Airlines Anticipate FG Support ,as intervention commences next January

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Domestic airlines have completed the necessary documentation for loan request at the Central Bank of Nigeria (CBN), which the apex bank is offering to the airlines at five per cent interest rate.
The intervention is expected to commence next January.

Some airlines are hoping to benefit from the palliative, which government is expected to offer operators and aviation agencies whose activities have been impacted by the coronavirus pandemic.

Almost all the airlines in the aviation industry have requested for the CBN’s loan which has low interest rate and possibly two-year moratorium.

But industry stakeholders have insisted that government must outline criteria that must be met before the airlines would benefit from the financial support.

Industry consultant and CEO of Belujane Konsult, Chris Aligbe, said that the N27 billion earmarked as palliatives for the airlines and aviation agencies would be given to cushion the negative impact of COVID-19 on airline operations; although conditions have not been set for its disbursement.

Aligbe said he agreed with earlier opinion of industry stakeholders on the need for conditions that must be met before airlines would benefit from the CBN intervention fund.

“Part of the conditions that should be given NCAA is to compel all operators to be part of the International Air Transport Association (IATA) payment system. This will ensure that airlines pay their charges to the agencies. So this would not be a question of going to set up debt recovery committee; all must comply with the conditions. This will put to an end the indebtedness to aviation agencies,” Aligbe said.

He said NCAA must evaluate the airlines and the Ministry of Aviation must also give testimonial of the airlines to CBN.
“This time it is hoped that the loan would be paid directly to the airlines’ account, unlike in the past when the money was used to support the banks from going under due to the huge debts airlines owed the banks then.

“Also CBN is giving this loan at five per cent interest rate and that is what it would be by the time it gets to the airlines; unlike the past when some banks graded the interest rate.

“I believe that CBN will give the airline time, like two years to help them pick up their operations. Globally, it has been projected that airline recovery will take about two years; so their full recovery will be from 2022.

“Also in past, the loans did not go through the Ministry of Aviation, it was used to revive the banks. But this time it will be different. This loan is different from the palliative, which is expected any moment from now and which will be used to lift currently operating airlines from the ground,” Aligbe also said.
Industry stakeholders are also of the view that NCAA must disqualify those who violated the Cape Town Convention, which was domesticated by NCAA and which enabled airlines to lease aircraft at affordable rates, but since the violation and the refusal of some airlines to abide to the terms of leasing agreement and went to the court instead, Nigeria has been blacklisted by lessors and the benefits of the Convention lost.

So, it was the opinion of some of the stakeholders that such airlines must not benefit from the CBN intervention because Nigeria has lost hugely due to the violation.

They noted that currently it is very difficult for Nigerian airlines to lease aircraft and even if they do it comes with extremely stringent measures, including outrageous insurance premium and the lessors could withdraw the aircraft at very short notice.
A former senior official in one of the aviation agencies said that it is not expected that any airline that does not have AOC would benefit from the fund, saying the planned palliative by the federal government would be for airlines whose operations were disrupted by the coronavirus pandemic.

“The palliative is for those whose operations were disrupted by COVID-19; not to those who have not been operating; that do not have air operator certificate.

“It will be very unfair for such airlines to benefit from government support that is aimed at addressing specific incident. So it is targeted at those airlines that have suffered and lost revenues and who cannot pay their workers because their activities were disrupted,” he said.

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