‘How interest-free loan, support will save local airlines’

Aviation stakeholders have reiterated the call on the Federal Government to support the local airlines and the industry at large against collapse.

The aviators called for grants and soft loans for airlines to stay in business after the coronavirus pandemic.

The call is consistent with the International Air Transport Association’s (IATA) request for direct financial support to passenger and cargo carriers to compensate for reduced revenues and liquidity attributable to travel restrictions imposed as a result of COVID-19.

The Federal Government lately placed a restriction on all foreign and local flights as it shutdown all airports as part of efforts to contain the spread of the pandemic. The move has forced all local flights to be grounded and accumulating debts.

Aviation expert and consultant, Chris Aligbe, noted that the industry had been severely affected with the pandemic leading to travel restrictions, which had led to loss of revenue by aviation companies and agencies.

Aligbe said for airlines business to survive this pandemic, “government must support them with grants to stay afloat and keep people in their employ.”

He suggested a loan of less than five per cent interest-rate, payable in 15-20 years, should be made available.

He said despite the intervention, it would take the airlines at least two years to bounce back and be able to expand.

He said within this period, government could push the national carrier project to be able to generate employment in the aviation industry immediately after the Covid-19 pandemic.

“Coronavirus will come and go, the industry will have to, not just continue, but the industry will have to grow, it should not be left to stagnate. If the industry stagnates, its contributions to economy will stop.

“This is why I will come to the point of national carrier and all those things. Yes, government doesn’t have money but luckily what is being programmed is not a government-funded or government-owned national carrier.

“Government just needs to put in something to kick-start it. But in a situation where government says, ‘we can’t make budgetary allocation for this’, for the airlines including the existing domestic airlines and the programmed national carrier, let there be a loanable fund, an intervention fund, soft loan of very low single-digit interest rate and long term – between 10 and 15 years maximum to be provided by the Central Bank.”
He added that aviation agencies, who depend on revenues from flights and five per cent ticket sales charges, like the Federal Airports Authority of Nigeria (FAAN), Nigeria Airspace Management Agency (NAMA), the Nigerian Civil Aviation Authority (NCAA), the Accident Investigation Bureau (AIB) as well as the Nigeria College of Aviation Technology (NCAT), should be given allocations as lifeline to survive the covid-19 crisis.

“Every aspect of the industry is impacted particularly because the revenues in the industry depend on the flights whether it is aeronautical or non-aeronautical. The more flights you have into an airport, the more likely businesses will develop around the airport.”

IATA had said governments must include aviation in stabilisation packages. The body argued that airlines are at the core of a value chain that supports some 65.5 million jobs worldwide. Each of the 2.7 million airline jobs supports 24 more jobs in the economy.

“Financial relief for airlines today should be a critical policy measure for governments. Supporting airlines will keep vital supply chains working through the crisis. Every airline job saved will keep 24 more people employed. And it will give airlines a fighting chance of being viable businesses that are ready to lead the recovery by connecting economies when the pandemic is contained. If airlines are not ready, the economic pain of COVID-19 will be unnecessarily prolonged,” de Juniac said.

IATA proposes a number of relief options for governments to consider. Loans, loan guarantees and support for the corporate bond market by governments or central banks. The corporate bond market is a vital source of finance for airlines, but the eligibility of corporate bonds for central bank support needs to be extended and guaranteed by governments to provide access for a wider range of companies.

Tax relief and rebates on payroll taxes paid to date in 2020 and/or an extension of payment terms for the rest of 2020, along with a temporary waiver of ticket taxes and other government-imposed levies.