Building infrastructure key to survival of aviation industry

Building aviation infrastructure has been identified as the way forward for the aviation industry to survive post covid-19.

This was the call made by panelists at the second edition of the aviation webinar organized by AELEX Partners.

With the theme “Flying into Turbulent Skies, Safely Navigating covid-19 Headwinds – Survival Strategies for Nigerian Aviation”, the conversation was centered on economic policy, state support and finance issues affecting airlines, airports and other stakeholders in the aviation industry.

Moderated by Mr. L Fubara Anga, the Head of Transportation and Finance Practice Groups, ǼLEX , the webinar had in attendance as panelists Bismark Rewane, CEO Financial Derivatives Company ; Capt. Dapo Olumide, CEO, Ropeways Transport Ltd; Chris Aligbe, CEO, Belujane Consult; George Uriesi, COO, Ibom Air; Aminu Ismail, Executive Director, AMCON; and Olumide Bolumole, Head of Listing, Nigerian Stock Exchange.

Speaking during the Webinar, Mr. Bismarck Rewane said the aviation industry has been the worst hit since the COVID-19 outbreak. He therefore recommended that friendly policies should be put in place to kickstart the operations of the airlines. Mr Rewane also indicated rather than the government pursuing a national carrier, the focus should be more on building aviation infrastructure as this will certainly draw investments.

While speaking, Capt. Dapo Olumide opined that the way forward for the Nigerian aviation industry is infrastructural development. He however stated that the government is not in the best position to make this provision, hence the need for privatization. He suggested that in the long term, the only way an airport would survive is if it is either privatized or concessioned because of the profit-oriented nature of private businesses.

In his own contribution, Mr Chris Aligbe noted that there’s a need for government intervention and to do this, he recommended three measures. According to him, there’s a need for the government to put in stimulus for the entire industry to come back to what it was before Covid-19.

He also proposed the need to stabilize he industry through the provision of long term soft facilities. This facility he said should be spread over a period of eight to ten years a low interest rate of 3-4% and a two-year moratorium for all players in the industry.

He stated that to expand the industry, there’s a need to fast track concessioning as the inability to do so means the industry will never achieve a global standard.

Mr Aligbe also expressed his view on the national carrier, that the government has no business owning an airline, except in a public-private partnership in which case the government should own not more than 5percent- 10percent of the airline.

The chief operating officer of Ibom Air, George Uriesi attributed the success of the airline within a short period of time to efficient and rational utilization of resources. He is not against government intervention in the aviation industry, but noted there’s a need to put in structure that will reposition the aviation industry.

He also advised that the government should fashion out a proper method of intervention in the aviation industry adding that concessions should be run using a model that has worked for others around the world.

Also speaking during the webinar, the COO, Ibom Air, Mr. George Uriesi indicated that the Ibom Air is increasing its fleet of aircraft in the midst covid-19 pandemic, as result of contractual obligations that were concluded in the last quarter of 2019.

He further stated that the success of the Akwa Ibom State owned airline is attributable to use of the right business model and adherence to corporate governance best practices in running the airline.

For Mr. Aminu Ismail, an executive director at AMCON, his focus was on reviving Nigerian Aviation.

He noted that AMCON over the years has played a significant role in strengthening the aviation industry by providing intervention funds of over N50 billion since 2012. Mr. Ismail, just like the other panelists, was also of the opinion that government need not own or run airlines, but should limit itself to policy development and developing infrastructure.

He expressed the need for the industry to re-calibrate and implement solutions to be able to come out stronger post COVID-19.

He recommended that the government should support the aviation industry to ensure survival through tax relief, suspension of the payment of Air Passenger Duty, access to forex, expansion of the aviation academy, and provision of training and development facilities. Further, he advocated for collaborative alliance among airlines once flights resume, as against the usual competitiveness. He also called on airlines to refocus their network, resize and restructure while placing priority on cash management.

Mr. Olumide Bolumole identified the high cost of operations, dominance of foreign operators, uncompetitive regulatory framework, lack of cheap and long term funding, the inadequate infrastructure, and safety and security issues as challenges being faced by the Nigerian aviation industry.

Suggesting a way forward, Mr. Bolumole stated that there’s a need for proper business regulations and also concessioning of airports and other related infrastructures.

He noted that the capital market offers opportunities for operations in the aviation space to raise capital which is required for smooth operations and growth.

ǼLEX the organizers of the webinar is a full service commercial law firm with a leading Aviation Law Practice that has been instrumental for landmark changes in the aviation industry. The firm represents International and domestic carriers, ground handling companies and other service providers. Banks, leasing companies and other financial institutions involved in Aviation.

Related posts