Aviation amid COVID-19 pandemic - NAN
Last year was turbulent for the aviation industry. This year is still taking shape and the industry is not sure of how things will turn out, writes YUNUS YUSUF
THE year 2020 will not be forgotten in a hurry, owing to the global disruption in all fields of human endeavour, largely because of the outbreak of the novel coronavirus, code-named as COVID-19.
The aviation industry, just like every other sector of the economy in 2020, had its own share of the disruption courtesy of COVID-19.
The outbreak of the coronavirus from Wuhan, China and its threat to lives and businesses led to the introduction of lockdowns and other stringent measures across cities of the world to curtail its spread.
Nigeria, like other countries, had begun the 2020 business year on a promising note. But when in March 2020, the first confirmed case of the disease was reported, the hope of a bright economy prosperous 2020 becomes deemed.
Nigerian ground handling firms in the aviation industry consequently, counted revenue losses due to the pandemic-induced plunge.
Aviation stakeholders have expressed divergent views on the effects of COVID-19 induced lockdowns and travel restrictions, which had forced ground handling firms to consider job cuts and cost reduction measures in a bid to survive.
A former President, National Associations of Nigerian Travel Agencies (NANTA), Bankole Bernard, said in the first two months of the global lockdown, the Nigerian travel industry lost more than N180 billion and thousands of jobs.
Bernard said in Nigeria, about 24,000 jobs were cut, while many employers had ceased payments for few, who still had their jobs retained until business situations improve.
Also, the International Air Transport Association (IATA) reported that so far, African airlines lost nearly $5 billion in revenue following the spread of COVID-19 on the continent due to low passenger demand.
Stakeholders also called on the government to consider an urgent bailout for the industry to remain afloat.
While others, especially the airlines and the service providers in the industry, would have to innovate to ensure their survivability post-COVID-19.
The Chief Executive Officer of Aglow Aviation Support Services, Mr Tayo Ojuri, at an occasion remarked that COVID-19 had drawn back the aviation sector after â€œthe robust growthâ€ witnessed in recent years.
â€œDespite the milestones in recent years, the outbreak of COVID-19 had led to a disruption in the sector.
â€œThis has drawn back the recent increase in passenger traffic and aviation contribution to GDP,â€™â€™ Ojuri said.
Also analysing the setback the industry experienced in 2020, former commandant of the Lagos Airport and aviation security consultant, retired Group. Capt. John Ojikutu said COVID-19 has seriously rewind the bright progress the aviation industry had recorded in recent times.
Ojikutu, however, said the pandemic had exposed some weaknesses in the airlinesâ€™ commercial practices and the negligence in the oversight in those practices.
According to him, the operators hide under these weaknesses and the responsible authority negligence on oversight of their commercial practices.
â€œThis, they used in asking for government financial palliatives, two months into the lockdown, as if the pandemic is the bane of loses in figures of their one-year earnings.
â€œThere was also the negligence in the periodic maintenance of necessary critical aeronautical landing equipment that led to the diversions of international flights to neighbouring countries. This caused huge loses of revenue earnings.
â€œThere were setbacks in the reconstruction of the infrastructure at some airports, especially those Enugu, Lagos, Abuja, Owerri and Benin among others where the air and passengers traffic are higher,â€™â€™ Ojikutu said.
He observed that the evacuation of foreign nationals exposed the weaknesses in the bilateral air services agreements between countries and the differences in what some countries call national or flag carriers and private airlines carriers.
â€œWhile most foreign carriers moved unrestricted in and out of our country, it was not easy for our domestic carriers to do same into other countries.
â€œWe lost out in spite of the capacities in some of our domestic carriers. It is very doubtful if the pre passenger traffic figures will come by soon in the next three years locally and internationally.
â€œThe only available market for our domestic airlines are local and regional cargo freighting; otherwise, most of them will sooner than later be out of operations,â€™â€™ the former Lagos Airport chief said.
Similarly, foreign airlines have also been caught in the forex tangle, as over $200 million of accumulated ticket fares sold in the last couple of weeks have lately been stuck in Nigeria due to constraints at the Central Bank of Nigeria (CBN).
Aviation stakeholders, however, believe that unless the Federal Government bailed out the local industry operators and avail them a special forex window, airfares might continue to spike and become unbearable for the travelling public.
The News Agency of Nigeria (NAN) monitoring of fares showed a slightly varying price range across the airlines and routes.
On the average, all routes, subject to availability, were sold for between N55,000 and N75,000 Economy Class one-way tickets. Return tickets for the same class averaged N120,000.
The one-way Business Class of N58,000 was sold for an average of N100,000, where available.
For instance, an Azman Air Lagos-Kano Economy flight ticket that used to sell for N30,000 went for N55,000.
The same airline sold Lagos-Abuja 10.00 a.m. flight for N85,000. Dana Airâ€™s Lagos-Abuja Economy Class is selling for N56,000, compared to N29,000 average rates in the past.
A travel agent, Akin Ogunnubi, said indications of fare hike had been palpable in recent months but aggravated when aviation unions picketed Arik Air.
â€œArik has the second-highest traffic after Air Peace. Picketing such an airline means serious disruption across the network,â€™â€™ Ogunnubi remarked.
The Chief Operating Officer of one of the local carriers said the major worry was the high cost of maintenance.
A C-check, which is required every 18 months, now costs an average of $2 million per commercial aircraft.
â€œAt N500 to $1, a C-check is now N1 billion; just for one aircraft! And that is one component of other obligations.
â€œSo, if you have N33,000 tickets now selling for N70,000, you cannot really blame the airlines, but the economy and its handlers.â€™â€™
The Federal Government has announced a plan to prepare a special credit line to support the financial liquidity of airlines amidst the pandemic.
Apart from the policy of the Central Bank of Nigeria (CBN), rolling out measure to mitigate the impact of COVID-19 pandemic on the economy, stakeholders in aviation are not happy that there is no specific government policy aimed at tackle the devastating impact of the pandemic on the sector.
Unless the existing credit facilities obtained by airline operators, and other stakeholders fall within the scope of CBN intervention facilities, they may not be entitled to take benefit of the CBN policy on the pandemic which provides for an extension of moratorium and reduction in the interest rate payable on CBN intervention facilities.
Since the onset of the COVID-19, the government has helped airlines survive the crisis with approximately $173 billion in various forms of financial support.
The Nigerian government, particularly, pledged to support local airlines with N4 billion, which the operators are yet to receive.
IATA said more support would be needed in the form of fiscal stimulus. Many of the support packages are running out while the industry losses continue to mount. Airlines losses are now forecast to exceed $118 billion in last year.
The industry is expected to continue burning out cash at a rate of almost $7 billion per month in the first half of 2021.
Director-General and Chief Executive Officer of IATA, Alexandre de Juniac, advised that financial support must come in ways that do not further inflate debt, which has risen by 51.4 per cent during the crisis to $651 billion.
â€œTo put this into perspective, total industry revenue in 2021 is expected to be $459 billion. Financially-viable airlines will be needed to lead the economic recovery from the depths of the COVID-19 crisis. Government support of $173 billion has helped many to survive.
â€œWith the potential to safely re-open borders and revive travel with testing, the Nigerian government will need to add measures that stimulate demand.
â€œSuch targeted initiatives will help generate revenues, avoid adding debt to airlines and immediately generate economic activity across the value chain,â€™â€™ de Juniac said.
Yusuf is of the News Agency of Nigeria (NAN)
Canada airlines agree to cancel all flights to warm destinations: PM Trudeau - REUTERS
OTTAWA (Reuters) - Canadaâ€™s major airlines have agreed to suspend all flights to Mexico and the Caribbean until April 30 from Sunday as part of the fight against a second wave of the coronavirus, Prime Minister Justin Trudeau said on Friday.
Trudeau also told reporters that all arriving airline passengers would be required to take a mandatory COVID-19 test at the airport and then wait in a hotel at their own expense until the results arrived.
Reporting by David Ljunggren
Nigeria to compete in $20.6b methanol market - THE GUARDIAN
By Kingsley Jeremiah, Abuja
Signs $3.6b FID To Harness Gas, Reduce Carbon Emission Years after wasting huge amount on the importation of methanol, the Federal Government has disclosed its intention to compete in the global methanol market with a new investment.
The Federal Government and some private sector investors sealed the Final Investment Decision (FID) on the Brass Fertiliser and Petrochemical Company Limited, expected to turn Nigeria into one of the worldâ€™s largest producers of the product.
Sponsored by two Federal Government agencies, Nigerian National Petroleum Corporate (NNPC) and the Nigerian Content Development and Monitoring Board (NCDMB), as well as a private firm, DVS Engineering Limited, the project is expected to cost about $3.6b and turn out about 10, 000 metric tons of methanol.
Methanol, also referred to as methyl alcohol and derived from natural gas and other sources, is used for industrial purposes. It serves as energy carrier for factories and electricity generation and alternative fuel in the face of the demand for cleaner energy. Globally, the market share of the product, standing at $20.4b in 2020 is projected to hit $26.6b by 2025.
Nigeriaâ€™s failure to develop its petrochemical industry, especially methanol, has been regarded as the reason manufacturing companies are importing about 80 per cent of their raw materials worth over $10b.
At the event in Abuja, Minister of State for Petroleum Resources, Timipre Sylva, said the country currently imports 100 per cent of its methanol needs.
According to him, the project would halt importation of methanol into the country, creates 30, 000 direct and indirect jobs during construction and about 6,000 permanent jobs, when operational.
Last year, the Federal Government had put the nationâ€™s total gas reserves at 203.16tr cubic feet (TCF), representing a marginal increase of 1.16tcf or 0.57 per cent from the 202tcf recorded in 2019. But the investment to unlock the resources remained elusive; thanks to recent efforts on the Nigerian LNG train seven, a new gas processing plants in Edo and the FID on the methanol plant.
Sylva, who took over office as Minister after being Governor of Bayelsa, an oil producing state, which houses the gas plant, had declared last year as â€˜the year of gas.â€™
He sees the current FID as another milestone in Nigeriaâ€™s efforts to maximise and monetise gas, which is usually flared or re-injected for crude oil production.
Group Managing Director of NNPC, Mele Kyari, said the current administration has taken about similar FIDs in the last five years, a development that showed positive signs, despite COVID-19 challenges and low investment appetite across the oil and gas industry.
He described the move as governmentâ€™s indication to boost domestic use of gas in the country, stressing that the momentum would be sustained.
â€œThis is not a virtual project,â€ Kyari said jokingly, stressing that the project would be implemented to time to enable the country creates value from gas resources.