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Fresh concerns for operators as five airports reopen June 21 - THE GUARDIAN

JUNE 05, 2020

By Wole Oyebade

*Carriers more vulnerable at 40% capacity

The Federal Government’s plan to reopen the airspace to local flight operations beginning from June 21 may delight members of the public, but not the airline operators.

Reason: the conditions attached to the partial reopening, especially onboard physical distancing, reduced maximum capacity, continued restriction of their foreign counterparts and denial of government’s bailout are all not in the best interest of already beleaguered local aviation businesses.

Stakeholders though commended the plan to lift the restriction on commercial flight services; they said the local carriers were more at risk of collapse at less than 40 per cent flight capacity.

It will be recalled that the International Air Transport Association (IATA) recently rejected the idea of keeping the onboard middle seats vacant as parts of measures to prevent the spread of coronavirus.

According to estimates, distancing measures on aircraft would shift the economics of aviation by slashing the maximum load factor to 62 per cent. That is well below the average industry breakeven load factor of 77 per cent.

As an alternative, the apex body for 280 global airlines opts for the wearing of face coverings for passengers and masks for the crew while on board aircraft as a critical part of a layered approach to biosecurity to be implemented temporarily when people return to travelling by air.

According to the plan, five airports will reopen on June 21. They are the Murtala Muhammed Airport (MMA), Lagos, Nnamdi Azikwe International Airport (NAIA), Abuja, Port Harcourt International Airport (PHIA), Port Harcourt, Mallam Aminu Kano International Airport, Kano, and the Akanu Ibiam International Airport, Enugu. The airlines will also operate at a reduced capacity of between 50 to 70 per cent.

President of the Aviation Safety Round Table Initiative (ASRTI), Dr. Gabriel Olowo, said the coast was not yet clear for the operating carriers or sustainable air travel business.

Olowo said no airline could breakeven with less than 40 per cent load factor and at the extremely low fares prevalent in the Nigerian market where passengers pay less than $100 per hour on jet engines.

He said the three weeks given for preparation was good enough for the airlines to restrategise and prepare for the ‘new normal’, but government’s support was most crucial “because the social distancing imposed would wreck havoc on the airlines’ economics”.

“Onboard social distancing will be quite challenging except aircraft will be configured to all first-class seats for economic operations. No airline can ever breakeven with less than 40 per cent load factor at the extremely low fares prevalent in the market.

“The prices are less than $100, the same level of 30 years ago. Lagos to Abuja was N2, 200 in 1990. Exchange rate was N22/$. A lot has changed since then but the fare range is still constant. But the problem is, can the passengers afford higher levels of the tariff?

“This is where the government’s intervention in airline economics is needed in Nigeria. There should by deliberate application of subsidies on fuel, taxes, airport charges, Value Added Tax (VAT) or lower interest rate on loans, quick foreign exchange availability, and so on, in order to lower airlines’ cost of operations,” Olowo said.

Aviation security consultant, Group Capt. John Ojikutu (rtd), added that Covid-19 had exposed the weaknesses of the commercial aviation sector globally, and magnified the Nigerian sector in particular, and its contribution to the national economy.

Ojikutu said the industry was going through a hard time under the pandemic and except the stakeholders make sacrificial efforts, instead of insistence on financial bailouts from the government, “we may come out worst of the present situation than we are now.”

“Except the international airlines’ operations begin into our country, we may be losing the 80 per cent contribution they make into our earnings. If the domestic airlines to fail to look for alternatives in domestic cargo transportation to passenger air traffic that could take up to a year to recover to the pre-COVID-19 level, a high number of them would go aground.

“Government, on the other hand, should give the operators palliatives but it must not be monetary because previous financial intervention in hundreds of billions to the domestic airlines is yet to be recovered fully after almost 10 years.”


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