COVID-19: Local airlines, others count losses in billions

Murtala Muhammed International Airport, MMIA, Lagos is first climate smart airport in Nigeria
Murtala Muhammed International Airport, Lagos
  • Carriers cut flights, cargo dips by 70 %
  • Losses unquantifiable, says AON

The shocking effects of COVID-19 spread is raving Nigeria’s aviation sector as experts put the cumulative loss to carriers, aeronautical and airport authorities, ground handling companies and the industry regulator at billions of naira.

Though two indigenous carriers: Arik Air and Air Peace have announced plans to both suspend flights on some international and regional routes including: Dubai, Freedom, Dakar, Accra and Banjul, experts say aviation agencies will lose hundreds of millions that wouldn’t accrued as revenue for landing and parking fees, passengers service charge, en route navigation charges as well as ticket/cargo sales tax.

Besides airlines that will lose daily revenue from dip in passenger traffic, cutting and suspension of flights, the Nigerian Civil Aviation Authority (NCAA) will also forfeit the five per cent revenue that it would have statutorily earned as revenue from tickets sold and cargo fried into and out the country.

The Federal Airports Authority of Nigeria (FAAN) will lose revenue on many fronts: aircraft landing and parking fees; ground rent; passengers service charge $20 each per passengers for international and regional flights and another N2, 000, 00 per passengers for domestic flights.

FAAN, on its part will also lose more revenue from toll collections, which has dipped following limited movements into airports nationwide in addition to the huge revenues it collects from car parks that litter airports nationwide.

An official of FAAN, who pleaded not be named said the authority will lose over hundreds of millions naira if there is further dip in commercial activities around the airport.

Besides FAAN and NCAA, the Nigerian Airspace Management Agency (NAMA) will also lose millions of naira and thousands of United States dollars that it would have earned as revenue as either en route navigation and terminal navigational charges; over flights charges and other charges it usually earns for its air traffic advisory services to both, domestic, regional, international and over flights across the Nigerian airspace.

Apart from aviation agencies paramilitary organisations including Nigeria Customs Services (NCS) and Nigeria Immigration Services (NIS) are also loosing revenues running into millions of naira which would have accrued as duties on cargo flown into Nigeria through the airports as well as Visa On Arrival Fees for visitors, investors and others who enter the country through the air borders and the accompanying fees, levies and charges they pay.

Chairman, umbrella body of indigenous carriers: Airline Operators of Nigeria (AON), Captain Nogie Meggison said the losses are unquantifiable.

Speaking in an interview, President, Association of Foreign airlines Representatives in Nigeria (AFARN), Kingsley Nwokoma said the effects of COVID – 19 is having gripping effects on Nigerian aviation as fewer cargo airlines were flying into the country since the crisis started .

He said: “If you go to the warehouses, it is like a ghost town, in those days, we use to have the China section of the warehouse, almost 70 per cent of what comes in goes to China or the Asia section of the warehouse but now it is empty, we just hope pray that things get better.”

“Most airlines are cancelling, stopped; Frequency has dropped, of course you need to have passengers and cargo to fly out. Before COVID-19, we had all the carriers coming in over 20 plus aircraft coming in both scheduled and non-scheduled coming in and landing. As I’m talking to you, more than half of that have stopped coming in and even those that are coming in are also looking at frequencies, have dropped, a lot of people are not traveling again and cargo is down,” he added.

Nwokoma noted that Asia was the market for most export and import and since the pandemic; production and export of goods had been brought to a halt.

‘If we are going to look at decline in cargo, if we are going to rate it, we should be talking about 70 per cent am even being magnanimous about it, 70 per cent because most export goes to Asia while import comes from Asia and China.

Recall that multiple flights have been canceled or temporarily suspended across Africa as airlines struggle to cope with falling demand following the spread of coronavirus.

According to a report from the International Air Transport Association (IATA), as of March 11, African airlines have recorded a loss of up to $4.4 billion in revenue since the virus surfaced.

Adefunke Adeyemi, IATA’s Regional Director for Advocacy and Strategic relations in Africa said passenger demand for Africa has reduced significantly.

International bookings in Africa went down by 20 per cent in March and April, while domestic bookings have fallen by about 15 per cent in March and 25 per cent in April, according to data from IATA.

“Not as many passengers are traveling to, from and within Africa because of the outbreak. In terms of the impact on the aviation industry, the numbers we released show Africa taking a hit in terms of revenue,” Adeyemi said.

Nigeria and Rwanda are also faced with a loss of 853,000 and 79,000 in passenger volume respectively, according to IATA.

One of the reasons Africa’s aviation industry is hit hard by the spread of the virus is its large trade and travel relations with China, where the outbreak started, said Tokunbo Afikuyomi, an economic analyst based in Nigeria.

Over the past 20 years, China and Africa have become close trade partners with China expanding its economic and political ties on the continent.

As a result, Chinese citizens have flocked Africa, working in industries including manufacturing, healthcare, and technology. And according to Migration Policy, there are currently about 2 million Chinese in Africa.

“China is Africa’s main foreign business partner. A range of businesses and people come to Africa from China and we have many flights to the continent every day,” Afikuyomi said.

Similarly, in Nigeria, travelers from countries with more than 1000 reported cases of coronavirus are barred from entering the country.

It is difficult to predict how long it will take to fully reduce the extent of the spread coronavirus, Adeyemi said.

In order to minimise the impact of the virus on the aviation industry, IATA’s calls to action to governments of affected countries is to support airlines through loans and tax relief packages says Adeyemi.

In a statement released Thursday, IATA asked governments in Africa and the Middle East to consider providing emergency support to airlines fighting to survive as a result of the spread of coronavirus.

“Many routes have been suspended in Africa and Middle East and airlines have seen demand fall by as much as 60 per cent on remaining ones. Millions of jobs are at stake. Airlines need urgent government action if they are to emerge from this in a fit state to help the world recover, once COVID-19 is beaten,” said Alexandre de Juniac, IATA’s Director General in the statement.

The International Air Transport Association (IATA) has given country specific analysis of the impact of COVID-19 to Africa’s aviation industry.

Out of the five major economies in the continent comprising South Africa, Kenya, Ethiopia, Nigeria and Rwanda, the disruptions from COVID-19 could result in 853,000 loss in passenger volumes and $170 million loss in base revenues in Nigeria.

IATA, the clearing house for over 280 global airlines stated that the disruptions to air travel could also put at risk over 22,200 jobs in the country. If the situation spreads further, approximately 2.2 million passengers and $434 million of revenues can be lost.

Arik last week announced the temporary suspension of flights to all its West Coast destinations effective Monday, March 23, 2020.

The management of the airline took the decision after a careful analysis of the novel CoronaVirus Disease (COVID-19) which has been declared a pandemic by the World Health Organization (WHO).

The Chief Executive Officer of Arik Air, Captain Roy Ilegbodu elaborated: “The safety and well-being of our personnel and valued customers are paramount at this critical time. We do not want to take chances and this is why we have taken this decision.”

From Saturday government started the restriction of travelers from the United States (U.S.), United Kingdom (UK) and China, Italy, Iran, South Korea, Spain, Japan, France, Germany, Norway, the Netherlands and Switzerland into the country.

These are countries with over 1,000 cases domestically.

Secretary to the Government of the Federation (SGF), Boss Mustapha, who announced the restrictions, said it will be in force for 30 days and subject to review.

Air Peace at the weekend said it has started downsizing its operations in response to the adverse effects of the pandemic, Coronavirus.

The airline said it took the decisive decision after an emergency meeting with its management staff to review its operations.

Mrs. Toyin Olajide, the Chief Executive Officer (CEO) said the airline also took the decision to cut down its flights following a tremendous decline in passenger traffic and the need to cut costs.

She said: “Air Peace, as a result of the adverse effects of the coronavirus pandemic on passenger traffic, has today taken the hard decision to downsize our flight operations in order to cut the mounting costs occasioned by the pandemic.”

Only last week, Airline Operators of Nigeria (AON) called on the Federal Government to take urgent steps by immediately announcing a comprehensive travel restriction to only two entry points for Nigerian travelers coming into the country.

The call came on the heels of a strategic response meeting held between the Managements of the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA), Nigeria’s Representative to ICAO, members of Port Health and Chief Executives of Airlines and Helicopter operators to develop and implement measures to prevent the influx of the virus into the country as well as curb its spread.