Operators seek tax holiday, subsidy to save airlines
Worried by the fate that awaits local carriers, operators yesterday, appealed to the Federal Government to introduce some economic recovery measures to safeguard airlines from collapse.
The operators, currently burdened by recurrent costs, are seeking aviation intervention fund at an interest rate of not more than five per cent. They suggested that government could take a cue from the American model of offering 50 per cent funding and grants, and 50 per cent palliatives through waivers and suspension of taxes, levies and fees among others.
Besides, they called for the implementation of President Muhammadu Buhari’s Executive Order on Removal of Value Added Tax (VAT) from all forms of transportation; as domestic airlines are still the only forms of transportation paying VAT.
The current restriction of both local and foreign commercial flight services has forced domestic carriers into financial distress estimated to hit N360billion losses. The sum, spread across eight airlines, is the running cost of operation, which include aircraft leasing, routine maintenance, debt servicing, staff salaries and allowances, parking and maintenance fees, and recurrent training, amid nil revenue.
Chairman of the Airline Operators of Nigeria (AON), Capt. Nogie Meggison, though commended the government’s efforts at containing the Coronavirus pandemic, said his members were worried that the restrictions had led to an almost complete shutdown of economic activities nationwide. This is added to the closure of Abuja and Lagos airports, and suspension of aviation activities, which are critical drivers and catalysts of the Nigerian economy.
To ensure the quick recovery of the Nigerian economy after the pandemic, there is need for government to begin to put in place measures that will guarantee the survival of airlines which is the main catalyst and a pivot to the quick recovery of the Nigerian economy.
Meggison said besides the bailout, it would not be out of place for government to “suspend all NCAA, FAAN, and NAMA charges for domestic operations within the country for 180 days. There should be subsidy for payment of workers’ salaries at least to cover six months from March to September 2020 so that staff are not sacked.
“Also, support towards augmenting insurance premiums which are dollar denominated, as well as augmenting payment for international leases and rentals on the over 120 grounded commercial aircraft that must be paid, and access to foreign exchange at the first tier rate given to Agriculture, pilgrims and so on.”
The International Air Transport Association (IATA), recently announced that on a global basis, an estimated emergency aid of up to $200billion is required for airlines to recover from the impact of the virus.
IATA estimated that the disruption could cost over 853,000 losses in passenger volumes and $170million in taxable base revenues. And should the situation persist, loss of passenger volumes could rise to over 22 million with a consequent loss amounting to about $1billion in revenue.
Meggison said this, therefore, calls for a proactive and immediate action by government to put certain relief measures in place to safeguard the Nigerian economy after the pandemic and ensure survival of the sector once the pandemic is over and economic activities resume.
“We believe the above measures are practical steps that will be a win-win strategy for all players in the sector and that will jumpstart the wheel of the Nigerian economy to keep moving as it will cushion the impact on the financial exposure of the Nigerian economy.
“It is our firm conviction that it is better to keep the aviation industry going today than to kill the goose that lays the golden egg at the expense of over 251,000 Nigeria Aviation jobs and recovery of our fragile economy today.
“We call on the government to use its machinery to kindly consider and immediately approve the above rescue plan for recovery of the Nigerian Economy and the Nigerian aviation industry post COVID19 and to support domestic airlines to survive which is a catalyst of any economy worldwide,” he said.
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