Nigeria: Government Okays N27b Bailout For Local Airlines, Sector

The Federal Government has pledged to bail out the local aviation sector with a sum of N27 billion as part of measures to restart air travel and keep the airports safer. The sum, already proposed to some of the operators, will besides supporting the airlines, also fast-track the establishment of a private sector-driven national carrier.

The Federal Government in March restricted local and International commercial flight services to slow the spread of the coronavirus pandemic. The lockdown crippled the aviation sector. Industry estimates showed that the sector lost about N180 billion, with airlines being the worst hit. Over 5000 registered travel agencies furloughed their entire staff, while airlines retained only 20 percent of workers and slashed salary.

Apparently, to salvage the sector from collapse, Minister of Aviation Hadi Sirika had earlier said that the Federal Government was working on a bailout package for airlines and other operators, as the airspace may reopen on June 21.

Sources, yesterday confirmed that N27 billion had been pencilled for the sector, though stakeholders complained that the amount was too small. A breakdown of the project elements under the N27 billion cushion includes payroll grant support to airlines, handlers, caterers,, and related services; provision of single-digit soft loans with long term repayment plan; and deferred payment of taxes and filing dates.

Also, the government is to ensure the removal of Value Added Tax [VAT] from airlines’ tickets as approved by the Federal Executive Council [FEC]; provision of COVID-19 tests for all passengers and crew; waiver of airport rent fees to airport operators for the duration of the lockdown plus one month; and beginning of processes for the establishment of a private sector-driven national carrier. The workplace has a 12-month duration.

President of the Aviation Safety Round Table Initiative [ASRTI] Dr. Gabriel Olowo described the grant as paltry, saying it would do very little to address airlines and their allied losses. Although he commended the move, he nevertheless stressed that the industry’s need should be equitably prioritised.

He advised that the identified seven project elements in the aviation industry should not go together in a swoop under the N27 billion estimated cost, urging the government to prioritise those that are key to a robust aviation sector in the country.

“Individual projects that are not COVID-19 related should attract special focus and special funding. All the project elements are key to a robust aviation sector in Nigeria and the government’s action is commendable. It is very necessary and is a good attempt, given the national income constraints during the year,” Olowo said.

Meanwhile, African Travel Times investigation revealed that the airline operators have been cheating by paying little or nothing as Value Added Tax [VAT] over the years and waiving it now accrued to nothing to them.

For instance, a one-way ticket from Lagos to Abuja may cost N40, 000.00, but dues to corrupt practices by the airlines, the fare will be staggered as follows: Fuel surcharge N18, 000, not taxable, other charges N12,000.00 not taxable and that main fare is N10.000.00 taxable, out of which the government will take its VAT.

Our investigation also revealed further that the airlines at will can increase fares under the name of fare adjustment without any recourse to the relevant government agency, a backdoor channel operators have used over the years to increase fares at will without any sanction. 

Source: Guardian Newspaper with additional report by Lucky Onoriode George