- As Senate urges FG to provide substantive bailout fund
House of Representatives yesterday raised the alarm that the aviation industry needs a whooping sum of N50billion interventions to avert its total collapse.
This was even as the Senate urged the federal government to provide a substantial bailout fund to airline operators in the country to revamp the aviation sector in view of the effect of the COVID-19 pandemic.
The House also said the regulatory agencies in the sector are also facing challenges of which there is the dire need to inject at least N50billion and not the N4billion COVID-19 bailout which is yet to be released to the airlines.
Chairman House Committee on Aviation, Hon. Nnolim Nnaji, who raised the red flag said findings from the just concluded Public Hearing on the amendment Bills for the review of some aspects of the civil aviation Acts, uncovered the sorry state and impending collapse of the sector.
Briefing newsmen, he explained the worrisome state of the Aviation Sector of the country, saying that while the local airlines could barely operate at a near-optimal level, the government’s regulatory agencies are also in near-comatose and cannot provide the needed regulations, facilities to ensure full potentials of services required.
“The industry is in dire need of urgent intervention to save it from imminent collapse”, he noted adding that as a great catalyst of economic development of the country, only in 2019, the aviation industry contributed N198.62billion to the national GDP according to the National Bureau of Statistics, NBS.
He said an increased contribution by the Aviation sector to the GDP was expected in 2020 if not for the Coronavirus pandemic which dealt a devastating blow on the industry.
Speaking further, the Chairman noted that, though it is not an exaggeration to say that aviation is the bedrock of the national economy, it is important to note that the all-important sector is facing extinction, the consequence of which will be very detrimental to the overall economy of the country if not squarely addressed immediately.
The Committee expressed worry over the list of challenges bedeviling the airlines, some of which the government intervened but without implementation.
“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,” he said.
Others are Non-implementation of the Executive Order on the Removal of the Value-added Tax, VAT, from Air Transportation; Inability to Access Forex, High cost of capital, and lack of single-digit lending interest rate for airlines.
The airlines are also facing challenges such as “Replacement of NCAA’s 5 percent Ticket Sales Charge, TSC, with a fixed charge similar to FAAN Passenger Service Charge, PSC; Multiplicity of Taxes, Fees and Charges and the urgent review of NAICOM Act on Aviation Insurance and exceptional Permission to grant.”
The externalization of insurance placements for domestic airlines in the country on an exceptional basis in the interest of air transport safety due to the inability of Nigerian Insurance Companies, NIC, to cover aviation risks is also part of the challenges they listed.
The Committee assured nonetheless, that as parliament, they will look into the various demands, especially those that the Federal Government has intervened like the Nigeria Customs Service refusal to respect the President’s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines, multiple entries for foreign airlines among others.
Meanwhile, the chairman of the Senate Committee on Aviation, Sen. Smart Adeyemi (APC – Kogi West), made the call in Abuja at a press conference.
Adeyemi said there was an urgent need to support the airline operators in the country given the effect of COVID-19 on the sector.
He noted that the aviation industry was the fastest-growing sector of the Nigerian economy in spite of the setback caused by the COVID-19 pandemic.
“Let me take this unique opportunity to call on the Federal Government to explore the possibility of providing bailout funds for the airline operators.
“The outbreak of the COVID-19 is a global and ongoing pandemic and countries all over the world are providing bailout funds for airline operators.
“Certainly, the aviation industry was the most affected by this virus attack and therefore need all the support possible to resuscitate the Industry.
“In the absence of this, so many airlines will struggle to stay in business or worst still, be forced to withdraw their services.”
Adeyemi added that the bailout funds will mitigate the devastation and also discourage operators from cutting corners as the consequences can only be better imagined.
“I do not think that N4 billion is what we are talking about. I think the federal government should give the industry all the attention it deserves; substantive support. Four billion is not enough. Yes, you might say they are in business; but their business is the soul of our economy,” he said.
Adeyemi further urged the government to provide sufficient bailout to the airline operators to avoid them “cutting corners” in their operations – “the implication of which is better imagined,” he concluded.