THE four unions operating in the aviation industry have mapped out a plan on how to overcome the crisis that will be generated by the coronavirus pandemic in the aviation sector in Nigeria. The unions are requesting for a huge but unspecified amount in order to bailout key stakeholders, particularly airlines and employees in the aviation industry.
The plan is contained in a letter to the Minister of Aviation, Senator Hadi Sirika, signed by Comrade Ocheme Aba, General Secretary, National Union of Air Transport Employees (NUATE); Comrade Frances Akinjole, Deputy General Secretary, Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), Oniha Erazua, General Secretary, National Union of Aircraft Pilot and Engineers (NAAPE); and Comrade Abdul Rasaq Saidu, General Secretary, Association of Nigerian Aviation Professionals (ANAP).
Global Trend
In the letter dated April 22, 2020 and received in the minister’s office the same day, the unions based their plan on the current global trends in the aviation sector where governments across the world are extending bailouts to save businesses and jobs that are likely to be lost in view of the total shutdown of civil aviation activities.
“This call has become necessary considering the fact that the aviation parastatals, ground handling companies, aviation catering suppliers and other allied aviation services providers depend solely on airlines for their survival. That the industry is currently locked down and remains so for God knows how long, leaves all the mentioned business undertakings in serious jeopardy, and the jobs and welfare of their employees (our members) in a very precarious situation,” the unions stated.
The letter further stated: “It is now obvious that the airlines and other undertakings would have serious challenges in fulfilling their compulsory obligations such as staff salaries; sustaining payment of insurance premiums; training of airmen and so on, which they must carry out whether or not they operate flights.
“It is the realization of the above and the report that airlines worldwide could lose up to $252 billion in revenue as a result of the COVID-19 pandemic, that made the International Air Transport Association (IATA and other concerned global institutions to call for urgent intervention by Governments for the aviation industries in their respective countries.
“The Hon. Minister may recall that the government of the United States of America recently earmarked $61 billion as a relief for its airline industry out of which $25 billion is specifically earmarked to be used for remuneration of aviation workers.
“Virgin Atlantic was among the first of the United Kingdom airlines to ask the UK government for financial help in addition to the general aid package made available to all British companies. Finnair has a provisional agreement with the government of Finland for state guarantee of up to €600 million to cushion the impact of the Virus on its operations. Governments of many other European countries have also already agreed to provide support to airlines in various forms to help them survive the crisis.”
Nigeria’s Situation
According to the unions, the situation in Nigeria is as critical as other parts of the world. They noted that recent estimates by the Airlines Operators of Nigeria (AON) “projected about N36o billion loss in operational revenues by its members due to the total shutdown of operations as a result of the COVID-19 pandemic.”
Noting that because most of the aviation agencies and parastatals are not left out of the negative impact of the pandemic as they rely on internally generated revenues directly connected to the operations of domestic and foreign airlines to fund their statutory obligations, including payment of workers’ salaries and other entitlements, they are critically encumbered as they have been unable to generate revenue due to the suspension of all domestic and international flight operations.
“It is on the basis of the foregoing we are passionately appealing to the Honourable Minister and the Federal Government to emulate what has been done in other climes by urgently considering as a matter of necessity, a bailout or palliatives for our domestic airlines, the aviation parastatals and other allied aviation services providers to enable them remain in business and meet up with staff financial obligations,” the unions argued.
The unions, in addition to their arguments for a bailout, the unions equally made a number of recommendations for the consideration of the Aviation Minister, which include the need to facilitate the granting of a 60-day moratorium for the payment of debts owed by airlines to NCAA, NAMA, FAAN and NCAT while current payments for services are to be made by the airlines upon resumption of operations; the suspension of certain aviation taxes such as VAT on air tickets to enable the airlines and other allied businesses stabilize and the need to subsidise and make available aviation fuel for the airlines.
Other recommendations include the need to “grant through the Nigerian Civil Aviation Authority reasonable escalation within manufacturers’ safety limits to aircraft which Certificates of Airworthiness expired during the lockdown to enable the operators put them to use before going for Checks at the end of the approved escalation;” the provision of federal government guarantees to airlines and other critical aviation businesses for easy access to credit facilities at a single digit interest rates to assist the airlines after the lockdown; the establishment of a covid-19 intervention fund for the aviation industry with very flexible and sustainable drawdown conditions in conjunction with the Central Bank, and mandatory emplacement a covid-19 health and safety policy for the industry for the protection of workers upon resumption of duties and operations to be enforced by an industry based committee of stakeholders set up for that purpose.
NUATE Outlines Conditions
Comrade Ocheme Aba
NUATE, in a letter to the Nigeria Labour Congress (NLC) on the situation in the aviation sector seeking for its support in amplifying the call for government intervention in the aviation sector, restated the fact that Nigeria’s aviation industry is the worst hit by covid-19.
In the letter dated April 27, 2020, Comrade Ocheme Aba, General Secretary, argued that the picture of Nigeria’s aviation sector looks very pathetic compared to the rest of the world with many of the airlines on life support prior to the coronavirus pandemic.
“Many of the airlines were on life support before the advent of COVID-19. Many of the logistics and other allied companies were equally at the verge of winding up. Practically all the agencies were virtually dependent on government support.
“The Federal Airports Authority of Nigeria (FAAN), for example, had been grappling with the heavy burden of maintaining 23 airports across Nigeria of which only two are viable, a responsibility that is impossible to shirk due to the social-economic importance of maintaining all the airports.
“Under these circumstances, the pandemic-imposed shutdown cannot but be seen as a killer punch against aviation, to the extent that aviation in Nigeria runs a very high risk of total collapse without urgent and substantial intervention, or bailout, from the Federal Government,” Comrade Aba stated.
NUATE asserted that the federal government, in providing bailout for operators in the sector, should put in place a methodology which it must insist that all beneficiaries abide by before accessing funds. It cautioned that the expected intervention must not be administered as had been done in the past.
According to the union, “the methodology to be applied for the intervention must be not business-as-usual. For, there have been two previous such financial interventions in the aviation sector in recent memory, both of which left much to be desired.
“In those instances, airlines like Arik Air, Kabo Air (defunct), Air Nigeria (defunct), and many others collected billions of naira supposedly for capital injection into their businesses but were diverted to personal usages, and callously leaving the airlines to bleed to death. The promoters of these airlines then ran away with bloated personal bank accounts and they are walking free till today.
“Therefore, if the same methodology as before were to be used, then we fear that the same undesirable result will accrue.”
To avoid mismanaging any bailout, NUATE made a number of recommendations which it believes will help the process achieve its objectives. The union stated: “The interventions, whatever form they may take, should mimic the extent of losses incurred by each and every organization, public or private, and should vary proportionately.
“Cash grants should be extremely minimized, or even totally avoided. In other words, little or no monies should be paid directly to the companies or agencies. Rather, debts and other outstanding obligations which constitute overhangs should be carefully determined and paid directly from the intervention fund. Such obligations could include outstanding staff emoluments, operational fees to FAAN and other agencies, remittances (PenCom, taxes, etc), outstanding scheduled mandatory aircraft maintenance costs, and such other outstanding debits.
“There have to be clear conditionality for access to the intervention fund, such as, (a) discernible good corporate governance structure, (b) transparent and accountable process for monitoring implementation of the intervention policies, (c) industrial climate, especially the presence of freedom for employees to freely join trade unions of their choosing, as well as presence of validly negotiated Conditions of Service, (d) accountability for previous interventions where applicable, and such other conditions that may be deemed fit.
“There is clear case for involvement of our Union in the process to assure transparency and effectiveness, and to benefit from our wide and strong base as well as our good understanding of the sector, including, importantly, its history.
“It is seriously recommended to utilize this opportunity to fully resolve the dicey situation of Aero Contractors and Arik Air, both of which are under the receivership of AMCON as a result of debt overhang. We would suggest and support AMCON’s full absorption of the debts of the two airlines to make way for positive acquisition of the airlines by those with proven capacity to progress the enterprises in the manner that could protect jobs and increase employment of Nigerians. As such, the intervention for these ailing outfitd could be tailored in the above fashion.
“The general public, ourselves in particular, will watch keenly to see whether the expected intervention will be the old way of money sharing between government officials and company promoters to the detriment of the public treasury, or a change towards an honest effort to stave off the danger of imminent collapse of aviation in Nigeria. We plead for the latter.
Unions Reject Arik’s Pay Slash
Meanwhile the leaderships of NUATE, ATSSSAN and NAAPE, three of the unions in the aviation industry have rejected the pay slash and furlough announced by Arik Air as its measures due to the impact of the coronavirus pandemic.
The unions, in a petition to the management of Arik Air, accused it of treating its workers like beggars. Comrades Ocheme Aba, Francis Akinjole and Oniha Erazua, who jointly signed the letter, while rejecting the airline’s decision, however conceded that they are open to collectively working together to ensure that they overcome the challenges.
Arik Air, said to be Nigeria’s largest commercial airline, but is being managed by Asset Management Corporation of Nigeria (AMCON) which took over the airline due to its huge debts, on April 24, 2020 told its employees that it had cut salaries of employees by 80%. The airline’s Chief Executive Officer, Roy Ilegbodu, also told employees via a memo that the management of the company had also decided that at least 90 per cent of its workforce will be furloughed from May 1. 2020.
“To date, the situation created by the COVID-19 pandemic remains dire with a high level of uncertainty, even within medical circles regarding the containment of the pandemic. Although daily updates from a few countries seem to be encouraging, our situation in Nigeria appears to be getting worse. With the current observed trend of events, it is prudent to lean on the assumption that the situation is likely to persist for a while longer.
“Of huge significance to us is that we have suffered a sharp decline of over 98% in our revenue streams since the suspension of our scheduled flights almost four weeks ago. Added to this is the rapid decline in the value of the Naira by over 35% against the benchmark and with oil prices now falling well below $15 per barrel, it is evident that we must, without further delay, take decisive action to preserve our organization,” Mr Ilegbodu stated in the memo.
The unions, while acknowledging that Arik Air was more affected by the pandemic being already in receivership, argued that any percentage of salaries paid now should be regarded as part payment, the balance of which would be paid later in full.
“We write to acknowledge receipt of your letter dated April 23, 2020 and we strongly express our unions’ displeasure at what management decided to throw at our members.
“Is it not high time we started having a second thought on this idea of seeing staff as beggars that have no choice? Being stakeholders in the aviation industry, our unions are equally disturbed about the negative impact of the pandemic on our sector generally.
“This was why our unions made an appeal to the Minister of Aviation, Captain Hadi Sirika, for intervention by the Federal Government. Is it not contradictory that our members are being made to bear the brunt of the negative impact of the pandemic before respite from the government comes?
“With due respect, the offer of 20 per cent salary for the month of April 2020 and no salary at all for May 2020 is totally unacceptable and our unions consider the manner in which the offer was thrown at us and the advice that staff should manage the 20 per cent prudently while the lockdown lasts as an insult.
“In view of that, we wish to state that whatever amount paid as salary to any of our members now will be considered as part payment of monthly emolument, pending any agreement borne out of a negotiation.
“Please be assured of our readiness to positively engage with you towards an amicable settlement, even as we await your invitation to that effect,” the unions stated.
