Senate asks FG to grant waiver to airline operators, condemns multiple taxes

… Airlines set to lose $157bn amid worsening slump – IATA

Senate has called on the Federal Government to fully implement the Executive Order on zero customs duty and zero Value Added Tax (VAT) on importation of commercial aircraft and aircraft spare parts.

It also directed the Central Bank of Nigeria (CBN) to make foreign exchange readily and easily accessible to airline operators and make the interest rate a single digit so as to reduce the cost of capital.

These followed a motion, “The Need to Protect Nigerian Indigenous Airlines From Extinction,” moved by Adamu Aliero (APC – Kebbi Central) at the resumed plenary on Tuesday.

The upper chamber called on the government to eliminate multiple taxes, fees and charges to reduce cost in the aviation sector.

It also mandated its Committee on Banking, Insurance and other Financial Institutions to facilitate review of the National Insurance Commission (NAICOM) Act to grant the externalisation of insurance placements for domestic airlines.

It also urged the Ministry of Aviation to allocate more entries and frequencies to domestic airlines on international routes, as well as create a business friendly environment in the air transport sector by fast tracking the clearance of Aircraft On Ground (AOG) spare parts.

Aliero, in his presentation, expressed worry that despite the significant contributions of the Airline Operators of Nigeria (AON) to the growth and development of the Nigerian economy, domestic airlines in the country were faced with multiple challenges that threatened their existence.

He stated that the government had refused to carry out the executive order on zero customs duty and zero VAT on importation of commercial aircrafts and aircraft spare parts.

He listed the high cost of capital and lack of single digit interest rate for airlines; replacement of NCAA five percent Ticket Sales Charge (TSC) among others, as issues hampering smooth operations in the aviation sector.

Meanwhile, airlines are on course to lose a total $157 billion this year and 2021, the International Air Transport Association (IATA), directorgeneral, Alexandre de Juniac, warned on Tuesday.

IATA, airlines main global body, further downgrading its industry outlook in response to a second wave of coronavirus infections and shutdowns afflicting major markets, noted.

IATA, which in June had forecast $100 billion in losses for the two-year period, said it now projects a $118.5 billion deficit this year alone, and a further $38.7 billion for 2021.

The bleak outlook underscores challenges still facing the sector in spite of upbeat news on development of COVID-19 vaccines, whose global deployment will continue throughout next year.“the positive impact it will have on the economy and air traffic will not happen massively before mid-2021,” de Juniac said.

Passenger numbers are expected to drop to 1.8 billion this year from 4.5 billion in 2019, IATA estimates, and will recover only partially to 2.8 billion next year.

Passenger revenue for 2020 is expected to have plunged 69 per cent to $191 billion.

The forecasts assume some re-opening of borders by the middle of next year, helped by some combination of Covid-19 testing and vaccine deployment.

IATA reiterated its call for governments to replace travelst ifling quarantine regimes with widespread testing programmes.

“We are seeing states progressively coming to listen to us,” de Juniac said, citing testing initiatives underway in France, Germany, Italy, Britain, the US and Singapore.

While some governments and airlines such as Australia’s Qantas say passengers are likely to require vaccination for long-haul travel, the approach is unlikely to work everywhere, de Juniac said.

“It would prevent people who are refusing (the vaccine) from travelling,” the IATA chief said.

“Systematic testing is even more critical to reopen borders than the vaccine.”

Air cargo, a rare bright spot for the industry as the grounding of flights pushes freight prices higher, will likely see global revenue rise 15 percent to 117.7 billion dollars this year in spite of an 11.6 percent decline in volume to 54.2 million tons, IATA said.