Author: Ayompe Ungitoh
The unexpected outbreak of the Covid 19 pandemic has slowed down a lot of businesses in the world as most Governments have taken several measures ranging from restrictions of human movement in terms of lockdowns, closing of local and international borders in a bid prevent the spread of the infection. In other parts of the world, Governments ordered its citizens to shut down their businesses in a bid to curb the spread of the novel deadly virus. Based on the shutting down of boarders locally and internationally, the Aviation Sector in the world has faced several challenges. The Director General and Chief Executive Officer of the International Air Transport Association (IATA) Mr. Alexander de Junaic, appealed for governments’ support for the industry. The crux of this study would be on how the Covid 19 Pandemic has affected the Aviation industry with a focus on Nigeria.
It is common knowledge that since the 23rd day of March, 2020, a restriction was placed on all commercial airlines coming into Nigeria by the by the Director General of the Nigerian Civil Aviation Authority (NCAA) as was stated in: All Operators Letter (DG 001/20) dated the 21st of March 2020. This however, excluded emergency and essential flights such as: aircrafts in state of emergency, over flights, operations related to humanitarian aid, medical and relief flights, alternative aerodromes identified in flight plan, technical stop where passengers do not disembark, cargo flights and other safety related operations in accordance with the, All Operators Letter (DG 004/20) dated the 23rd of March, 2020. Following President Muhammadu Buhari’s barn on interstate travels the Nigerian Governors Forum in a letter dated 24th April, 2020 requested that there should be a lockdown of flights locally. As a consequence, the Aviation Industry in Nigeria has experienced several challenges ranging from loss of jobs in the industry, increasing industry debt profile, increased competitive pricing.
LOSS OF JOBS
IATA in a press release estimated that the COVID-19 crisis would put 124,000 Nigerian jobs at risk while in an article released by Business a.m. on the 20th of March, 2020, they stated that:
“The disruption to air travel due to the continued spread of coronavirus will cost Nigeria’s aviation industry over N160.58bn (using Bureau de Change rate of N370 to $1) ($434m) in revenue and 22,200 jobs”
As predicted several jobs have been lost due the shutdown of local airports and international boarders as a result of the pandemic. This is due to the fact that there has been no need for the services of Flight Crew, Air Traffic Controllers(ATC), ground staff like Aircraft Maintenances Engineers (AME), baggage handlers, Flight dispatchers, station managers and flight ticketing agents. In recent times, several airline companies have had to lay off staff due to challenges faced as a result of the Covid 19 pandemic.
FINANCIAL CHALLENGES
As earlier stated in the introductory paragraphs, the aviation industry has suffered a financial meltdown due to the outbreak of Covid 19. Even though the industry responded quickly to the crisis by taking significant cost cutting measures to preserve cash, the sharp decline in travel demand resulted in considerable cash burn and a deterioration in the financial outlook. Since the outbreak, the median airline rating has shifted to the ‘highly speculative’ category, reversing the improvement in ratings seen in the past decade. IATA stated that Nigeria would, lose approximately 2.2 million passengers and in March projected 853,000 losses in passenger volumes and $170m loss in base revenues in Nigeria if the spread of COVID-19 continued.
According to Hadi Sirika, the Minister of Aviation in Nigeria, about N21 billion is being lost monthly by the airlines since the outbreak of Covid-19, due to the lack of activities faced by the sector whose income solely depends on flight operations.
Added to the fact that airlines are not flying due to the pandemic there is the issue of finding the right space and conditions to park planes and keeping them airworthy.
What most people fail to realise is that, aircrafts can’t simply be left unattended to. They need a lot of work and attention while in storage which range from maintenance of hydraulics and flight-control systems, protection against insects and wildlife. Then there’s humidity, which can corrode parts and damage interiors. Even when parked on runways, planes are often loaded with fuel to keep them from rocking in the wind and to ensure tanks stay lubricated. This explains why the Federal Aviation Authority (FAA) ordered that airlines must inspect any Boeing 737NG aircraft that has been parked for more than a week after four reports of engine shutdowns. All of these are running cost which airlines in Nigeria still incur even though there is no income coming into the industry.
Furthermore, due to the covid 19 and the need for social distancing, even when international boarders are opened there would be the need for social distancing. This would mean airlines would need to carry less passengers to respect social distancing. Therefore, spending the same price on fuel and carrying less passengers would be less productive and costlier on airlines.
FUTURE PROGNOSIS
Based on the impacts discussed above there may be a ripple effect which would cause many airlines to be bombarded with law suits for failure to perform contractual obligations or terminating employee contracts before effluxion of time stated if airlines do not do not have solid contract which protect them from such unexpected occurrences. Prior to the lockdown of boarders, several business organisations had paid for delivery of their good and services of perishable and non-perishable nature. The question that lingers is who should be liable to ensure goods of perishable nature are properly preserved? If such liability is on airlines can they effectively rely on force majeure clauses in agreements or rely on doctrine of frustration?
In line with laying off of pilots and engineers Mr. Abednego Galadinma, president of the National Association of Aircraft Pilots and Engineers (NAAPE), at a news conference in Lagos issued an ultimatum to airlines who sack pilots under the guise of covid 19 to reverse their decision and called on the NCAA to intervene to stop unilateral dismissal of pilots. This would have escalated if the Minister of Aviation did not intervene to find a way to amicable address the issue raised leading to a few pilots being reinstated. As such there is a lot of uncertainty as to what the other pilots or staff who have not been reinstated and properly compensated would do. All these issues might lead to many airlines being sued.
CONCLUSION
Judging from the above, it goes without say that the aviation industry in Nigeria has been severely destabilised and would need all the support they can get from government and its agencies for them to survive the effects of the covid 19 pandemic. It is imperative to note that if this sector does not flourish again the Nigerian economy would crumble as several other business sectors that depend on the aviation industry have also been severely affected. This is because the air transport sector in Nigeria provides a lot of jobs and spending generated by airlines and their supply chain, the flows of trade, tourism and investment resulting generates a lot of money for the Nigerian economy.