The House of Representatives Committee on Aviation says airlines in Nigeria require N50bn bailout to prevent the industry from total collapse in the aftermath of COVID-19 pandemic.
The Chairman of the committee, Honourable Nnolim Nnaji (PDP-Enugu), made this known while addressing journalists at the National Assembly Complex on Monday.
The lawmaker said that adequate mechanisms must be put in place to support the industry which he described as the “bedrock of the economy”.
Nnaji said that countries such as the US, Canada, Brazil, Rwanda, Senegal, lndia, China, Korea, United Kingdom, among others, had given bailouts in billions of dollars to their airlines to cushion the impact of coronavirus.
“The Federal Government’s four billion naira bailout to the airlines and some palliatives to the agencies (not yet released) is too small.
“The Airlines need at least N50bn bailout funds to cushion the Coronavirus effect.
“We are requesting that other mechanisms should be introduced as a support to avert the collapse of the Aviation sector,” he said.
Nnaji said that the just concluded public hearing on the bills for the review of the Civil Aviation Acts revealed impending crisis in the industry that required urgent attention.
According to him, the hearing is an ample opportunity for the indigenous airline operators to voice out their problems which shall not be treated with levity.
The lawmaker stressed that the industry was in dire need of urgent intervention to save it from imminent collapse.
He said that the operators complained that they were running at a loss and reeled out factors responsible for the situation.
The challenges crippling the industry, he said, included the non-implementation of the Executive Order on Zero Customs Duty and Zero VAT on importation of commercial aircraft and aircraft spare parts.
He said other challenges listed by the operators were the non-implementation of the Executive Order on the Removal of VAT from air transportation, inability to access forex and high cost of capital.
Other challenges, he said, were the lack of single digit lending interest rate and replacement of NCAA’s five per cent Ticket Sales Charge (TSC) with a Fixed charge similar to FAAN Passenger Service Charge (PSC).
He gave multiplicity of taxes, fees and charges and called for urgent review of NAICOM Act on Aviation Insurance and exceptional permission to grant the externalisation of insurance placements for domestic airlines in the country.
He said that the grant should be on an exceptional basis in the interest of air transport safety due to inability of Nigerian Insurance Companies to cover aviation risks.
He said that the Ease of doing business programme, over regulation of domestic airlines and inadequate night landing facilities in most of the airports affected the operating flight hours daily.
Nnaji said that aviation was a strategic industry with potential for economic growth and played a crucial role in national development and regional integration.
The chairman said that the industry was the tonic on which many other sectors depended, saying that the consequence of its collapse would be very detrimental to the overall economy.
He added that in 2019, the contribution of the industry to the nation’s Gross Domestic Product (GDP) was N198.62 billion according to statistics from the National Bureau for Statistics (NBS).
He said that the aviation industry was rated as the fastest growing sector in 2019 in spite of the harsh operating environment.
The lawmaker said that the sector was projected to surpass the amount in 2020 but for the advent of Coronavirus pandemic which dealt a devastating blow to the industry.
“As legislature, we are going to look into these demands to find out why the Nigeria Customs Service would not respect the President’s Executive Order on duty exemption and other palliatives meant to lighten the burdens of the airlines.
“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 comes to the aid of the operators by addressing these needs in the overall interest of the national economy.
“It is to relieve the airline operators’ frustration, as well as threat of shutting down their operations due to lack of funds and harsh operating environment.
“We are not just talking about airlines alone, the service providers, the Federal Airports Authority of Nigeria, (FAAN), the Nigerian Airspace Management Agency, (NAMA), 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 10 years to help the agencies upgrade their facilities,” he said.