Deji Elumoye in Abuja
The Senate yesterday painted a gloomy picture of the aviation sector as it raised the alarm over imminent air disaster in the country as a result of the inability of airline operators to put their aircraft in proper shape.
It, therefore, implored the federal government to quickly intervene with N50 billion bailout to the airline companies as against the paltry N4 billion currently being offered.
The Chairman of the Senate Committee on Aviation, Smart Adeyemi, who gave the sorry state of the aviation industry at a news briefing, said airline operators in the country are broke and badly in need of bailouts to prevent them from cutting corners.
According to him, the aviation sector is very critical to the economy of any nation and is highly capital intensive, which make governments across the world to give bailouts to operators from time to time.
He cited example of Senegal that recently gave $74million bailout to the sector in the country; Rwanda $150million, and United States of America $58billion.
“A critical look at the aviation industry in Africa, Senagal for instance, which is no competition for the Nigerian aviation industry in terms of number of airline operators, released the sum of $74 million as bailout funds for their airline operators. Rwanda also released $150 million for its airline operators.
“Taking the scope out of Africa, USA for instance released the sum of $58 billion as bailout funds for its airline operators. This is to mention a few,” he said.
Aside the N50billion bailout, Adeyemi hinted that many of the airline operators confided in the committee that issues such as custom taxes on imported spare parts of aircrafts, multiple form of taxations and VAT on air transportation are running them out of business and tempting them to cut corners.
According to him, “Operational challenges running down their businesses as confided in the aviation committee are noncompliance of the customs department with the executive order to waive any form of taxation on importation of spare parts and commercial aircrafts.
“Other challenges are the noncompliance of the executive order on the removal of Value Added Tax (VAT) from air transport and the inability of the airline operators to have access to single digit lending as obtainable in other parts of the world. The inability of the airline operators to access foreign exchange as and at when due to enable them pay the value added tax for their aircrafts is also an operational challenge.”
The senator added that though the federal government, due to COVID-19 pandemic adverse effects on the sector, planned to give out N4 billion bailout, but based on the comprehensive assessment of the pathetic situation at hand, not less than N50 billion will be required for such intervention.
Adeyemi further said: “You would recall that the federal government, having considered impacts of the pandemic on the aviation industry, with a view to maintaining smooth operations, made the sum of N4 billion available as a bailout to these airline operators.
“With further and more critical intervention with airline operators in Nigeria, we gathered that approximately N50 billion will be required to meet the requirements of airline operators.
“This increase in bailout fund is imperative if we are to keep our economy running, guaranty job security and mitigate retrenchment.
“If comparative analysis is anything to go by, it is clear that the N4 billion announced by the federal government as bailout funds for airline operators will not be sufficient to sustain three of the needs of the fifteen scheduled flight operators, save the nonscheduled operators.
“Our further enquiry has also shown that airline operators are already discouraged and have resorted to cutting corners in carrying out maintenance requirements on their aircraft.
“This is of course as a result of their poor financial situation. If this is not immediately checked, the effect is best imagined than experienced.”
“As duly elected representatives of the people, we are mandated to take seriously any issues which may have adverse effects on the lives of the people we represent. Where we see red flags, we should immediately bring this to the attention of the people and ultimately, the federal government.”