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Saturday, June 25, 2022

FG Plans N27bn Bailout For Local Airlines, Soft Loans On Radar

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The Federal Government (FG) has assured the local airlines of plans to bail out the sector with a sum of N27 billion as part of measures to restart air travel and keep the airports safer. The sum, already proposed to some of the operators, is expected to support the airlines, while also fast-tracking the establishment of a private sector-driven national carrier.

It will be recalled that the Federal Government in March gave a directive restricting local and International commercial flight services, a move intended to mitigate the spread of the coronavirus pandemic. The resultant lockdown crippled the aviation sector. Industry estimates show that the sector lost about N180 billion, with airlines being worst hit.

Over 5,000 registered travel agencies furloughed their entire staff, while airlines retained only 20 per cent of workers at slashed salary.Minister of Aviation Hadi Sirika had earlier said that the Federal Government was working on a bailout package for airlines and other operators, as the airspace may reopen on June 21.

A breakdown of the project elements under the N27 billion cushion include payroll grant support to airlines, handlers, caterers and related services; provision of single-digit soft loans with long term repayment plan; and deferred payment of taxes and filing dates.

Also, the government is to ensure the removal of Value Added Tax (VAT) from airlines’ tickets as approved by the Federal Executive Council (FEC); provision of COVID-19 tests for all passengers and crew; waiver of airport rent fees to airport operators for the duration of the lockdown plus one month; and beginning of processes for the establishment of a private sector-driven national carrier.

The workplan has a 12-month duration.President of the Aviation Safety Round Table Initiative (ASRTI) Gabriel Olowo, however described the grant as paltry, saying it would do very little to address airlines and their allied losses.

Although he commended the move, he nevertheless stressed that the industry’s need should be equitably prioritised.

He advised that the identified seven project elements in the aviation industry should not go together in a swoop under the N27 billion estimated cost, urging the government to prioritise those that are key to a robust aviation sector in the country.

“Individual projects that are not COVID-19 related should attract special focus and special funding. All the project elements are key to a robust aviation sector in Nigeria. Government’s action is commendable. It is very necessary and is a good attempt, given the national income constraints during the year,” Olowo said.

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