How airlines, travel agencies, others share N5b palliative

Details have emerged on how airlines, travel agencies and service providers shared the N5 billion intervention funds for COVID-19 granted to all members of the aviation sector.

In a disbursement memo obtained by The Guardian, the Airline Operators of Nigeria (AON) had agreed to a five per cent deduction from the approved N4 billion given to both scheduled and charter operators, as part payment of debt owed to the Nigerian Civil Aviation Authority (NCAA), Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA).

The Guardian recently reported that some airline operators expressed displeasure over the sharing formula employed in the distribution of N4 billion aviation bailout funds to airlines, saying it skewed the largesse more in favour of a few airlines.

The complainants, who apparently operate smaller capacity, were displeased with the ratio 70:30 adopted between the schedule and non-scheduled carriers.

The likes of Air Peace, Azman, Arik, Aero Contractors, Overland, and Dana Air have been listed as some of the biggest beneficiaries.
Akwa Ibom state-owned airline, Ibom Air, was missing from the list of beneficiaries that include the ground handling companies, National Association of Nigerian Travel Agencies (NANTA), Aviation fuel marketers as well as airport car hire services.

In the breakdown, the scheduled commercial operators all got the sum of N3 billion, out of which N150 million was deducted as five per cent debt to the regulators.

The N150 million deductions earned FAAN N75 million; NAMA N37.5 million and the NCAA N37.5 million. Charter operators got a total amount of N1 billion, with N49.9 million deducted as five per cent debt payment to regulators.

The N49.9 million deductions earned FAAN N24.9 million; NAMA N12.5 million and the NCAA N12.5 million. Ground handling companies, Aviation fuel marketers and catering services got N233.3 million each. The National Association of Travel Agencies (NANTA) received N200 million, out of which N4 million was deducted for the regulatory agencies. Airport Car Hire Association of Nigeria (ACHAN) received from the ministry N100 million as COVID-19 palliative.

The special intervention was thrown open to all airlines with a valid Air Operating Certificate (AOC) and distributed according to the size of the carrier. The parameters, however, made some ‘dead’ airlines beneficiaries of the COVID-19 stimulus package.

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

Defending the Ministry of Aviation’s 2021 budget at the Senate’s panel in November, the minister, Hadi Sirika, disclosed that the bailout of N5 billion was in the offing for aviation.

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

Meanwhile, Sirika earlier disclosed that the local airlines’ total debt burden to the regulatory agencies stood at N22 billion. A breakdown showed the sum of N19.37 billion and $6, 993, 284 million (N2.7 billion) as unremitted Ticket Sales Charge (TSC) and Cargo Sales Charge (CSC) collected on behalf of the Nigeria Civil Aviation Authority (NCAA) and its sister agencies.

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