NIGERIA: Olowo Tells FG That Airlines Can Not Break Even On 40% Load Factor

The President, Aviation Round Table Safety Initiative (ART), Dr. Gabriel Olowo has said that no airline will be able to break even with less than 40 % load factor at the extremely low fares prevalent in the Nigerian market where passengers pay less than $100 per hour on jet engines.

Dr. Olowo made this known, while responding to the planned recommencement of flight operations on June 21 and the directive to reduce passenger capacity to between 50%-70% something that most airlines and aviation players have canvassed against during the lockdown.

Olowo who said that three weeks given was good enough to give the airlines time to strategize and prepare also said government intervention was needed because the social distancing imposed would wreck havoc on the airlines’ economics.

He further said,” On board social distancing will be quite challenging except aircraft will be configured to all first class seats for economic operations. No airline can ever break even with less than 40 % load factor at the extremely low fares prevalent in the market where passengers pay less than $100 per hour on jet engines.

“This was the levels 30 years ago precisely 1990. Lagos Abuja N2, 200.Exchange rate N 22/$.  The dichotomy is can the passengers afford higher levels of tariff?”

“This is where government  intervention in Airline economics is needed in Nigeria by deliberate application of subsidies on fuel, taxes, airport charges, vat, 5% or lower interest rate on loans, quick foreign exchange availability,  etc. in order to lower Airlines cost of operations.”

On the time frame for the airlines to commence operations, he said;”Three weeks is good enough to do the needful by all stakeholders because we never stopped strategizing and talking all through the lockdown.  It’s time to walk the talk.

“It is expected that all states should open and indeed all countries should open simultaneously because aviation connects economies. So while we continue to battle with the virus, our economic life line must not be destroyed. The two are directly related. Just as disease can kill, hunger can also kill and even kill faster.

“The airlines have been advancing in technology prior to Covid-19 on social distancing through self service for online ticketing and payments, self service check in, self service security and passport controls, etc. Nigeria Airports should urgently update its system if these are not already in practice.

“We still have tons of human contacts and check points at our airports which must go. Security information should be shared with immigration for example instead of two different people having to check the passenger passport all the time.

“Currency and agriculture information should also be shared with Security while the harmonized processes are automated.”

On efforts to ensure that aviation is not used as a hotbed to spread the virus, Olowo said face masks, hand washing and sanitization will be a necessary and sufficient condition for travel, something the Federal Airports Authority of Nigeria (FAAN) has provided for based on its travel procedure.

He also canvassed,” Health certificate valid for at least 14 days (scanned) on phones just like boarding pass should be a necessary condition for travel to avoid isolation at the destination. This is a challenge for port health.

As we continue to advance in Technology, the Ease of doing business with or without limited human contact will progress the industry further and challenge the skill set of employees.

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