On a global scale, the services sector was one of the most hard-hit, with special emphasis on the aviation industry. Like in most advanced and developing economies, major interventions were necessary to salvage that industry from collapse.
By and large, each country adopted its unique approach to salvage its aviation industry, with unique results.
For Nigeria, in March 2020 the federal government rolled out “The National Economic Sustainability Plan” with the objectives of stimulating the economy by preventing business collapse and ensuring liquidity, retaining and creating jobs, undertaking growth-enhancing and job-creating infrastructural investments, promoting manufacturing and local production, as well as extending protection to the very poor and other vulnerable.
In line with those objectives, aviation was allocated N27 billion from this fund principally to save jobs and existing organizations using this stimulus package as the fulcrum.
Consequently, the ministry allocated N5 billion to some segments of the industry while keeping a chunk of the palliatives for the proposed national carrier. Scheduled operators were granted N3 billion, with 5% deductions for the agencies.
Non-scheduled operators got a total of N1 billion with a total deduction of N950 million to aviation agencies.
Ground handling companies, Aviation fuel marketers, and catering services got N233 million each.
The National Association of Travel Agencies (NANTA) received a total of N196 million with an N4 million deduction.
Airport Car Hire Association of Nigeria (ACHAN) received from the ministry, N1 million
Although the EU made a concerted effort to salvage its aviation industry also, the approach was different from the Nigerian.
The EU principally anchored their support on keeping the airlines operating. The union did this by expeditious granting of flight rights/permit, temporarily removing night curfew placed in some cities around selected airports, and quick approval of passenger aircraft conversion to cargo aircraft for movement of critical goods.
Cargo crew and associated personnel were upgraded to critical/frontline staff, which was motivational and allowed them to bypass lockdown protocols. Also, flight crews were exempted from travel restriction rules.
Other measures included suspension of slot requirement into busy airports, which is a requirement to land at such airports, and removal of punitive measures embedded for non-usage (before then some airlines operated wasteful ghost flights just to keep the slots). State aid included members being allowed to set up financial schemes as grants, loans and palliative, and selective tax advantage implemented for general aviation. States were also urged to guarantee bank loans when called upon, as well as subsidies on interest and principal on outstanding public loans.
In the United States, the CoronaVirus Aid Relief and Economic Security Act (CARES ACT), which was an act of parliament, Injected trillions of dollars to support the economy; aviation inclusive in loans and loans guarantee.
Funds were targeted at keeping workers on payroll. Federal excise tax holiday (temporarily repealed excise taxes in relation to commercial aviation) was given.
Beneficiaries of these funds had the following caveats: no dividend payment, limit on stock buyback, no employee furlough, lay-off or pay reductions, no insolvency, limit on executive compensation, warrant, equity and debt issued to the government.
The approach to saving the aviation industry was yet different in India. In that country, the government did not give any palliatives. Its approach included calibrating opening of routes and seat capacity on different routes, protecting small carriers with capped minima and maxima fares, and reviewing the Bilateral Air Services Agreements that were skewed in favour of foreign airlines
Airlines web check-in moved from just above 10% pre-COVID to about 90% for all travels booked in India. Minimal contacts with baggage and security checks developed at all airports.
Nigeria adopted the US model of supporting payroll and assisting the different organizations but did not adopt or include the necessary caveats to monitor usage, implementation and the provision of other non-cash palliatives as earlier enumerated and highlighted.
Therefore there is need to go further by ensuring fairness in distribution, monitoring and accountability, while also considering other non-monetary options that should mitigate the following issues bedeviling the industry: bad debts from clients, interest on bank loans/ overdrafts, increased insurance premiums, increased cost due to health protocols, depreciation of the naira, scarce forex, retrenchment and closure of outlets/offices.
Many banks and financial institutions blacklisted aviation, travel and tourism organisations as being non-revenue generators throughout the COVID lockdown and beyond. Even the existing limits, if any, have been reduced.
Government can in the interim facilitate a moratorium for at least 2 years from all loans and other financial facilities. This can be paid back, free of interest to the government in installments over 24 months thereafter or deducted at 15% of their salary and paid back to the treasury.
There should be fresh loans/overdraft facilities to organisations provided at rebated interest for a period of at least 5 years until things are restored to normalcy. This shall give support to them to meet their administrative overheads and promote travel and tourism effectively.
Be that as it may, the aviation industry, as a matter of responsibility, has to be accountable and transparent. And there have to be measurements of viability to attract investments. Measurement is at the heart of management; you cannot manage what you do not measure. The big data era has given the aviation sector the tools required to do both. Therefore, the industry must rise and work towards having appropriate, verifiable and generally acceptable data for the industry to attract investors, reduce cost and improve revenue.
There is a need for transparency and corporate governance from the top down. You cannot measure what you cannot see either. Partnership between the private and public sector is not just related to projects or privatisation but requires all stakeholders to get on the same page.
Partnership and collaboration throughout the sector is the best response to creating an enabling environment for the sustainability of the sector.
