Where is the aviation bailout fund, recovery strategy?
Dear aviation minister, congratulations on the successful reopening of the nations’ airspace after months of COVID-19 imposed lockdown.
The Presidential Taskforce (PTF) on COVID-19, of which you are a member, did well with the safety protocol and ensuring that each of 23 airports was safety and security compliant entering into the difficult new-normal era.
As it is the hallmark of true leaders to take commendations for achievements and responsibility for bad days, yours cannot be an exception. We have one of such bad days in the local aviation, for which you should take responsibility and brace up for urgent remedial actions.
Just last week, I offered to assist an aged neighbour to buy a flight ticket from Lagos to Abuja, where he needed to attend a family emergency. It was tough securing a seat, which is strange for such an erstwhile high-frequency route. When I did, it cost N95, 000! Can you believe that? The old man’s face widened in shock at the outrageous asking price. But when calls from family and friends in Abuja persisted, he grudgingly coughed out the fare. N95, 000 one-way Economy class ticket of less than an hour flight! His words as he departed were: ‘Just like that? What is this country becoming? Yet, we are supposed to have a government at the helm of our affairs?’ The Baba is not alone in this credibility doubt. Some travellers even claimed to have bought the same ticket for between N80, 000 and N100, 000, and they shared similar concerns.
As an aviator that superintends over this sector, you should be most bothered. That is about a 200 per cent spike in airfares in less than two weeks. In May, prior to the reopening of the airspace, your PTF colleagues had told Nigerians that there would be no spike in the cost of airfares, pledging to support the sector in a manner that would not push add-on cost to consumers. It was a reasonable motive not to inflict further hardships on Nigerians. But did you advise them to make the promise? To operators in the industry, it was like a line from the usual electioneering campaign booklet. What has happened to that promise and others like it? In as much as forces of demand and supply would always cause fares to fluctuate in a price deregulated market, such an astronomical spike is not justifiable in an industry that is closely regulated. This is unfair on average Nigerians that have been impoverished by this awful economy and made poorer by the pandemic effects.
Feelers out there suggest that you have abandoned operators to their fate. Unlike in other climes where governments are rallying behind insolvent airlines to ensure that they do not go under due to the global devastating effects of the pandemic, our operators and service providers are yet to get anything to date. You pledged to give them meagre N5 billion worth of soft loans when the Senate advised N50 billion. How come they have not seen either? What is worse is that the recent naira-free fall has further crippled the fighting chances of airlines. Aviation as you know is 100 per cent dependent on dollars. Without intervention from the Central Bank of Nigeria (CBN), operators are condemned to seek dollars from the black market at N500/1$. You know no airline can survive that. How come you didn’t deem it fit to make the case for a special FX window for aviation to enable operators to have access to cheaper naira-to-dollar rate, repatriate aircraft that are stuck overseas to boost capacity, and widen the network? One of the airlines has a set of brand new airplanes, scheduled to have been delivered in October, stranded overseas because of FX. Why didn’t you intervene, knowing that such delivery is a plus to the local sector? You do not have control over forex or the economy, but the aviation sector should not go out of hand under your supervision.
Let’s be clear on one thing. Throwing more money at the local aviation problem has never solved it and we should not be making past mistakes. In 2011, CBN threw N120 billion aviation intervention largesse at operators at six per cent interest rate. None of the monies has been recovered to date. The era of sinking unaccountable commonwealth into private ventures should be long gone. Besides the crucial safety oversight, the Nigerian Civil Aviation Authority (NCAA) has the duty of ensuring that operators are financially accountable and led by corporate governance. It behooves on the regulator to identify genuine operators and urgent concerns that warrant financial stimulus in the form of long-term, low-interest loans, only through the CBN. For instance, all the airlines have issues paying staff salaries that were accumulated during the lockdown. As you are aware, all the airlines have downsized, with Arik sacking another 300 a fortnight ago. Injecting a stimulus package to cater for staff welfare alone will take a lot of burden off the operators, regulators, and service providers alike.
There are other avenues through which the Federal Government can support genuine operators and stimulate market growth at these desperate times. The International Air Transport Association (IATA) recently advised temporary waivers or suspensions of government charges, taxes, and fees to airlines and passengers to reduce flight costs and lower travel costs for passengers. Route subsidies for flights to local/regional destinations to support connectivity for rural communities and business; financial incentives in the form of rewards for operating flights, or seats flown, which can support airlines while load factors or yields are too low. Also, advance ticket purchases that governments can use for future trips or distribute to the traveling public in the form of vouchers to support travel and tourism, and passenger travel subsidies in the form of vouchers for passengers or as a percentage cash-back on overall travel costs. There are more homegrown measures that our world-famous aviators and industry experts can offer, to save the sector from getting worse than you met it.
Honourable minister, your passion for aviation is not in doubt. You are not only a trained pilot, your children, family, and friends are all dependent on the aviation sector. Your ambitious aviation road map that was launched in 2016 to transform the sector has, sadly, not seen the light of the day and already hangs in a balance with the local economy and global pandemic. But you can still salvage the sector by intervening in the current pricing regime. The industry needs to stabilise before it can grow. A stitch in time will save the sector from collapse. Sincerely yours.