of the year should be less severe than in first half of the year after the initial lockdown.

Financial markets steadied somewhat on Thursday following a brutal selloff a day before as the latest restrictions snuffed out faint signs of recovery seen over the summer and pointed to further economic pain at the end of the year.

The European Central Bank, which has been propping up the economy through its 1.35 trillion euro ($1.60 trillion) Pandemic Emergency Purchase Programme, said it was ready to offer additional support.

Governments have been desperate to avoid a repeat of the spring lockdowns but have been forced to move by the speed of new infections and a steadily increasing mortality rate across the continent as winter approaches.

Even the well-equipped health systems of countries like France, Germany, the Netherlands and Switzerland have been pushed close to their limits by the exponential surge in cases recorded this month.

On Thursday, Sweden, which alone among European countries never imposed a lockdown, reported its third record increase in cases in a matter of days.

“We’re beginning to approach the ceiling for what the healthcare system can handle,” Chief Epidemiologist Anders Tegnell told a news conference, calling for a joint effort to curb the spread of the virus.

‘WINTER WILL BE HARD’

German Chancellor Angela Merkel said her government had moved quickly to prevent intensive care facilities being overwhelmed and called for a joint effort to face the crisis.

“We are in a dramatic situation at the start of the cold season. It affects us all, without exception,” Merkel told the Bundestag lower house of parliament, adding new restrictions to reduce social contact were “necessary and proportionate”.

While Paris and Berlin hope that the month-long lockdowns will be enough to slow the spread of the disease, there was little certainty about whether they would be enough for a return to even near-normality.

“We want to do everything so that French people can be with their families and their friends for the festivities at the end of the year,” French Health Minister Olivier Veran said. “Will it be the same? Possibly not.”

While the latest restrictions have put a spotlight on Europe, the United States has also seen a surge in new coronavirus cases in the run-up to next week’s presidential election, with more than 80,000 new cases and 1,000 deaths reported on Wednesday.

“We are on a very difficult trajectory. We’re going in the wrong direction,” said Dr. Anthony Fauci, task force member and director of the National Institute of Allergy and Infectious Diseases.

By contrast, many Asian countries have begun to relax controls as the disease has been brought under control, with Singapore announcing it would ease restrictions for visitors from mainland China and the Australian state of Victoria.

Reporting by Reuters bureaux; writing by James Mackenzie; editing by Nick Macfie

OCTOBER 29, 2020

By Wale Odunsi 

The Lagos State Government has announced a total closure of the Adekunle to Adeniji section of the Third Mainland Bridge for repairs.

Commissioner for Transportation, Frederic Oladeinde, made the announcement in a statement.

The closure of would be from midnight of Friday, October 30 to Sunday, November 1, 2020

The section of the bridge between Adekunle and Iyana–Oworo will remain open, as well as Ebute Metta outbound section into Iyana-Oworo.

Oladeinde explained that the second phase closure of the repair works is coming two weeks behind schedule.

The official said the delay was caused by the recent violence around Lagos.

“It is, however, essential to have it urgently done to prevent vibrations on the bridge during the casting-in-place of the newly installed expansion joints which in turn will allow the special concrete to achieve its required compressive strength”, he added

Oladeinde said the repair works were slated for weekends to minimise inconveniences that may arise from the total closure

He assured that transportation management officers will ensure a smooth flow of traffic.

OCTOBER 30, 2020

By Chinedu Eze

A Nigerian who recently arrived the country from the Nnamdi Azikiwe International Airport, Abuja has petitioned Nigerian Customs Service over alleged imposition of tax and extortion by officials of the agency.

The passenger (name withheld) narrated how he arrived at the airport and going through the Customs checkpoint, he was requested to step aside by officers of the agency for his luggage to be searched.

The passenger who spoke to THISDAY, said in his possession were several personal effects purchased during his trip, including but not limited to shoes, perfumes and electronic gadgets.

According to him, the position of the Customs officers conducting the search was that passengers were not allowed to bring in items with value of more than N50, 000 on aggregate, even as they claimed that any items above the threshold were subject to import duty tax. They further noted that any disagreements with this levy should be communicated to the National Assembly, which is responsible for enacting the law, which they enforce.

The passenger also told THISDAY that the officials insisted that the he must pay the imposed tax in cash; when the passenger demanded for a Treasury Single Account (TSA) into which the tax could be paid if indeed it is legal tax, but all requests for a TSA account to be provided or for POS services to be utilized, were allegedly rebuffed by the Customs officials.

Rather, they provided a slip detailing the amounts to be paid and insisted that the passenger should walk into the First Bank Plc branch at the airport to make payment.

He also alleged that the Customs officials were so desperate to collect cash for the transaction that they offered the passenger the option of paying the levy in dollars at a rate of N430 as opposed to the prevalent rate of N460 to the dollar.

The passenger said he was held back at the airport for over five hours before finally being coerced into parting with funds for the illegal tax payment after he refused to part with cash.

“Ultimately, I was forced to pay close to N1 million as duty on the personal items in my baggage when it was apparent that I would be continually detained at the airport,” he alleged.

The passenger in his petition demanded one; that the above events, as narrated, were ab-initio an illegality and transpired in contravention of the rightful procedures for the remission of taxes, duties and levies to the Federal Government Treasury Single Account and two, that the above incident was a contravention of the law as well as legal precedent as pronounced in the recent ruling of the Federal High Court sitting in Abuja which has ordered the Nigeria Customs Service (NCS) to desist from collecting import duties or related charges from passengers in respect of goods or personal effects in a passenger’s bag not meant for sale, barter or exchange, describing such charges as unlawful.

“The Chief Judge of the Abuja Federal High Court, Justice J.T Tsoho, gave the order while delivering judgment in a case between Mr. Kehinde Ogunwumiju (SAN) v. Nigerian Customs Service Board & Anor in Suit No: FHC/ABJ/CS/1113/2019.

“That there is immense suspicion (requiring further investigation and probe), that the account into which the imposed tax amount was paid, is a fraudulent and unauthorized one used by the Customs officers at the Abuja International Airport to perpetrate fraud and extort innocent members of the public into forcefully parting with their hard earned funds.”

However, THISDAY spoke to an official of Customs who was a former spokesman at the international wing of the Murtala Muhammed International Airport (MMIA), who didn’t wish his name mentioned because he was not on duty at the time he spoke.

He threw light on the issues concerning what passengers should pay for and what they should not pay for in terms of personal effects.

“On the issue of the personal effects, there are conditions. Personal effects means that you have paid for them abroad at least nine months before your return; so if you are coming back to Nigeria you are free to identify everything you have bought as personal effects.

“Even if you bought a car and your documents indicates that it is your car, you won’t pay anything. But most passengers don’t understand that. When they go there they just buy what they want to buy in the name of personal effect.

“Now if you buy something abroad and you are coming back with it, there is a condition attached. If you buy a pair of shoes it I s okay but some people will buy four pairs of same shoes because they want to give them out and they still call them personal effects. But Customs will allow you one and charge you for the other three.

“Then if you buy anything that is less than N50, 000 you won’t pay duties but if it is N50, 000 or more you will be asked to pay duty. But Customs does not collect cash. You go to the bank and make your payment. You go and pay into Customs account and collect teller and come. Nobody collects cash. If anybody demands cash you raise an alarm on the person,” the Customs official told THISDAY.

OCTOBER 30, 2020

By Wole Oyebade

The Federal Government recently hinted at the plan to float a new national carrier already christened Nigeria Air. But the controversial venture is coming at a time of lean resources, global downturn, and investors’ fatigue, amid an unfriendly local environment for airlines’ survival. WOLE OYEBADE writes.

After the 2018-botched take-off of the new national carrier, the Federal Government is having another go at the controversial project. The latest take-off date is now 2021.

Minister of Aviation, Hadi Sirika, during Tuesday’s budget defence, told the Senate Committee on Aviation that the Aviation Road Map agenda would be executed in 2021, with the national carrier component getting priority.

Indeed, the national carrier has been on the mind of the Buhari Administration since 2015, as a replacement and succour for the misfortunes of hurriedly liquidated Nigeria Airways.

But the worry for stakeholders is the timing of such a high-capital venture in a world worn-out by the COVID-19 pandemic and an industry riddled with uncertainties. There is a consensus that beyond just a new national carrier, a friendly business environment and good support for operators should take precedence if the government would not put the cart before the horse.

Much motion without movement Recall that the Federal Government in 2016 launched the aviation road map – an ambitious plan to turnaround one of the most critical non-oil sectors of the economy. On the agenda were plans to set up a new national carrier, concession the airports for efficiency, set up Maintenance Repair and Overhaul (MRO) facility, and aircraft leasing company to avail capacity.

The FG in July 2018 unveiled the name and logo of the proposed carrier at the Farnborough International Public Air show in London, ahead of the initial take-off on December 24 of that year. Lack of budgetary provision and vicious criticism by the public forced Sirika to “temporarily” ditch the December roll-out plan.

The national carrier was intended to replace the defunct Nigeria Airways that ceased operations in 2003. The replacement was designed as a Public-Private Partnership (PPP) with the FG likely to own as much as 10 per cent stake.

The equity was backed by N47 billion in the 2019 budget to help the airline take-off after it reached the procurement stage just before the 2019 general elections. The national carrier also features in the N27 billion bailout fund earlier proposed for the aviation sector in the aftermath of the COVID-19 pandemic. In the 2021 budget, it will gulp a substantial part of the N78.96 billion lump sum for the aviation sector.

Sirika said: “We don’t want what happened to Air Nigeria to repeat itself because someone just woke up from the left side of the bed and decided to liquidate Nigerian Airways, and set up Air Nigeria, which didn’t last. We want to build an airline that can challenge Ethiopian Airlines.”

Pitfalls ahead Amid the irresistible enticements of the local market and its potential, there is more to the survival of the air travel industry than throwing in the national carrier dice, and the former chairman of the Airlines Operators of Nigeria (AON), Nogie Meggison, said as much.

Meggison recently welcomed the idea of a new national carrier though doubts some of the problems it aims to solve. He observed that the problem of the sector was not essentially that of capacity, but of infrastructure deficit and a tough operating environment that should ordinarily be tackled head-on before other considerations.

He reckoned that the shrinking size of the domestic carriers and the sector at large was the reflection of the tough business environment that had continued to take its toll on investments.

Indeed, many private airlines had featured, though short-lived, since the demise of the Nigeria Airways in 2004. An NCAA estimate showed over 100 registered airlines with a lifespan of five years in an industry that is notable for free-entry and free-exit.

Meggison said what the industry needs the most is a clear economic policy for the survival of domestic airlines, with some certain issues placed at the fore.

They include the review of five per cent Ticket Sales Charge (TSC) to a flat rate in line with the global best practices and harmonisation of over 35 multiple charges, which add huge burdens on airlines.

Others are poor navigational and landing aids that limit operations to daylight operation for most airports; high cost and epileptic supply of JetA1; obsolete infrastructure that hampers the ease of doing business; and lack of consultations with airlines before the introduction of new charges and policies among others, which throw the feasibility studies of airlines out the window.

“The mortality rate of airlines in Nigeria within the last 11 years stands at 57 per cent. This is quite alarming. There is, therefore, an urgent need for a deliberate economic policy that will critically look into the support and the positive growth of the aviation sector and survival of domestic airlines in the country,” Meggison said.

Investors’ apathy The worry among stakeholders is the new venture’s ability to attract 90 per cent of investment from both local and foreign investors, coupled with a credible technical partner to drive its operations. The worry is not out of place, especially when benchmarked against over $314 billion, which global airlines have lost to COVID-19 – according to the International Air Transport Association’s (IATA) estimates.

Similarly, a lot of potential credible partners are struggling to remain in business; managing to hang on by shedding some liabilities and injecting the government’s bailout funds.

For instance, British Airways, as of April disclosed plans to retire all 747 four-engine airplanes over the high cost of maintenance. Delta Air Lines earlier estimated the loss of $534 million for Q1 2020.

Emirates Airline’s president, Tim Clark, recently said “probably up to 15 per cent” of the carrier’s workforce would be cut as a result of the coronavirus crisis. That equates to around 9,000 jobs out of the 60,000 Emirates had going into the pandemic. Fellow Middle Eastern operator Qatar Airways also announced job cuts affecting up to 9,000 positions out of 45,000 employees in May.

In Africa, South African Airways has filed for bankruptcy. Kenya Airways is in the process of being nationalised. Ethiopian Airways, the biggest on the continent, has already flagged a loss of $550 million as of April.

President Hage Geingob of Namibia recently told the parliament that Air Namibia, a national carrier, might be liquidated over a series of losses despite bailouts. According to the International Civil Aviation Association (ICAO), African airlines are at risk of losing $6 billion in revenue compared to 2019 and three million jobs.

Aviation commentator, Simon Tumba, said the country was not in any position to woo the right investment to such high-risk megaprojects.

He said the country lacks financial discipline, especially with the government’s hands in business ventures.

“Our government policy is so inconsistent that the next government can change everything overnight. Investors don’t like that. We need a long-term plan and strategy with the buy-in of all critical stakeholders and our policymakers to make progress. I would even suggest that the project is put into law, if possible.

“It is not rocket science that airline investment post-COVID-19 is now a dangerous gamble, especially for startups. Who will risk it? Even the mega Middle East airlines, which have ‘money to burn’ are being careful now. The market is so uncertain and is a massive risk to invest in a startup now. Investors don’t like uncertainty. If you have the money will you invest in Nigeria Air?” Tumba asked.

Charity should start from home Chief Operating Officer of one of the airlines affirmed that it would be hard for any airline to survive in this clime, and “those of us that have come this far deserve some credits.”

“I can bet that even the new national carrier will find it hard to survive in this environment without the government helping them to cut corners. I thought the most logical thing to do is making the industry better by removing booby-traps for all investments to thrive.

“What we have often seen, and the reason we are worried is that once the government carrier comes on board and settled into the grim realities, the government would do everything to ensure that it does not fail too quickly thereby cut-off its charges, offer subsidised fuel, and other privileges, forgetting that it is a competitive market. And we are already seeing that from the government’s dealings with private airlines, doing almost everything to stall our growth.

“Who says Air Peace or Arik cannot be a formidable flag carrier of reference if given the right support? Air Peace just played the role of a national carrier in South Africa, evacuation of Nigerians, and medical equipment during the pandemic. That airline has three Boeing777 airliners already, with pending orders enough to cover major cities in the world. So, you can’t keep talking about poor capacity when you have not supported airlines with tax holidays and other concessions. If support is given to the right people and investors, the existing business concerns will blossom and the economy will grow,” he said.

In other climes where the mixed economy had worked, a particular factor of reference is the clear-cut policy that fairly represents the interest of all parties in a liberal environment.

Chief Executive Officer of African Aviation Services Limited, Nick Fadugba, said despite how beautiful the Nigeria Air plan seems, “it is still clouded in a lot of uncertainties” around here.

Fadugba observed that with Nigeria Air coming on board while Arik Air and Aero Contractors are already under the control of the Asset Management Corporation of Nigeria (AMCON), “it means the government shall own three airlines and I don’t know any country in the world where that is done.”

He wished that the government had first sat with the airlines’ operators to have a macro managed to view, implication, routes, and sustainability impact of the new national carrier before having the launch.

OCTOBER 30, 2020

By Chinedu Eze

Members of the organised labour have expressed dissatisfaction with the handing over of state-owned airports to the Federal Airports Authority of Nigeria (FAAN) without additional budgetary allocation by the federal government.

The President of the National Union of Air Transport Employees (NUATE), Ben Nnabue said FAAN workers were peeved that no additional money was given to FAAN but the federal government.

“That is exactly what we are saying. In the budget of FAAN we didn’t make any provision for acquiring more airports but the Ministry of Aviation imposes airports on us without additional budget allocation. It means that they want to kill FAAN. They said FAAN does not have the capacity to manage airports; yet you are adding more airports for the agency to manage. This is a paradox,” NUATE President said.

The Minister of Aviation, Senator Hadi Sirika confirmed recently that the federal government had taken over the airports in Kebbi, Osubi, Dutse and handed them over to FAAN, saying discussion was ongoing between the federal government and the state government for the handing over of the Gombe airport to FAAN.

Industry consultant and CEO of Belujane Konsult, Chris Aligbe, told THISDAY that the states that handed over the airports to FAAN saw it as national patrimony, so that FAAN would be bringing money to run the airports. He noted that by handing the facilities to FAAN, their expectation would be that money would be flowing in from the centre to run the airports.

“The burden on FAAN is heavy and the states that build the airports don’t contribute anything. Up till now no palliatives have been given to FAAN or any of the agencies, but I don’t see how states should build airports and hand them over to FAAN.

“They know that they are white elephant projects and they have made money from the airports but now they don’t want to fund their maintenance but hand them over to FAAN,” Aligbe said.

Some FAAN workers decried the fact that all the airports handed over to FAAN do not generate revenues that can sustain their maintenance and payment of salary of personnel; so it means that the same budget FAAN uses to maintain other airports it would use to maintain the additional ones.

Aligbe suggested that FAAN should become more innovative and think out of the box in order to find ways to make the airports profitable and viable.

“FAAN should think ahead to find innovative ways to make each airport viable.

FAAN should draw a strategy and evolve a model for each airport to make them generate revenue beyond aeronautical sources and states should give out part of the ownership of the airports to investors to use part of the facilities for other businesses in order to make them viable,” Aligbe said.

But the Managing Director of Overland Airways, Captain Edward Boyo, said FAAN must not run all the airports.

“Why does the federal government continue to hold airports in Schedule 1? Government should only be interested in having FAAN run the airports of entry and profitably too. What is too much in an airport for a management company to run? What is too much in an airport for even a state to run? Every state should be encouraged to establish an airport of not more than 2000 meters runway length excluding clearway length.

“Where are all the prematurely retired FAAN staff? Are they unable to utilise their experience at state airport companies? FAAN is suffering the yoke of the weight of its greed. The rules and standards to run airports are clearly spelt by the International Civil Aviation Organisation (ICAO) annexes. Airports are licensed and subject to the Nigerian Civil Aviation Authority (NCAA) and state security regulations.

“Airports are meant to be state infrastructure like schools and hospitals. They do not need to make profit but are to complement social growth. But as usual, Nigeria case is different. Airport wants to compete with banks to declare territory and profit. To summarise, we are just too blinded by greed and continue to sponsor obsolete laws that regard our society,” Boyo said.

OCTOBER 30, 2020

The Federal Airports Authority of Nigeria (FAAN) recently disrupted the operations of airlines indebted to the agency by delaying the operations of two airlines at the Nnamdi Azikiwe International Airport, Abuja. FAAN officials closed the counters of the two airlines during check in and it was after prolonged pleading by the domestic carriers that the agency allowed them to airlift their passengers for the flight.

Spokesman for FAAN, Mrs. Henrietta Yakubu who confirmed the development said, the agency was on a revenue drive at the Abuja airport. A FAAN official said the agency had to recover its debts in order to sustain its operations, pay its workers in order to continue to provide services to airlines and other airport users.

THISDAY learnt that the agency intends to extend the disruption to other airports until it is able to recover the debts owed it by the operators.

An industry observer told THISDAY that the airlines should have envisaged that the agency must seek for their revenue and should have made provision for that in their financials but also noted that FAAN and the airlines should have negotiated for the payment part of the debts, knowing that it has not been easy for the airlines and the airport managers due to economic downturn occasioned by the COVID-19 lockdown and the aftermath.

OCTOBER 30, 2020

Chinedu Eze writes on the likely impact of the recent civil unrest in some states on Nigerian carriers which came few weeks after the COVID-19 lockdown

Since July 8, 2020 when the nation’s airspace was reopened for domestic flight operations, Nigerian airlines have been brainstorming on how to survive when after over three months of lockdown they did not earn revenues, they still had to meet their financial obligations.

Realising that the palliatives which they critically needed was not going to come from government, the operators adjusted to the new reality and restrategised for survival, but still under threat and some of them still literally in comatose, when the airlines were hoping to increase load factor to 50 per cent, the #Endsars protest started. But hoping that it would come to an end peacefully, it was overtaken by riots, destructions and killings.

Many entrepreneurs have lost their businesses and this obviously would affect their purchasing power and industry operators say that airlines would experience less patronage because the middle class, who constitute majority of those who travel by air, have lost their businesses and the current situation breeds uncertainty that it is not known when things would return to normal and those whose businesses were destroyed by hoodlums would need time to rebuild their businesses.

Restrategising

Aviation economist and the lead consultant at ETIMFRI Group, Amos Akpan, said what has happened would keep the airlines management on their toes for them to survive, noting that Nigerian carriers have been facing economic problems before the #Endsars crises but they were about to launch their strategy after the COVID-19 lockdown when the protest and its attendant destruction started.

“Airlines did so many things to ensure their survival when they realised that the palliatives earlier hinted by government was not going to come. They realigned their aircraft to their routes, seeking the aircraft size that would break even at low load factor; they rationalised their routes, renegotiated loan agreements and reached agreements with staff on downsizing and salary adjustment.

“Then the protest came and its outcome was not anticipated. Its effect on the economy will be devastating and it has depleted the income of the middle class, these are the people who can afford to travel, but it is only those who can still manage their business that will be able to afford airfares.

“Luxury travel was killed by COVID-19; now we are talking of essential and business travel and these have been seriously hampered,” Akpan said.

He noted that currently, business is yet to start because there is insecurity; so nowhere is safe to operate business and there is no chance now for business owners to calculate their losses occasioned by the crisis.

Akpan also said entrepreneurs would have to know what they have lost in the mayhem before they would start making plans to restart their businesses and this situation would adversely affect the purchasing power of prospective air travellers; so the airlines would record low load factor for a long time.

“By this month of October, airlines have started making plan for December, but how many people would be able to purchase ticket and travel in December when their businesses are destroyed in October? So the airlines’ revenue will continue to deplete.

“They restrategised to have 40 per cent to 60 per cent load factor by bringing the aircraft type that can break even at 50 per cent load factor, but with the latest crisis, they will have to renegotiate between 20 per cent to 40 per cent load factor.

“How can the airlines get aeroplanes that can break even at 20 percent to 40 per cent load factor? So now the airlines face the problem of the right aircraft and finance,” he said.

Finance and Corporate Governance

Akpan said the basic thing that will choke an operator right now is finance because it is finance that will enable him to remain in operation; so it is the airline that has finance and good corporate governance that would survive; adding that adjusting to the reality of the time is very critical. He also called for urgent government intervention in the form of bailout, insisting that this is not the time for policy statements but for actions.

“This scenario does not permit policy statements and protocols. It requires urgent action otherwise domestic airlines will go under. You don’t make policy statements about health insurance and infrastructures when a sick man on sick bed needs oxygen; just plug in the oxygen on the man otherwise he dies. We have heard various statements about bail out for domestic operators. The domestic operators should come out to tell Nigerians if they have collected any form of bail out this year.

“The #Endsars crisis further constricts the number of people with capacity to buy airline products and services. Operators had worked out plan to adjust to the effects of COVID–19 and started to implement it. Now they have to go back to the drawing table to work out another strategy to combat the further reduction in purchasing power of likely customers.

“There is a lot of constriction and contraction in one year. Airlines that will survive need finances to pay compulsory operational bills; corporate governance systems that recognize innovation and flexibility; government assistance and these factors must be added to a restrategization. They have to trim and optimize utilization of resources,” Akpan added.

Laying Solid Foundation

The Founder and CEO of Jet West Partners, Dikko Nwachukwu speaking on Arise TV on Wednesday said that the COVID-19 lockdown and the #Endsars crisis have put Nigerian carriers in financially deleterious situation and they are making short term efforts to survive but considering the pivotal role of aviation in unlocking any nation’s economy, government should take urgent efforts to revamp the industry by laying a solid foundation for long term sustenance of the sector.

He reiterated that air travel is not luxury but essential service and government and stakeholders should recognise its significant contribution to the economy and then make efforts to prioritise the sector with policies that would facilitate its growth.

“The aviation industry provides essential services and the airlines need the palliative to survive. There is also the need to lay a solid foundation for long-term survival of the industry.

“The industry has been in a downward spiral since 2015, but we have to recognise that aviation contributes 04 per cent to the nation’s GDP. COVID-19 and #Endsars have dealt deathblow on the airlines so there is a need to think outside the box.”

Nwachukwu said although the airlines are waiting for federal government’s bail out of N27 billion, which is very little, but he suggested that airlines should think out of the box by finding ways to raise capital by looking inwards.

He noted that airlines own 90 per cent of their aircraft; they did not lease them; so they could find a constructive way of using the aircraft to raise funds through leasing in order to revamp their operations.

“They should sell their assets and leverage on the funds. Airlines should look inwards because the International Air Transport Association (IATA) said that the industry would make full recovery from the COVID-19 lockdown from 2023.

“That may be the year of recovery. Since the Coronavirus pandemic, many passengers are no more confident to travel. So there should be a strong foundation that should serve as foothold to grow the aviation sector in the next 10 to 20 years,” Nwachukwu said.

After Effect of COVID-19

Before the #Endsars crisis, domestic operators have lamented that it would be difficult to recover from the effects of Coronavirus pandemic lockdown, but the seemingly hopeless satiation has been exacerbated by the #Endsars crisis.

The Chief Accountable Manager of Dana Air, Obi Mbanuzuo, who explained recently that domestic airlines are not likely going to recover these losses incurred by the COVID-19 lockdown said, “I don’t think airlines can recover the losses they incurred in a year because it wasn’t just the fact that we were shut down, airlines still had to pay for several things.

“Some of the airplanes are leased and we have to pay for them, even the airplanes that were not being flown had to be looked after on a schedule.

Whether we fly or not, the engineers do some checks daily. Some engineers have to go in there, start up the engines, check major parts and fix what needed to be fixed. So, there was still money being spent even though we were not flying,” he said.

Mbanuzuo said even now, due to low passenger traffic, the airlines are still incurring cost and not making profits and expressed the fear being entertained in the industry that some airlines would go under.

“Now that we are flying it is even worse because we are not making profit, but we are paying for fuel, spare parts, landing charges and several other charges. So, the palliative we expected was to get us through.

“What I see is that some airlines may go down. It is not something we wish for but it will happen if these airlines don’t get support. Now we are flying, we are paying operational costs of flying these airplanes.

“We are just trying our best to conserve cash and keep jobs. Without the airlines, the airports will be shut down; the Nigeria Civil Aviation Authority (NCAA) won’t do anything. The aviation industry contributes a big chunk to the economy, to development and travel and tourism amongst others.

“We just have to get urgent support or else thousands of people may lose their jobs,” the Chief Accountable Manager of Dana Air said.

Low Purchasing Power

As explained by Amos Akpan above, airlines may not even have a choice to increase airfares because there is a general economic turn now worsened by the #Endsars crisis, which obviously would keep many hitherto prospective air travellers our of the airports.

This means that the load factor would further be depleted, as most entrepreneurs who operate small and medium scale businesses who were victims of destruction of their businesses by the hoodlums, would count their losses first.

The Dana Air Accountable Manager, Obi, has earlier explained why the airline has not significantly increased fares since it resumed operation after the lockdown.

“When we wanted to start flight operations, we sat down and looked at the dynamics and we knew that fares were going to go up, especially as the Federal Airports Authority of Nigeria, (FAAN) said they would increase Passenger Service Charge (PSC).

“So we were thinking whether to absorb these internally or pass it to the passengers. We knew that somehow fares would go up. However, we are in a competitive market and some have decided that they can survive at a lower price, which drives the market down. So, we are trying to be intelligent at what we are doing.

“We are trying to increase our average fares as we have a department that is focused on that. If you buy your tickets, you can still get some cheap prices but we have on average increased the fares,” he said.

This may also be the thinking of other airlines but THISDAY investigation revealed that airlines take advantage of the route where they dominate or operate along to introduce exploitative fares to make up to the fares in the competitive routes.

OCTOBER 30, 2020

British Airways records €5.6billion loss up till September

 
By Abankula, with agency report

International Airlines Group (IAG), the owner of British Airways and Spanish carrier Iberia, has recorded a cumulative loss of €5.6 billion, up till September.

Its latest quarterly loss, published Friday, was €1.76 billion euros, a fallout of the worsening Covid-19 crisis that has decimated demand for global air travel.

The loss after taxation in the three months to September contrasted with net profit of 1.0 billion euros a year earlier, IAG announced in a statement.

 
The company resumed flights over the summer, following the national lockdown, but only operates a greatly reduced volume of services.

Revenue plunged 83 percent to 1.2 billion euros in the reporting period, according to IAG which had already outlined its dire quarterly performance last week.

The group repeated on Friday that it suffered an operating loss before exceptional items of 1.3 billion euros, after profit of 1.4 billion euros a year earlier.

“These results demonstrate the negative impact of Covid-19 on our business but they’re exacerbated by constantly changing government restrictions,” said IAG Chief Executive Luis Gallego.

“This creates uncertainty for customers and makes it harder to plan our business effectively.”

 
IAG urged governments worldwide to embrace pre-departure testing to enable safer air travel.

“We are calling on governments to adopt pre-departure testing using reliable and affordable tests with the option of post flight testing to release people from quarantine where they are arriving from countries with high infection rates,” said Gallego.

“This would open routes, stimulate economies and get people travelling with confidence.

“When we open routes, there is pent-up demand for travel. However, we continue to expect that it will take until at least 2023 for passenger demand to recover to 2019 levels.”

New British Airways chief executive Sean Doyle has already urged the UK government to end the quarantining of passengers arriving from abroad.

OCTOBER 30, 2020

Liberian President George Weah on Friday inaugurated a new national carrier for the West African country, named Lone Star Air, about 30 years after the country’s previous airline went bust. Speaking at a ceremony at Liberia’s international airport, near the capital Monrovia, Weah said the new airline would “connect our country to our region and to the world”.

“It is my dream, my hope and my ambition that we will very soon see Lone Star Air, the wings of Liberia, flying our flag in international skies, shining so brightly,” said the footballer-turned-president. Liberia’s flag bears resemblance to the flag of the United States, but features one star instead of 50. The country was founded in the 19th century with US support as a home for freed American slaves, whose descendants have a long history of dominating political life. 

Liberia currently has no active national carrier, with the country’s former airline folding in the early 1990s, according to a statement from Lone Star Air. It is unclear when the new airline will begin flights, and neither Weah’s office nor the ministry of transport were immediately available for comment. 

However the airline initially plans to operate flights between Monrovia and regional hubs such as Abidjan in Ivory Coast or Nigeria’s Lagos. A poor nation of some 4.8 million people, Liberia is still recovering after back-to-back civil wars from 1989 to 2003 and West Africa’s 2014-16 Ebola crisis. 

[AFP]

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