Aviation Sector Gasps for Stimulus in Worst Ever Crisis

Proshare

Friday, May 08, 2020 / 1:18 PM / CSL Research / Header Image Credit: Loop Barbados


In 2019, the Nigerian aviation sector was the fastest growing sector in Nigeria in real GDP terms, up 13.2% y/y to N83.5bn from N73.8bn in 2018. However, the outbreak of the coronavirus in Nigeria has threatened to derail the fast improving prospect of the industry. The aftermath policies of the Federal Government's bid to contain the spread of the coronavirus resulted in the shut down of the Nigerian airspace since March 22. The Presidential Task Force (PTF) on coronavirus recently announced a 4-week extension to the ban on both local and international air travel.


Proshare Nigeria Pvt. Ltd.


The economic costs of the shut down of air travel is significant for Nigeria. According to the Minister of Aviation's briefing to the PTF on coronavirus, Nigeria currently loses c.N21bn/ month. In addition, data from International Airline Tranport Association (IATA) estimates that the coronavirus outbreak would cost Nigeria's aviation sector US$994.0m (N357.8bn) in Revenue, 125,370 jobs would be lost and the overall economy would lose US$885.0m (N318.6bn)in form of nominal GDP contribution from the sector.


The crisis in the aviation industry is a global phenomenon that resulted from the need to curb transmission of the global pandemic across countries. However, the difference in the case of Nigeria however is the dearth of palliatives to ease the crisis in the sector. For example, in the United States, the historic US$2.2tn fund includes a US$61.0bn relief package for airlines. In exchange, they promised to keep their thousands of employees through the crisis. In Europe, governments have made available loans for airlines although countries like UK have instructed that the airlines must have exhausted other sources of funding. In Nigeria, the situation appears different, while the CBN has announced several stimulus packages in union with the FG, the attention seems to have been directed towards, health and pharmaceuticals. This comes despite the request made by the Minister of Aviation for stimulus measures to support the industry.


Proshare Nigeria Pvt. Ltd.


We note that while the sector has been showing signs of promise in recent years, the story has not always been positive with intense competition among airlines forcing ticket prices lower. When the low occupancy rate of local flights is considered, the situation appears worse, forcing smaller players who could not compete to file for bankruptcy. Failure by the government to provide adequate support for the industry will lead to several airlines shutting down and massive job losses within the sector. For example, Airport hotel, an associated hotel business close to the Lagos Muritala Muhammed airport sent its workers on a 3-month leave without pay.


In our view, the Federal government needs to provide dedicated funding support in the form loan facilities and tax breaks to support the very fragile aviation industry as the aviation sector would play a key role in the economic recovery process post the pandemic.


Proshare Nigeria Pvt. Ltd.


Related News

  1. NIS Grants Payment Waiver to Visitors Affected by Travel Ban
  2. FG Restricts Entry Into Nigeria from 13 Countries; Suspends Issuance of Visa on Arrival
  3. UK Foreign Office Issues Travel Advice Against Non-Essential Travel Worldwide
  4. Airlines Face Growing Pressure From The Coronavirus
  5. LSTSA Chairman Speaks On Growth Prospects for Tourism In Nigeria
  6. Nigeria Has a New International Airport in Asaba
  7. Zenith Bank Unveils Easy Online Dubai Visa Application
  8. 1.01m Passport Applications Received in 2018 - NBS
  9. National Holidays 2019: Comparison of Four Countries
  10. Emirates Reports a Profit of US$ 237 Million For Its 2018 - 2019 Financial Year
  11. Emirates Unveils its Pavilion for Expo 2020 Dubai Focusing on Future of Commercial Aviation
  12. Emirates Announces Network Updates For 2019
  13. PwC Hospitality Outlook 2018-2022: Positioning For Future Growth
  14. Nigeria to Earn N3.63 Billion From Domestic Tourism By End of 2018 – Hospitality Report
  15. 100 Best Things To Do In South Africa
  16. Nigeria Immigration Service Suspends Biometrics Enrolment and Associated Charges For Visa On Arrival
  17. Emirates Announces Attractive Offers To Dubai #Summer2018
  18. 720,958 Passport Applications Received in 2017 - NBS
  19. Makeigo.com launches bus service digital payment platform
  20. Using Courier Firms To Send Items To Nigeria Is Not Viable Comparatively – DHL As Case Study

Proshare Nigeria Pvt. Ltd.

Proshare Nigeria Pvt. Ltd.
READ MORE:
Related News
SCROLL TO TOP