Opinion by Hon. Nnaji Nnolim
THE just concluded public hearing on the amendment Bills for the review of some aspects the of civil aviation Acts has brought to the fore the impending crisis in the aviation industry which require urgent attention. The industry is in dire need of urgent intervention to save it from imminent collapse.
There is no gain saying that aviation is the bedrock of the national economy. It is important to note that the aviation industry is regarded as a strategic industry, not only for its potential for economic growth but also for its crucial role in national development and regional integration The most important contribution aviation makes to national economy is through its impact on the performance of other sectors and as a facilitator of their growth.
The industry is the tonic on which many other sectors depend on. Unfortunately, this vital sector that acts as stimulus to the rest of the sectors of the economy is facing extinction, the consequence of which will be very detrimental to the overall economy of the country if not squarely addressed immediately.
In 2019, the contribution of the aviation industry to the nation’s gross domestic product,(GDP) was put at N198.62 billions according to the release from the National Bureau for Statistics, (NBS). In fact aviation was adjudged the fastest growing sector for 2019 despite the harsh operating environment. This was projected to be surpassed in 2020 but for the advent of corona virus pandemic which dealt a devastating blow on the industry.
Before the outbreak of COVID-19, the industry, especially the airlines were already crying for intervention from the government to help them surmount the various challenges confronting them. The public hearing we held for the 6 aviation Bills between November 17 and 19 provided the ample opportunity for the indigenous airline operators to voice out their problems which we believe should not be treated with levity if we must move the industry and the economy forward.
The operators listed the challenges which they claimed have been crippling their operations as follows: non-implementation of the Executive Order on zero customs duty and zero vat on importation of commercial aircraft and aircraft spare parts, non implementation of the executive order on the removal of vat from air transportation; inability to Access Forex, inadequate night landing facilities in most of the airports thereby affecting the operating flight hours daily.
As parliament, we are going to look into these demands and more especially to find out why the Nigeria Custom Service would not respect the President’s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines. The multiple entries for foreign airlines is equally an important concern raised by the operators which must be looked into.
If developed countries could give bailouts in billions of dollars to airlines to cushion the impact of corona virus with all incentives at their disposal you can understand what our operators are going through without help. America, Canada, Brazil, Rwanda, Senegal, India, China , Korea, United Kingdom and several European countries all injected funds into the sector to support their local airlines and the service providers because they understand the importance of aviation in their national economies.
The International Civil Aviation Organisation, (ICAO) the global aviation watchdog had in the wake of the pandemic canvassed for continued financial and regulatory support, particularly financial relief that does not increase industry debt levels through direct cash injections, credit or loans and deferrals or discounts on user charges to support airlines over the restart and recovery period.
However, only the following African countries; Rwanda, Senegal, Côte d’Ivoire, Burkina Faso and recently Cape Verde have responded adequately to this plea said ICAO Regional Director, Mr Mohammad All Bakri in a recent publication of the International Air Transport Association, (IATA) journal.
Their actions according to ICAO have helped save thousands of jobs and will enable some airlines to restart and support the wider economies they serve in those countries. The IATA Regional Vice President for Africa and Middle East, Mr. Barry Kasambo, in the same publication also acknowledged that the situation of airlines in Africa are worsening and urged that the measures are essential to minimize job losses and ensure that connectivity can be restored within the Continent. “We urge African governments and the development institutions which have committed funding to provide it urgently in a structure that does not weaken already stressed airline balance sheets, before it is too late,” he said .
Here in Nigeria, our indigenous airlines are faced with enormous challenges like high interest rate on loans, lack of maintenance facilities, high insurance premium, multiple taxation, disadvantageous policies and high cost of jet-A1, (aviation fuel) among others which make it near impossible for them, (local airlines,) to break even.
We are not just talking abut airlines alone, the service providers, the Federal Airports Authority of Nigeria, (FAAN) the Nigerian Airspace Management Agency, (NAMA!) and the Nigerian Civil Aviation Authority, (NCAA) and the rest are also having their own challenges. They need bailout funds to function optimally.
The Aviation sector requires huge capital for infrastructural development, the remittances of 25 per cent of their internally generated revenues, (IGRs) should be retained for the next ten years to help the agencies upgrade their facilities.
The Federal Governments N4 billion bailout to the airlines and some palliatives to the agencies( not yet released) is too small. The Aarlines need at least N50bn bailout funds to cushion the coronavirus effects. We are requesting that other mechanisms should be introduced as a support to avert the collapse of the Aviation sector.
We intend to interact with the leadership of the National Assembly and the Ministry of Aviation on all the concerns raised by the operators and other sundry issues confronting the industry to see how we can address them to avert the collapse of the industry.
It is important that the Federal Government urgently come to the aid of the operators by addressing these needs in the overall interest of the national economy and to relieve the Airline operators’ of frustration and as well avert their threat of shutting down their operations due to lack of funds and hash operating environment.
Hon. Nnaji is the Chairman, House of Representatives Committee on Aviation
