Aviation sector: Senate proposes bailout for operators

CHUKWU DAVID reports that the Senate has taken steps to get airline operators in Nigeria out of harsh financial situation by recommending that the Federal Government provides N50 billion as bailout fund to help keep the sector afloat


The aviation industry, being a very important sector of the economy, is currently facing serious challenges that encumber its smooth operations in the country. The most challenging of the problems of the industry is poor funding.


But the Senate, in a bid to salvage the the sector, has called on the Federal Government to quickly intervene and render financial support, especially to airline operators, so that they can carry out needed maintenance work on their aircraft without cutting corners. Accordingly, the Senate, on Monday November 23, urged the Federal Government to provide a N50 billion bailout for the aviation sector if it must remain afloat and efficiently serve Nigerians.


The Chairman, Senate Committee on Aviation, Senator Smart Adeyemi, who made the call in Abuja, while briefing journalists on the plight of airline operators in the country and the need for the Federal Government to urgently intervene and rescue the situation, described the N4 billion bailout fund provided by the government as inadequate.


Adeyemi said it has become dangerous and scary to fly in the nation’s air space as a result of the dilapidated condition of most aircraft operating in the country due to financial difficulties being faced by the operators in putting them in good working conditions.


The lawmaker, who represents Kogi West Senatorial District on the platform of the ruling All Progressives Party (APC), further said that it is no longer safe to fly Nigerian airlines, noting that operators    in the country are managing and cutting corners just to remain in business.


He said that during a recent public hearing by the Senate Committee on Aviation, members had interaction with operators in the industry, who disclosed some of their predicaments and appealed for their intervention. “We particularly held interactions with airline operators and a few important factors came to the fore. It will indeed require executive orders which must be adhered to,” he said.


Adeyemi said that although the Federal Government had provided a bailout of N4 billion to the operators, there is the need for a review of the bailout to keep the airliners in business and ensure safety of air travelers.


His words: “With further and more critical intervention with airline operators in Nigeria, we gathered that approximately N50 billion will be required to meet the  requirements of airline operators. This increase in bailout fund is imperative if we are to keep our economy running, guaranty job security and mitigate retrenchment.


“A critical look at the aviation industry in Africa, Senagal for instance, which is no competition for the Nigerian aviation industry in terms of number of airline operators released a sum of $74 million as bailout fund for their airline operators. “Rwanda also released $150 million for its airline operators. Taking the scope out of Africa, the United States for instance, released the sum of $58 billion as bailout funds for its airline operators.

“If comparative analysis is anything to go by, it is clear that the N4 billion announced by the Federal Government as bailout fund for airline operators will not be sufficient to sustain three of the needs of the 15 scheduled flight operators, save the non-scheduled operators.”


According to Adeyemi, some of the challenges currently being faced by airline operators in Nigeria include non-compliance of Nigerian Customs with the executive order to waive any form of taxation on importation of spare parts and commercial aircraft.


Others are multiple forms of persisting taxation on the airliners and non-compliance of the executive order on the removal of Value Added Tax (VAT) from air transport.


He also pointed out the inability of the airline operators to have access to single digit lending as obtainable in other parts of the world as one of the major challenges of the sector and called for quick intervention by the government. Adeyemi further said that the inability of the airline operators to access foreign exchange as and when due to enable them pay for VAT on their aircraft is also a big challenge.


He said that investigation carried out by his committee revealed that airline operators are already discouraged and have resorted to cutting corners in carrying out maintenance requirements on their aircraft.


The lawmaker warned on the danger of neglecting the request by the committee for government’s intervention, saying that if the problem is not immediately addressed, the effect would be best not imagined.


He said that no amount of money is worth the life of even one Nigerian and that it is on that basis that the senators called for the immediate and urgent attention of the Federal Government on the need to increase the bailout fund for airline operators.


Adeyemi further said that as legislators, who represent the people, they strongly advise the Nigerian government to run a tax free and VAT free process for all spare parts and commercial aircraft being imported to Nigeria. According to him, in most nations, there are special considerations for airline operators because they must not cut corners, noting that if a particular spare part is needed and it happens that it is not available, and the operator decides to manage what it has, it will spell doom for air travelers and the country in general.

“Let me explain what they are doing in some African countries so that you can understand what we are saying because when you are convinced with your facts, we would say these are the facts that we have gathered. It is left for those who are in the industry to dispute our position but these are the information we have gathered. I want to put it on record that there is danger in flying in Nigeria today. There are instances of some planes skidding off the runway.


“We must support the airline operators pending when we have our own national carrier. But if we want to continue with the operators like most nations are doing today, we cannot afford to leave them on their own because they will want to be in business and struggle to make profit, and by extension, they will be cutting of corners.”


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