Recent media report that Air Peace, Nigeria’s largest domestic airline, has laid off over 1,000 workers, out of which 150 pilots and engineers were affected, is worrisome. The dire situation calls for urgent measures including the release of the N27 billion bailout for domestic airlines as promised by the federal government.
According to the spokesperson of Air Peace, Stanley Olise; “The airline cannot afford to toe the path of being unable to continue to fulfill its financial obligations to its staff, external vendors, aviation agencies, maintenance organisations, insurance companies, banks and other creditors hence the decision to restructure its entire operations with a view to surviving the times.
Similarly, Bristow Helicopters has sacked 100 pilots and engineers following negative impact of coronavirus on its business and the nation’s economy. A statement from the management of Bristow Helicopters justifying the sack said, “The spread of the Covid-19 has severely impacted all sectors in the aviation industry including our market, which primarily serves the Nigerian oil and gas sector. It said in addition, the ongoing downturn in the global oil and gas market continued to influence and determine the “demand for our services” and that the combined effects of these ‘arisings’ had resulted in very significant reductions to its business, particularly a reduction in the number of contracted aircraft in Nigeria.
“As a result, the company must now restructure all aspects of its business model (both Rotary & Fixed Wing), including an extensive review of its operations and we continue to drive efficiencies, but with zero compromise to safety and our core values. One of these measures includes the right sizing of the business to ensure that the company has the optimal level of personnel to continue the safe delivery of its services to its clients, whilst allowing the appropriate capacity for future growth. Accordingly and with much regret, the company has taken the very difficult decision to release over 100 pilots and engineers (both national and expatriates) over the next couple of weeks,” it said.
The federal government had recently pledged to bail out the local aviation sector with a sum of N27 billion as part of measures to restart air travel and keep the airports safer. The sum, already proposed to some of the operators, will besides supporting the airlines, also fast-track the establishment of a private sector-driven national carrier.
The federal government had in March restricted local and international commercial flight services to slow the spread of the coronavirus pandemic. The lockdown crippled the aviation sector. Industry estimates showed that the sector lost about N180 billion, with airlines being worst hit. Over 5000 registered travel agencies furloughed their entire staff, while airlines retained only 20 per cent of workers at slashed salary.
Apparently, to salvage the sector from collapse, Minister of Aviation Hadi Sirika had earlier said that the federal government was working on a bailout package for airlines and other operators, as the airspace may reopen on June 21. A breakdown of the project elements under the N27 billion cushion include payroll grant support to airlines, handlers, caterers and related services; provision of single-digit soft loans with long term repayment plan; and deferred payment of taxes and filing dates.
Also, the government is to ensure the removal of Value Added Tax (VAT) from airlines’ tickets as approved by the Federal Executive Council (FEC); provision of Covid-19 tests for all passengers and crew; waiver of airport rent fees to airport operators for the duration of the lockdown plus one month; and beginning of processes for the establishment of a private sector-driven national carrier. The workplan has a 12-month duration.
President of the Aviation Safety Round Table Initiative (ASRTI) Dr. Gabriel Olowo described the grant as paltry, saying it would do very little to address airlines and their allied losses. Although he commended the move, he nevertheless stressed that the industry’s need should be equitably prioritised. He advised that the identified seven project elements in the aviation industry should not go together in a swoop under the N27 billion estimated cost, urging the government to prioritise those that are key to a robust aviation sector in the country.
“Individual projects that are not Covid-19 related should attract special focus and special funding. All the project elements are key to a robust aviation sector in Nigeria. Government’s action is commendable. It is very necessary and is a good attempt, given the national income constraints during the year,” Olowo said.
We are dismayed that the domestic airlines should be allowed to face this severe strain on their operations, resulting from the coronavirus pandemic which necessitated the lockdown of the global economies including that of Nigeria. Consequently, we appeal to the federal government to expedite action on the release of its promised bailout funds, among other incentives, to save the airlines from extinction, thereby exacerbation the unemployment crisis in the country.
