Sunday, May 16th 2021 2:10 PM
Lagos
+29°C

Market Digest Nigeria

Business

18 Nigeria airlines get N4b aviation intervention fund from F.G.

The grant was thrown open to all operators with valid air operating certificates (AOCs) and distributed according to the size of the carriers.


The Federal Government has shared an N4 billion aviation intervention fund among 18 scheduled and non-scheduled carriers.

The Guardian learned that the grant was thrown open to all operators with valid air operating certificates (AOCs) and distributed according to the size of the carriers. The parameters, however, made some ‘dead’ airlines beneficiaries of the COVID-19 stimulus package.

Meanwhile, the Presidential Task Force (PTF) on COVID-19 has placed a six-month ban on 100 Nigerian passport holders over alleged violation of safety protocols at the ports of entry. The committee, in a publication yesterday, made public the passport number of concerned citizens.

In response to the losses incurred during the lockdown, the Federal Government had last May hinted of a plan to bail out the airlines prior to restart. Flights resumed but nothing came in form of a bailout.

Defending the Ministry of Aviation’s 2021 budget before the relevant Senate panel in November, the minister, Hadi Sirika, had said an N5 billion lifeline was in the offing for the industry.

The sum was a far cry in the estimate of both the operators and the lawmakers. The upper legislative chamber concluded that airlines should get as much as N50 billion for economic and safety reasons.

In-between the back and forth, the financial and operational challenges of airlines worsened. As an industry that depends on 100 per cent on foreign exchange, though earns revenue in weak naira (N500 to $1), keeping a respectable fleet of healthy planes became a major headache of operators, causing massive disruption and spike in fares during the festive season.

It was gathered that reprieve came the way of the airlines at the weekend, as the government disbursed the special bailout, though different from the proposed N27 billion soft loan of the Central Bank of Nigeria (CBN) through the National Economic Council.

Sources at the aviation ministry confirmed that the fund was in line with the minister’s earlier promise that the airlines would get N4 billion, while their regulators get N1 billion.

Of the sum, scheduled carriers got N3 billion, as charter operators received N1 billion.

Reacting, a charter operator and Chief Executive Officer of Skypower Express Airways, Captain Mohammed Joji, yesterday, thanked the Federal Government for “bringing relief to the industry.”

He said the bounty would offset salary backlog and pending insurance premiums.

“We are very grateful for the intervention. The minister and DG NCAA really tried for us,” Joji stated.

Some of the beneficiaries, nevertheless, said that the intervention was a drop in the ocean of devastating effects of the pandemic on the air travel business. Though there is no consensus on how much was lost, estimates ranged between N360 billion and N500 billion.

In three months of lockdown, no fewer than 120 airplanes were parked, yet incurring maintenance cost.

The Chief Operating Officer of one of the airlines observed that for the heavy cost of maintenance, the airlines could have ignored the Federal Government’s bailout.

His words: “The pandemic lockdown was an unusual development that modern aviation did not foresee.
That the whole world would be on lockdown for months was unthinkable. Yet, it came. Airplanes that were programmed to be in the air 20 out of 24 hours daily started sitting on the apron. That was a devastating and huge loss, to say the least. Someone has to bear the brunt, which no operator can afford. That is the rationale behind global requests for governments’ support so that aviation will not die.

“In our own case, C-check maintenance costs as much as $2 million per airplane because we have to fly them overseas. Most of the planes grounded during the lockdown are already due for C-checks. Think about it, the so-called N4 billion bailout can only repair four airplanes at the cost of $2 million each. Isn’t that a drop in the ocean?
“We now see airlines closing routes all over the place, while some carriers have not even come back since local flight services resumed. Is that normal? I think the government needs to get serious with the plan to save the sector from imminent collapse. We are not asking for free money but a good loan deal that will support airlines through a mandatory maintenance schedule, restart, and recovery process.”

A total of 18 local operators had submitted formal applications for the N27 billion aviation bailout. Three operating commercial airlines – Dana Air, Max Air, and Azman Air – were among them.

But included in the list are scheduled and non-scheduled airlines that had allegedly quit business some two years prior to the COVID-19 outbreak. There were arguments that some of the applicants still hold valid AOCs.
Among the applicants are Dornier Airlines, OAS Helicopters, Omniblu Aviation, Quorum, Allied Air, Top Brass, TAL, ANAP Jets, West Link, Jed Air, Executive Jets, Kings Airlines, and First Nation Airways.

Others included Dana Air, Max Air Limited, Skyjet Aviation Services Limited, and Skypower Express Airways.

Director-General of International Air Transport Association (IATA), Alexandre de Juniac, had acknowledged that the virus devastated the balance sheets of member airlines, adding: “We need continuing government support to enable the aviation industry to restart and rebuild connectivity.”

Records showed that governments have already provided $173 billion to airlines, but many programmes are running out as the crisis prolongs.

THE GUARDIAN

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

To Top
SUBSCRIBE NOW!
Get the best of Market Digest Nigeria financial news
delivered to your inbox daily!
By clicking Give it a try, I hereby: Agree and Consent to the Terms of Use and the Privacy Policy
& I may receive free newsletters & promotions from this site and can choose to unsubscribe anytime.