The Nigerian federal government is contemplating a bailout package for the local airline industry in order to prevent the collapse of carriers due to the coronavirus pandemic.
Nigeria’s airspace was closed for scheduled passenger flights on March 23 and this was extended for a month on May 6, with a possible resumption of flights in early June.
According to local media, Nigerian Civil Aviation Authority (NCAA) director general, Musa Nuhu, said the federal government is working on a plan to bail out the aviation sector. Speaking during the ‘Flying into turbulent skies’ web conference on May 21, Nuhu said the assistance would extend to agencies and ground handling companies. The government was still consulting with airlines and developing the economic stimulus package, he said.
On May 4, the Minister of State for Budget and National Planning, Clem Agba, told a web conference that the federal government was looking at ways of supporting the aviation sector. He said the grounding of aircraft is causing monthly losses of nearly NGN21 billion naira (USD58 million). “We are looking at how to provide some form of bailout support to ensure that the industry doesn't die," he said.
Several Nigerian airlines have called for the government to assist the sector. The managing director of Med-View Airline (Kano), Muneer Bankole, on May 20 urged the Federal Government to fast-track its intervention plans, the Daily Trust reported him saying. He also urged domestic flights to resume within weeks. He said 90% of Med-View staff were at home.
Air Peace (P4, Lagos), meanwhile, told the May 21 web conference that the airline will cut its workforce by 60%. Air Peace chairman Allen Onyema said “We are going to downsize because the passengers will no longer be there, we are going to deploy four out of the seven B737 aircraft and six out of the Embraer fleet.” According to the ch-aviation fleets advanced module, Air Peace has eight B737-300s, five B737-500s, one B777-200(ER), two B777-300s, one Do328-300, and eight E145s in its fleet.
Meanwhile, Ado Sanusi, managing director of Aero Contractors (N2, Lagos), said the industry would need to go through mergers and acquisitions to survive. “It is time for us to reflect. I am very confident that the sector will rebound. Yes people will lose their jobs, they would be put on redundancy but we need to forget about competition and think about a very robust aviation industry”, he told the May 21 web conference.
The Asset Management Corporation of Nigeria (AMCON) has joined calls for a government bailout for the airline industry. The corporation told the May 21 web conference it had injected NGN50 billion (USD138 million) in the aviation sector in Nigeria between 2012 and 2020.
At the beginning of May, the International Air Transport Association (IATA) called for aviation-specific financial relief measures from the Nigerian government to address the severe impact of the COVID-19 crisis on the air transport sector.
Prior to the pandemic, aviation contributed USD1.7 billion to Nigeria’s gross domestic product and supported 241,000 jobs, IATA said, estimating that the COVID-19 crisis puts 124,000 Nigerian jobs at risk and some USD900 million of the country’s gross domestic product.
“Nigeria has announced general relief measures for sectors affected by COVID-19, but not specifically for aviation. Given the importance of air transport for Nigeria’s economy and connectivity, the government must not let aviation fail. The industry faces a liquidity crisis. Without a viable aviation sector Nigeria’s eventual recovery from COVID-19 will be longer and even more painful. Aviation-specific financial relief measures are urgently needed as a matter of survival,” said Muhammad Albakri, IATA’s Regional Vice President for Africa and the Middle East.
IATA suggested the government provide direct financial support to carriers, loans, loan guarantees and support for the corporate bond market by the government or central bank, tax relief, financial relief on airport and air traffic control charges and taxes and foreign exchange availability.
Nigeria has half a dozen scheduled carriers, including Aero Contractors, Air Peace, Arik Air, Azman Air, Dana Air, Ibom Air, MaxAir (Nigeria), Med-View Airline, and Overland Airways.
