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Airline Operators Count Losses, Suffer 80% Revenue Loss - THISDAY

MARCH 26, 2020

•Air Peace, Arik Air suspend flight operations

By   Chinedu Eze

Nigerian airline operators are counting their losses due to flight suspension and cancellations occasioned by the global pandemic, COVID-19, THISDAY has learnt.

Operators of travel agencies as well as private jet businesses are also badly hit by the impact of the virus because of low patronage.

Industry sources told THISDAY that domestic airlines have lost over 80 per cent of their revenue and have also been forced to bring down airfares to the level that could not even cover the cost of fuel just to attract passengers.

The Chief Operating Officer of Air Peace, Mrs. Toyin Olajide, whose company has over 50 per cent market share, told THISDAY that the airline has lost about N2.1 billion in the last three weeks due to the impact of the pathogen.

The airline has just announced the suspension of all its flight services.

She stated that the airline’s load factor has dropped below 40 per cent.

“We have been losing a lot. We lose money daily because passenger figures have dropped by 60 per cent. We lose N100 million daily and we have been doing that in the last three weeks. People are no longer flying. We now attract passengers by lowering the fares for the past three weeks.

“We charge N23, 000 per ticket for over 100 passengers in one flight. That is below the cost of fuel for a flight. We have to count the cost of insurance, spares and getting spares is very difficult now as there are no more international flights.

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“So, if you don’t have aircraft spares in your store, it becomes very difficult to replace the one in the aircraft because there are no flights,” she explained.

Olajide urged the federal government to intervene in the aviation sector to save jobs and ensure the continuous existence of firms.

“We call on the federal government to see how they can help airlines, as other countries are doing, otherwise, jobs will be lost. This is a global problem.

“No airline can even pay a salary this month. For the airlines to be afloat we need government support. The government can start by giving domestic airlines waivers on charges and taxes; unless they want the airlines to die,” Olajide said.

Meanwhile, as part of the efforts to stop the spread of the pandemic, Nigeria’s biggest carrier, Air Peace, has announced the suspension of all its flight services.

In a statement signed by its Chief Operating Officer, Air Peace said: “It is with a great sense of responsibility that we have decided, in the best interest of our nation, our passengers and workforce, to suspend scheduled flight operations for 23 days effective 23.00hrs on Friday (an hour before midnight on Friday) the 27th day of March 2020 as a result of the COVID-19 pandemic.

“This difficult decision was reached in order to, not only, support the efforts of the federal government and other stakeholders in curbing the spread of this the virus in our nation, but also to protect our teeming passengers and our staff from becoming victims of the pandemic.”

The airline noted that passenger traffic in the last three weeks had slumped drastically as a result of the pandemic, saying it was unwise to continue raking up avoidable costs that the airline could ill afford.

Arik Air has also suspended all scheduled commercial flight operations effective tomorrow.

The airline said it took the decision to mitigate the risk of the spread of COVID-19 to customers and staff.

Customers who have confirmed tickets were advised that they could still use their tickets when the airline resumes flight operations but such tickets could also be modified at no extra charge.

The Chief Executive Officer of Arik Air, Captain Roy Ilegbodu, in a statement yesterday, said: “The safety and well-being of our valued customers are paramount at this period of a health emergency. We implore everyone to keep safe and abide by all directives issued by governmental authorities.

“We sincerely regret any inconvenience this suspension may have caused our customers.”

Ilegbodu added that Arik Air would be available to support government emergency, humanitarian and charter flight requests during the period of suspension of air transport operation.

Speaking on the losses incurred by the airlines, the President of the National Association of Nigerian Travel Agencies (NANTA), Mr. Bankole Bernard, said the sub-sector has already lost about N180 billion, adding that as international flights become grounded with the closure of borders by many countries, the downstream sector of the aviation industry would record more losses.

The association said due to the downturn of business occasioned by the virus ravaging the world, 24, 000 travel agents might lose jobs.

According to him, travel agents are expected to remit monies generated on sales of tickets over a period of time to IATA, adding that they have not been able to sell tickets while the few tickets sold have not been paid for.

“Therefore, it would be difficult to remit the monies to IATA at these trying times,” he said.

Also, the Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison, told THISDAY that load factor in domestic operation had drastically gone down, and it would get worse with the shutdown of economic activities by Lagos State Government in the bid to check the spread of the pandemic.

Meggison explained: “The load factor is out. How long can we survive this way? Load factor is below 40 per cent so airlines are not even getting the cost of operation so the best thing is to stop. The problem is that interest rates continue to grow.

“Banks will not recognise the economic downturn caused by COVID-19. The value of the aircraft is going to be down and even when you ground your aircraft when the calendar dates come for mandatory checks, you must conduct the checks. If this shut down continues to summer, the market will be distorted.

“The whole problem is in a spin right now. We are still going to do retraining of pilots overseas but no country will open its borders for you. Insurance will continue to run but the airlines can only change premium from airborne insurance to ground insurance after 30 days, which will save them 20 per cent of the premium. The whole thing is spin.”

Also, the Chairman and CEO of Quits Aviation, the major private jet terminal at Lagos airport, Mr. Sam Iwuajoku, told THISDAY that contrary to reports that some highly placed Nigerians have adopted charter operation instead of scheduled passenger service, the whole aviation industry is in distress because of low patronage.

He expressed hope that the industry would recover after the pandemic.

 

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