Barring a Federal Government intervention, a major crisis looms in the air travel industry owing to the financial miasma being experienced by regulatory agencies and key service providers.
The telltale signs of insolvency that manifest in operations of local airlines, last week, have become discernible, with some having difficulties in discharging their financial obligations to workers, including payment of monthly salaries.
While the Nigerian Airspace Management Agency (NAMA) borrowed to offset the July salary of the 3,000 workers that it supervises, its sister agency, the Federal Airports Authority of Nigeria (FAAN) managed to pay 50 per cent to employees in the senior cadre.
Indeed, traveller apathy and attendant low traffic since operations resumed mid-July have helped neither the airlines nor the regulators. Major challenges, stakeholders said, are heavy indebtedness of the operators to the regulatory and service providers, coupled with an over-bloated workforce that should be tackled beyond bailout.
With almost zero revenue generated during the three months of lockdown and skeletal services since flight resumed about a month ago, both the regulatory agencies and service providers have been having difficulties sustaining their overheads and keeping critical infrastructure serviceable.
Unlike the airlines that have sent 80 per cent of workers on leave without pay, while the rest put up with pay cuts, the aviation agencies have retained all staff. Recent moves by FAAN and NAMA to halve emoluments were resisted by unionists. Subsequent threats to ground operations forced management to beat a retreat.
Our reporter gathered that the apex regulatory body, the Nigerian Civil Aviation Authority (NCAA) that requires an average of N750 monthly expenditure and the Accident Investigation Bureau (AIB) with a N350 million bill have continued to meet commitments from reserves.
In dire straits are the Nigerian College of Aviation Technology (NCAT) that requires N150 million per month; Nigerian Meteorological Agency (NIMET) N290 million; NAMA, N1.5 billion and FAAN, N4 billion to pay salaries and run 22 airports in four weeks.
FAAN, prior to the Sallah holiday, paid workers on Grade Level 8 and above half salary for July, raising speculations that the management may have slashed those of top staff by 50 per cent.
The management, had in May, hinted of plan to cut remuneration as part of measures to cope with realities of the COVID-19 pandemic.
But following opposition, the management had to pay the 50 per cent balance in the week after the break.
Secretary General of the Association of Nigerian Aviation Professionals (ANAP), Abdulrazak Saidu, said besides the economic constraints, the FAAN management was insolvent due to “the huge overhead of over N3 billion monthly for payment of salaries of staff and retirees.”
The Managing Director, Captain Fola Akinkuotu, confirmed that NAMA is broke and desperately needs operational funds.
With about 3,000 workers, the agency needs about N1.5 billion monthly to settle workers in addition to sustaining aeronautical services nationwide.
Indeed, the airlines and airports are perennially indebted to the service providers. FAAN recently told the House of Representatives Committee on Aviation that a yet undisclosed local airline owed it N13b of unremitted revenue.
Aviation consultant, Chris Aligbe, explained that the cash-strap situation could be understood against the backdrop that all the government’s parastatals depend on passenger traffic. More so, majority of the revenue comes from foreign airlines that have been shut out due to the coronavirus outbreak.
Secretary General of the Aviation Safety Round Table Initiative (ASRTI), Group Captain John Ojikutu (rtd), said the insolvency went beyond the pandemic to years of negligence, alleged operators’ non-compliance with rules and non-enforcement of requisite laws.