Senate committee rejects N5 billion ‘palliatives’ for airlines, others

The Senate Committee on Aviation has rejected the proposed N5 billion bailout for airline operators and other businesses in Nigeria’s aviation sector.

The offer, it said, is grossly inadequate to make any meaningful impact or relieve the impact of COVID-19 on the industry.

This decision was made at the public hearing on six executive bills aimed at fine-tuning regulatory issues as well as effective management of agencies in the Nigerian aviation industry on Monday.

President Muhammadu Buhari had in November 2019, transmitted six aviation sector bills to the Senate for consideration and passage into law.

Some of the legislations are the bill for an Act to repeal and enact the Civil Aviation Act; Federal Airports Authority of Nigeria Bill, 2019 and Nigerian College of Airspace Management Agency (Establishment) Bill, 2019;

Others are Nigerian College of Aviation Technology (Establishment) Bill, 2019; Nigerian Meteorological Agency (Establishment) Bill, 2019 and Nigerian Safety Investigation Bureau (Establishment) Bill, 2019.

The Minister of Aviation, Hadi Sirika, had told the panel about the federal government’s plan to provide N4 billion for airline operators and another N1 billion for other business owners in the aviation sector as part of its intervention to cushion the effects of COVID-19 pandemic.

The decision, he said, was based on the recognition of the pivotal role of the aviation sector to the Nigerian economy.

But the chairman of the committee, Smart Adeyemi, maintained that the fund is far less than is required for them to finance aircraft maintenance and retain their workers. 

“I do not think that N4 billion is what we are talking about. I think the federal government should give the industry all the attention it deserves; substantive support. Four billion is not enough. Yes, you might say they are in business; but their business is the soul of our economy.”

Mr Adeyemi further urged the government to provide sufficient bailout to the airline operators to avoid them “cutting corners” in their operations – “the implication of which is better imagined,” he said.

Speaking to journalists after the hearing, the minister agreed with the Senate over the low offer for bailout funds but noted that it is what the federal government can afford. This, he said, is because both the ministry and many other agencies are “currently struggling.”

The minister also told the panel that some agencies are owing the federal government and that the Nigeria Civil Aviation Authority operates on a cost recovery basis.

This was in response to concerns raised by a representative of the Airline Operators Association of Nigeria (AON), Chinansa Unaegburam, about some sections of the bill.

She urged the Senate to consider reducing the five per cent cost of contract sales and service charge to 1.5 per cent.

“That five per cent has been in law since 2006. Our proposal is that consideration be given to lowering that percentage.

“We are proposing that we have our fees at cost recovery so the aim is to ensure that these agencies are run efficiently in the system. That there is accountability and transparency. Putting these factors in place, we can then justify the retention of this five per cent. But today members of the AON are groaning.

“We propose 1.5% but it is subject to negotiation. The operators have to operate efficiently which is a very important issue for the operators,” she said.

In his response, Mr Sirika kicked against the proposal, saying the AON owes the federal government about $7 million

“They (AON) are owing us $6,993,234 and N19,365,374,686. She is proposing that the percentage goes down and the money is not there. These are monies we get from tickets and they ought to be remitting this money so that we can train more inspectors and keep the industry safe.

“We have concerns and they are very genuine. NCAA operates on a cost recovery basis. We are here so we get a very robust civil Aviation Act.”

The panel promised that all proposals made will be considered before the bills are passed by the Senate.

The hearing is expected to continue on Tuesday and Wednesday.