Monday, July 26, 2021 / 01:48
PM / by CSL Research / Header Image Credit: LA Times
A Punch report states that the highly transmissible delta variant of Covid-19 poses an additional layer of concern for many operators and stakeholders in the country's aviation sector. The Nigerian Centre for Disease Control (NCDC) detected the index case of the delta variant amongst inbound travellers into the country on 8 July 2021. Since then, the number of daily Covid-19 cases has been on the rise, signaling another phase of movement and travel restrictions in the country. Countries such as South Africa, Turkey, and India where cases have grown exponentially have been partly barred from international travels by other countries. In effect, a continuous increase in the number of infections in Nigeria could lead to travel restrictions which may further squeeze the earnings of airline operators.
The pandemic badly bruised the aviation sector, derailing the sector's bright prospects. Interestingly, the aviation sector was the fastest growing sector in the country, up 13.2% y/y in 2019. However, since the emergence of the pandemic, the fortunes of the sector have been reversed due to movement and travel restrictions. For the past four quarters, the sector has had negative growth averaging (-39.9%), plunging it into a deep recession. Without a doubt, the virus took its toll on most airline operators, resulting in the termination of many workers, while many were asked to proceed on forced leave. Other related sectors such as tourism and hospitality were also severely affected, which nevertheless prompted innovative ideas in their service offerings.
The emergence of the delta variant may imply the Nigerian aviation sector remains far from recovery. As a first step to stemming the further spread of the deadly variant, we may see a reduction in boarding capacity. In our view, the government needs to provide more support for the sector than it is currently doing, given the sector's systemic importance for the conduct of trade and other economic activities in the country. We recognize that the government disbursed a bailout fund of N5.0bn at the tail end of 2020 but more needs to be done in terms of quantum of funds and removal of undue bureaucracy in disbursement to ensure the funds reach the operators.