The Covid-19-induced crunch, which has resulted in mass retrenchment in Nigeria’s aviation sector may yet get worse if the Federal Government’s apparent refusal to intervene in the sector with financial palliative is any indication.
This fear was heightened Monday this week after the nation’s biggest domestic commercial aviation operator, Air Peace, announced that it had sacked some 70 pilots and other categories of staff in a move aimed at downsizing its over 3000 workforce.
According to the announcement, Air Peace also placed the remaining staff on a 40 per cent pay cut.
Air Peace’s move may have caught many unawares but it would appear to be all the other operators needed to move in that direction in their bids to make returns on their investments in the face of a challenging business environment worsened by the Coronavirus disease (Covid-19) pandemic.
The already bad situation could get worse largely because of government’s reluctance to accede to requests by by operators for appropriate intervention in the face of the ravaging Covid-19 effects on commercial aviation globally and, by extension, locally.
Before the Air Peace announcement, Monday, Med-View Airlines, in a bid to save its business from bankruptcy, had put up two of its B737 aircraft for sale, while renegotiating another on-lease plane. And that was two weeks ago.
Arik Air has yet to renegotiate the terms implemented on working conditions of staff imposed in the wake of the shutdown of operations occasioned by the response of the Federal Government, which has failed to extend financial assistance to commercial aviation hit hard by economic crunch occasioned by the Covid-19 pandemic.
The company placed virtually its workforce either on 60 per cent pay cut or on compulsory leave.
Only yesterday, another domestic carrier, Bristow Helicopters, sacked nearly 100 staff including pilots and engineers, citing losses incurred as a result of the adverse effects of Covid-19 pandemic on its operations.
Bristow Helicopters operates chartered shuttle services for majorly upstream oil and gas companies moving staff on and offshore.
Although Bristow Helicopters has been in a long drawn labour dispute with members of the local branch of National Association of Aircraft Pilots and Engineers (NAAPE) over conditions of service, the airline may have exploited the revenue drop occasioned by Covid-19’s negative impact on the aviation industry to announce the latest development
AbeyaNews reports that NAAPE had declared an indefinite industrial action in Bristow Helicopters, a development which commenced last week.
In announcing the sack of its pilots and engineers, management of Bristow Helicopters said it had now engaged the services of NAAPE leadership to help in negotiating ‘a fair and equitable redundancy compensation for the affected individuals.’
The airline employs both Nigerian and expatriate pilots and engineers.
According to the airline, the decision to terminate the employment of its technical staff stemmed from losses incurred as a result of Covid-19, adding that it would use the period to now restructure all aspects of its business model.
“The spread of the Covid-19 virus has severely impacted all sectors in the aviation industry including our market, which primarily serves the Nigerian oil and gas sector. In addition, the ongoing downturn in the global oil and gas market continues to influence and determine the demand for our services.
“The combined effects of these ‘arisings’ have resulted in very significant reductions to our business, particularly a reduction in the number of contracted aircraft in Nigeria. As a result, the company must now restructure all aspects of its business model (both Rotary & Fixed Wing), including an extensive review of its operations and we continue to drive efficiencies, but with zero compromise to safety and our core values.
“One of these measures includes the right sizing of the business to ensure that the company has the optimal level of personnel to continue the safe delivery of its services to its clients, whilst allowing the appropriate capacity for future growth.
“Accordingly, and with much regret, the company has taken the very difficult decision to release over 100 pilots and engineers (both national and expatriates) over the next couple of weeks.”
“In compliance with the relevant labor and local content laws and also best practices, the company has engaged the leadership of the National Association of Aircraft Pilots and Engineers (NAAPE) to negotiate a fair and equitable redundancy compensation for the affected individuals.
“In compliance with the terms of employment, the affected individuals will be paid 3 months’ salary (excluding applicable deductions) following their exit from the company. The redundancy packages will be paid to them as soon as an agreement has been reached with NAAPE.
“This decision has not been made lightly, but having considered the state of the business and the very serious constraints caused by the spread of the Covid-19 disease and the downturn in the oil and gas market, the company must now take this painful, but decisive step to ensure the continuity of its business and delivery of essential services to its clients,” the airline wrote.
The negative impact of Covid-19 on the aviation industry is well documented, as even the global commercial air transport regulator, the International Air Transport Association (IATA), has consistently raised alarm over the travails of operators.
However, many of these mishaps in the industry could have been avoided, even as there were signals sent out to government by operators calling for its intervention to save the situation, but which apparently fell on deaf ears
Way before the originally announced June 21 reopening date for commercial aviation operations, later moved to July 8, over 80 per cent of domestic operators were already reeling under the burden of financial cost, internal debts, operational burden and poor capacity utilisation. While some have placed a chunk of their workers on half pay, others have outrightly downsized workforce to meet running cost.
With the obvious exception of Air Peace which long-haul aircraft was relatively kept busy courtesy of a handful of emergency flights for other countries during the international lockdown necessited by Covid-19 pandemic, the bulk of other domestic operators had their entire fleet grounded.
The costs incurred by these airlines already overwhelmed their ability to respond to regular maintenance of their fleet in preparation for the reopening of normal flight services and this may, in addition result in routes under-servicing.
Furthermore, some of the conditions given by the Federal Government, though informed by safety concerns, could not allow for domestic operators to quickly recoup or cover losses.
Minister of Aviation, Hadi Sirika, while earlier announcing the June 21 reopening date announcement at a briefing of the Presidential Task Force on Covid-19 in Abuja, had said: “The modality of operations by airlines and the passenger numbers will certainly drop and the load factor will also drop. Only 50 or 70 per cent of the passengers should be taken. These are some of the things that we have been looking at.”
However, while the minister declared that consultations had been on and would continue between the ministry and industry stakeholders on the best ways to operate profitably while at the same time ensuring the safety of travellers, no mention was made of the demands put forward by operators back in March, this year, on the way forward for aviation business post-Covid-19.
Also, no airline confirmed the reported maintenance or servicing of its aircraft in preparation for the botched reopening.
In terms of air worthiness,the Director, Airworthiness Standards, Nigerian Civil Aviation Authority (NCAA), Engineer Ita Awak, once said that only six domestic airlines have ‘crossed the airworthiness mark.’
Similarly, while commenting on the financial capacity of domestic operators as they prepared to return to the skies, the Director, Air Transport Regulation at Nigerian Civil Aviation Authority (NCAA), Group Capt. (Rtd.) Edem Oyo-Ita revealed that out of a dozen local carriers in the country, only three had submitted their financial reports, which would enable the agency determine the status of the operators.
“Only three airlines have submitted their financial health while waiting for others,” he said last week, rising from a stakeholders meeting in Abuja,” he said.
Back in March, at the start of shutdown of commercial aviation, Chairman of Airline Operators of Nigeria (AON), Capt. Nogie Megisson made some key demands from the Federal Government during a strategic response meeting held between the managements of the Federal Airports Authority of Nigeria (FAAN), the NCAA, Nigeria’s Representative to International Civil Aviation Organisation (ICAO), members of Port Health and Chief Executives of Airlines on one hand and Helicopter operators on the other, to develop and implement measures to prevent the influx of the virus into the country as well as curb its spread.
AON Chairman had called on the Ministry of Aviation to take a cue from the Central Bank of Nigeria (CBN) by directing the various agencies under its supervision to immediately put in place and extend critical palliative measures to Nigerian airline operators in order to reduce the burden of their losses from the impact of Covid-19 on air travel.
AON also called on regulatory agencies of Government in the Ministry of Aviation to toe the same path by taking action to support domestic airlines that are drivers of the nation’s economy.
Nigerian airlines, Megisson stated, are suffering heavily from the impact of Covid-19, as the passenger numbers have dropped drastically and overheads remain the same on many fronts and even increasing significantly on other fronts.
“The agencies should, therefore, help the airlines by immediately streamlining the over 32 multiple charges given to airlines which are mostly double billing. Government should also bear 100% cost of disinfecting all aircraft for this period and provide thermal scanners and hand sanitizers as well as mobilize more manpower and training of Port Health Personnel at local airports to encourage more people to travel.
“What we are asking for is not unprecedented. For instance, in the United Stated of America, airlines are seeking a $50 billion bailout. As part of its response, an Emergency Stimulus Package was passed by the US Senate and House and they reduced interest rates to 0.25%. Also, the bill granted their airlines tax credit for their losses during the Pandemic.
“Our government can do the same therefore by granting the above stated reliefs to Nigerian airlines as a way of assisting them during this very difficult time to recover from their losses,” the airline operators chief said.
With domestic operators yet to get any positive signal from the Federal Government in terms of palliatives or policy adjustment, it is no surprise that there is a spate of retrenchment sweeping across the domestic aviation sector.
To make matters worse, the preference by government for foreign airlines during emergency operations in parts of the world through evacuation of stranded Nigerians did not help the finances of the local carriers.
These local airlines which had the capacity to undertake evacuation flights in any part of the world were overlooked by government, except for Air Peace, resulting in most of their fleet totally grounded due to non-patronage.
According to AON, if government had kept these local carriers busy, the horde of Nigerians now facing unemployment in the face may not have gotten to that level, as the airlines could have earned much-needed revenue to maintain operations and welfare of workforce.