General Elections-Travel Bans Hits Aviation Sector

Yemisi Izuora

nahco aviance

The shift in the 2015 general elections and travel ban by European countries is costing aviation operators much fortune.

Similarly, the industry is badly hit by declining oil prices in the international market.

According to Mr. Norbert Bielderman, acting managing director, Nigerian Aviation Handling Company (NAHCO) Aviance Plc, who revealed this at the one day ‘Nigeria Summit’ orgenised by NAHCO Aviance in Lagos today, Today’s Economy 2015 is a crucial year because of elections and its associate intrigues.

It’s therefore no surprise that our economy has been badly hit and worsened by the election postponement.

There has been travel bans from many European countries and this has negatively impacted the aviation sector. Nigeria’s foreign reserves is significantly depleted and our national account is in deficit.
Bielderman, also said that the crash in oil price and consequent impact on the nation’s revenue earnings, exchange rate move from N155/$ to N205/$ within a 6-month period at the interbank and Central Bank of Nigeria’s final closure of the RDAS is a testament to the fact that all is not well with our economy.

He stated that the Naira has been devalued to between 30-40 percent and this will necessary cause inflation if government does not put in place deliberate measures to mitigate against an upsurge in price across industry, adding ‘We expect inflation to rise up to 10 percent or more soon’.

Speaking further, he said the cost of fund have also significantly risen with bank interest rates now up to about 26 percent which he said will lead to massive job losses within the private sector and for them to survive this trying time.

‘In Aviation, the domestic airlines would be worst hit because of current ticket prices are not in sync or responsive to current realities. This is due to unhealthy price wars and pursuit of market dominance at the domestic side of airline business. Domestic air tickets are still significantly low despite increase in airport charges, taxes etc.

These domestic carriers still maintain their aircraft in USD and aviation fuel has not significantly been reduced if at all. In our opinion, we suggest that these domestic airlines come together and agree a base rate for air tickets in order not to compromise safety and the regulator would do well to step in and analyze their current book positions and act accordingly. Nigeria cannot afford another air mishap!

‘The international carriers are more better positioned to survive this challenging time because their ticket price/ rates are USD based and this hedges them from witnessed Naira depreciation although the capacity of the very important middle-class to purchase international travel tickets will reduce. We expect they would save rather than spend in months ahead due to rising cost of living, potential job losses, rising children school fees etc.

Also, the travel warnings and/ or ban from EU countries for their citizens coming into Nigeria has assured that many flights from Europe to Nigeria have been either flying half empty to near empty. This is also a negative consequence of the present political economy’ he added.

 

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