Local air travel in the year of pandemic
Aviation business globally had one of its worst nightmares in 2020. WOLE OYEBADE highlights defining moments in the local sector, authorities’ actions, and inactions at reaching stability.
Modern commercial jets are programmed to be in the sky, earning revenue and meeting financial obligations round-the-clock. To have them grounded for a day is alien to the aviation business.
But for one-third of 2020, or more, global airlines had entire fleets grounded and inactive, creating a financial crisis that will require another three years of intensive recovery efforts to fix.
What began as an epidemic in Wuhan, China, in the twilight of 2019, spread across the globe in the first quarter of 2020. As the main culprit of the transmission, airlines came under restrictions as nations closed borders and imposed rare lockdowns.
When the coast became clearer in Nigeria after three months of lockdown, the airlines were gasping for breath, and in need of a fiscal stimulus package. In the battle for the soul of aviation, a fatal helicopter crash was recorded in Lagos, ending Nigeria’s five-year record of zero-fatality in commercial aviation.
Besides, investors’ fatigue literally caused the year to end without the new national carrier, airport concession, and Maintenance Repair Organisation (MRO), among other ambitious plans of the 2016 Aviation Roadmap. Another wave of economic recession and a spike in the exchange rate caused airlines to buckle and push the unbearable cost to beleaguered customers. Together, they summed up a dismal 2020.
No fly zone Year 2020 took off on a wobbly note. A massive disruption rocked both local and international operations nationwide. Harmattan haze – a natural phenomenon between November and March –ushered in poor visibility and safety concerns at airports. Local airlines were grounded for days.
Foreign airlines were not left out. It was unlike past episodes where more sophisticated foreign carriers touched down and took off even at zero visibility. In January, the newly-installed Category III Instrument Landing System (ILS) at Lagos and Abuja international airports would not work to precision, due to poor judgment and tardiness of the local authorities. The recently acquired Beechcraft Super King Air 350 (B350) ILS calibration aircraft, purchased by the Minister of Aviation, Hadi Sirika, for $8.5 million (N2.59 billion), failed when it mattered the most. So the ILSs could not be used by airlines.
British Airways simply took it out on the passengers and abandoned it all in Accra, Ghana. Scores spent days reconnecting Lagos by road. More amiable Delta Airline simply took the passengers on another nine-hour flight back to its hub in Atlanta, USA. Those onboard could tell that it was one of the most embarrassing moments to be a Nigerian.
An Italian brought COVID-19 At the tail-end of February, Nigeria recorded the index case of COVID-19. With the benefit of hindsight, Nigeria had a two-month window period to learn valuable lessons and get prepared for the pandemic. Aviation Security Consultant, Group Capt. John Ojikutu (rtd) earlier tabled proactive preventive measures like either a shutdown of the airspace or restriction of air movements to only two airports for proper monitoring of all inbound travellers.
The Senate Committee on Health during an oversight function to Lagos airport and Apapa port in early February was indeed shocked and raised the alarm that the foremost ports of entry were not secured. Lagos airport for instance had only a doctor on-duty, amid inadequate support staff, screening equipment, just as operating airlines were not complying with basic control directives of the Nigerian Civil Aviation Authority (NCAA).
The index case arrived on February 27 and three weeks later, 12 positive cases had been recorded, and over 1000 on the surveillance list. On March 23, the NCAA shut down Lagos and Abuja airports and by month-end, the entire airspace had closed down.
Collateral damage COVID-19 is a global storm predicated on insolvency. Clearinghouse for 280-plus airlines worldwide, the International Air Transport Association (IATA), recently estimated that the airline industry’s global debt could rise to $550 billion by December.
The debt is a $120 billion increase over debt levels at the start of 2020. The details showed that about $67 billion of the new debt is composed of government loans ($50 billion), deferred taxes of $5 billion, and loan guarantees of $12 billion. The global debt crisis is forcing operators to explore difficult reforms, which will affect 25 million direct and indirect aviation jobs.
There is really no consensus on the losses incurred by the local airlines. But a huge fraction of about N360 billion estimated was on account of aircraft maintenance and overhead during the lockdown. In three months of lockdown, no fewer than 120 airplanes were parked, not yielding revenue, yet incurring maintenance cost.
All airlines downsized their workforce. Arik Air, managed by the Federal Government’s Asset Management Corporation of Nigeria (AMCON), furloughed half of the workforce and cut the wages of survivors.
The Chief Operating Officer of one of the operating airlines told The Guardian that without the heavy cost of maintenance, the airlines could have ignored the Federal Government’s bailout plan.
“The pandemic lockdown was an unusual development that modern aviation did not foresee. That the whole world would be on a lockdown for months was unthinkable. Yet, it came. Air planes that were programmed to be in the air 20 out of 24 hours a-day started sitting on the apron. That was devastating and huge losses to say the least. Someone has to bear the brunt, which no operator can afford. That is the rationale behind global requests for governments’ support so that aviation will not die.”
Chairman of Air Peace airline, Allen Onyema, said the sector must be talking about N500 billion in revenue lost to date.
“Airplanes that could not be maintained during lockdown will cost us more to do now. For instance, there is one of our B777s in Jordan.
“When you’ve parked an aircraft for a while, you have to move it every seven days to, at least, enable tyres to change positions. It should not stay in one position for long. Now, there was a lockdown in Jordan with no one going to work. Nobody moved our plane for one month. This is a 777 where one engine costs about $10.2 million! Just because there were no people to work at the MRO, we are now going to change the entire 12 wheels. That is over $500,000.
“Upon that, the MRO is charging us $100,000 per month for parking. So, in the last seven months, that is $700,000 alone for parking. So, when people say N180 billion, it is a lie. We are losing over N500 billion,” Onyema said.
Promise not kept The Federal Government had during the lockdown in May hinted at a plan to bailout airlines prior to restart. Flight operations resumed and weeks rolled into months, yet nothing came in the form of bailout. The delay fueled official denials that the bailout might be a ruse after all.
Defending the Ministry of Aviation’s 2021 budget at the Senate’s panel, Sirika disclosed that the bailout of N5 billion was in the offing for aviation. Operating airlines will get N4 billion, while aviation service providers will be entitled to N1 billion. It was a far-cry in the estimate of both the operators and the host lawmakers. The Senate concluded that airlines should get as much as N50 billion for economic and safety reasons.
Indeed, in-between the back and forth, the financial and operational challenges of airlines have worsened. As an industry that depends 100 per cent on foreign exchange, yet earns revenue in weak Naira (N500 to $1), keeping a respectable fleet of healthy planes is the major headache of operators.
President of the Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the Industry, Dr. Gbenga Olowo, said the direct and indirect contributions of the industry to the economy were too huge to be abandoned to its COVID-19 fate.
Olowo said thousands of aviation-related jobs already lost were enough incentive for any government to rally behind the industry early enough.
“Reasonable countries intervened in their aviation industries in the second or third month. This is the ninth month and Nigeria is just responding. I think the government should just leave us to die, and then we will know that Nigeria has no aviation industry. The N4 billion palliative for the aviation industry is very insensitive. I condemn it totally,” Olowo said.
New pricing regime Unsavory effects of the neglect came to the fore in November when prices of local airfares spiked by about 100 per cent across the network.
Though they argued that the spike was not arbitrary, the operators said surplus in demand is typical of festive seasons and the current shortage in the fleet capacity of airlines would naturally jack up airfares and sell to the highest bidders.
The operators said most worrisome was the shortage in operating aircraft to complement traffic surge as more than half of the regular fleet are either due for maintenance or stuck overseas due to lack of funds to repatriate them.
Safety record smashed Though the regulatory bodies, especially the Accident Investigation Bureau (AIB) further raised the tempo on safer airspace, the industry in August recorded a fatal air crash, shattering a five-year record of zero-fatal accidents in commercial aviation.
A Bell helicopter belonging to Quorum on August 28 crashed into residential apartments in Opebi, Lagos, killing its pilot and two crew members on board. The light helicopter Bell 206B3, with registration Number 5N-BQW was flying from Port-Harcourt to Lagos when it crashed just a few minutes to touchdown at Murtala Muhammed Airport, Lagos. AIB’s preliminary report, in less than four weeks of findings, disclosed that the aircraft had no fuel at the time of the crash.
Commissioner of the AIB, under whose tenure the body has been transformed to the world-class agency, Akin Olateru, said the accident was a minor dent, as the Nigerian safe airspace remains intact and of significance in the world.
