Future of Aviation in Africa: Focus on Nigeria Post COVID-19

The Future of Aviation in Africa: Focus on Nigeria, Post Covid-19 By: Capt. Tolu Odutola June 2020.

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Table of Contents The Future of Aviation in Africa: Focus on Nigeria Post Covid-19 ................................................................. 2 Impact of COVID-19 pandemic on the aviation industry in Africa ............................................................ 3 Impact of COVID-19 pandemic on the aviation industry in Nigeria .......................................................... 4 What changes are happening in the Nigerian aviation industry ............................................................... 6 Impact on airlines and airport operations ................................................................................................. 6 Implications for airport personnel and professionals ............................................................................... 7 Measures to be applied for safety and security in work environment ..................................................... 7 Overall impact to the air passengers in Nigeria ........................................................................................ 8 Way Forward for African Airlines .............................................................................................................. 9 What Nigerian Airlines could do ..............................................................................................................10 Conclusion................................................................................................................................................11 Appendix 1 ...............................................................................................................................................12 Appendix 2 ...............................................................................................................................................13

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The Future of Aviation in Africa: Focus on Nigeria Post Covid-19 The Covid-19 pandemic is by far more than a crisis for the health sector, now affecting regional and global economies to their core (UN, April 2020). Nigeria, and her people, like the rest of the world, is no exception to the unprecedented challenges (UNDP, March, 2020).

According to the International Civil Aviation Organisation (ICAO, June 1, 2020), although airlines had planned to increase seat capacity in 2020 by 3.5% (domestic by 3.7% and international by 3.2%), with revenues of the global airline industry forecasted to contribute $1 trillion to the world Gross Domestic Product (GDP) by 20261, the latest estimate of Covid-19 impact on world scheduled passenger traffic compared to the Baseline for 2020 will see: A 40% - 53% general decline in seats offered by airlines A general decline of between 2,247 and 2,915 million passengers A possible potential loss approximated at between USD 297 and 384 billion in gross operating revenues of airlines

Source: ICAO Air Transport Reporting Form A and A-S plus ICAO estimates For International passenger traffic (2020) versus Baseline, depending on duration and magnitude of the pandemic, against containment measures put in place, A 48% - 63% general decline in seats offered by airlines A general decline of between 1,091 and 1,399 million passengers

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https://businessday.ng/opinion/article/the-impact-of-covid-19-on-the-aviation-industry/

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A possible potential loss approximated at between USD 193 and 248 billion in gross operating revenues of airlines For Domestic passenger traffic (2020) versus Baseline, the following is estimated: A 34% - 63% general decline in seats offered by airlines A general decline of between 1,156 and 1,516 million passengers A possible potential loss approximated at between USD 104 and 136 billion in gross operating revenues of airlines

Impact of COVID-19 pandemic on the aviation industry in Africa Air transport industry offers support to 65.5 million jobs globally, out of which 10.2 million are direct jobs.2 In Africa, Aviation supports 6.2 million jobs, and $56 billion in GDP 3.

Predominantly, African airlines have limited cargo revenue, and heavily depend on passenger revenue.4 According to ICAO (June 1, 2020), 96% of all world destinations had travel restrictions by the end of the first week of April, with most destinations having closed their borders for tourists, either partially or completely, with 44 destinations closing their borders for specific countries of origin. The International Air Transport Association (IATA, April 23, 2020) observed that airlines in Africa could lose $6 billion of passenger revenue, compared to 2019, with job losses in aviation and related industries growing to 3.1 million, 5 with full year 2020 traffic expected to plummet by 51%.

IATA further notes that some of the African nations that will be hardest hit by the severe travel restrictions owing to the covid-19 pandemic include Kenya, Tanzania, Ethiopia, South Africa and Nigeria6, calling on governments to rescue the airlines through a mix of direct financial support, loans, loan guarantees, support for the corporate bond market and tax relief.

Airlines like Air Mauritius has entered voluntary administration, South African Airways and SA Express are in business rescue, with staff placed on unpaid leave, pay cuts and job losses in other distressed carriers. The largest carrier in Africa, Ethiopian Airlines, has seized the opportunity to step up cargo operations, to help deal with a revenue loss of $550 million between January and April alone.7

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https://www.icao.int/sustainability/Pages/Economic-Impacts-of-COVID-19.aspx (https://www.icao.int/sustainability/Documents/COVID19/ICAO%20COVID%202020%2006%2001%20Economic%20Impact.pdf) 3 https://www.businessdailyafrica.com/news/IATA-calls-on-states--financiers-to-rescue-Africa-s-airlines/5395465568078-yjma03z/index.html 4 https://aviationbusinessjournal.aero/2020/06/01/covid-19-predicting-uncertain-times-for-african-airlines/ 5 https://www.iata.org/en/pressroom/pr/2020-04-23-02/ 6 https://www.businessdailyafrica.com/news/IATA-calls-on-states--financiers-to-rescue-Africa-s-airlines/5395465568078-yjma03z/index.html 7 https://africa.cgtn.com/2020/04/24/3-million-jobs-in-africas-aviation-sector-at-risk-due-to-covid-19-iata/

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Impact of COVID-19 pandemic on the aviation industry in Nigeria The Nigerian aviation industry, which is totally denominated in foreign exchange, has not been spared either (other currencies are used for aircraft procurement, training of pilots, sourcing for jet oil and spare parts, as well as maintenance). In an effort to contain the spread of Covid-19, all Nigerian international airports were shut on March 23, 2020, save for emergency and essential flights.8 This has left about 120 domestic aircraft grounded nationwide, leaving operators without a source of income but recurrent expenditure. 9 The Federal Airports Authority of Nigeria (FAAN) has been most affected, cognizant of the fact that it has a workforce spread across a total of 22 airports in the country, and without a source of revenue.10 Other agencies with similar predicament include the Nigerian Civil Aviation Authority (NCAA), which is the apex regulatory body for aviation, and whose monthly overhead stands at N750 million; the Nigerian College of Aviation Technology (NCAT), which requires N150 million monthly; the Nigerian Metrological Agency (NIMET), which requires N290 million monthly; and the Nigerian Airspace Management Agency (NAMA), which requires more than N500 million monthly, to sustain overhead expenditure. Ideally, these agencies are funded through budgetary allocations by Federal Government and Internally Generated Revenue

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https://allafrica.com/stories/202005070013.html https://www.von.gov.ng/tackling-impacts-of-covid-19-on-nigerias-aviation-sector-2/ 10 Ibid.

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(IGR).11 The current crisis has left the agencies at the mercies of allocations by Federal Government, whose revenue has equally plummeted substantially due to the drastic global fall in oil prices. This is further compounded by the travel and tourism industry which has been left on its knees by the pandemic.

Source: AUC calculation based on the World Bank data, 2020; Oil and tourism sectors (in % GDP) for the Big 5 Economies in Africa12 Prior to the Covid-19 crisis, aviation contributed $1.7 billion to Nigeria’s GDP, offering employment support to 241,000 persons. Figures by the Nigeria Bureau of Statistics indicate that by end of Q4 in 2018, aviation was the second fastest growing sector in the country, taking the lead by Q4 in 2019. 13 According to IATA, this pandemic risks 124,000 Nigerian aviation jobs, which would see the country lose up to $900 million in GDP.14 Already, the major carrier in Nigeria, Arik Air, has asked 90% of its 1800 staff to proceed on indefinite unpaid leave, with the remaining 10% subjected to 80% pay cut on their salaries/wages. 15 There are fears that up to 50% of the workforce may be compelled to resign, as the airline plans to right-size the workforce.16 In April, Max Air followed suit by sending its staff on unpaid leave, for the period of the imposed lockdown.

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Ibid https://www.tralac.org/documents/resources/covid-19/3218-impact-of-the-coronavirus-covid-19-on-theafrican-economy-african-union-report-april-2020/file.html 13 https://allafrica.com/stories/202005070013.html 14 https://aviationbusinessjournal.aero/2020/05/07/iata-calls-on-nigerian-government-to-provide-aviationspecific-financial-relief-measures-to-aviation-in-nigeria/ 15 https://allafrica.com/stories/202004240163.html 16 https://nairametrics.com/2020/04/24/arik-air-bows-to-pressure-implements-80-salary-cut-for-staff-in-april/ 12

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What changes are happening in the Nigerian aviation industry 17 Airline to advise its passengers to choose the option of online ticket purchase and online check-in.

Airline to also ensure that its online platforms for ticket purchase and flight check-in are functioning optimally Airline shall ensure strict COVID-19/Pandemic protocols for all walk-in passengers Ensure ground handling arrangement is in compliance with Advisory CircularNCAAAC-AMS-003 on COVID-19 Public Health Corridor Concepts for ground handlers.

Submit an estimate of the financial loss incurred during the Covid-19 lockdown period Submit an estimate of the financial obligations (i.e. indebtedness) to service providers e.g. FAAN, Leasing Company, Inflight Caterer, Aviation Fuel Suppliers, Ground Handlers etc Submit evidence to meet airline’s immediate financial obligations for at least 3 months from the available cash Post Covid-19 Lockdown

Impact on airlines and airport operations All scheduled commercial airlines to apply and obtain an approval from the authority to resume operations once the restriction is lifted 18 The apex regulatory body will grant approval to applicants upon satisfactory assessment of airlines for compliance with all relevant COVID-19 guidelines and applicable Nigeria Civil Aviation Regulations (Nig, CARs) following the prolonged lockdown period.

The Airlines will be required to show evidence of compliance with actions listed under the immediate action plans required by the NCAA. No airline will be given start-up clearance without meeting the restart requirements Airline’s restart plan to provide assurance of safe operations both from the technical perspective of flight operations i.e. to address issues like aircraft disinfection, aircraft depreservation, flight crew recurrence or proficiency, and from the perspective of putting measures in place to protect passengers from COVID-19 infection.

Comply with the COVID-19 Public Health Corridor Concept Protocol, which covers a diverse range of topics to protect against COVID-19 infection from passenger boarding, passenger and flight protection in flight to disembarkation. In case of a COVID-19 threat on board, a process to manage the situation is also required.

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https://ncaa.gov.ng/media/shllynwa/advisory-circular-ncaa-ac-fsg-001-post-covid-19-airline-restart-plan-finalrev-o.pdf 18 https://guardian.ng/business-services/aviation-authority-to-certify-airlines-for-post-lockdown-restart/

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Implications for airport personnel and professionals19 1. Flight Crew: Shall be required to submit evidence of: LPC /OPC (LPC reviewed syllabus –Alternative means of compliance with simulator exercises), medicals, instrument check, check airman status, refresher courses, HSE specific training with emphasis on COVID-19, and evidence of COVID -19 SOPs. For flight crew whose simulator are due for renewal and are unable to access training facility are to submit evidences of: • LPC /OPC (LPC reviewed syllabus –Alternative means of compliance with simulator exercises) • Current Medical Certificate 2. Cabin Crew: Shall be required to submit evidence of: Medicals, drills, recency, refresher courses, HSE specific training with emphasis on COVID -19, and evidence of COVID19 SOPs. 3. Dispatchers/Ground Operations Officers: Shall be required to produce evidence of: licenses, recency, refresher courses, HSE specific training with emphasis on COVID- 19.

Their SOP shall contain the following 20: • Plans for the fumigation and disinfection of the airport/terminal prior to commencement of operations • Procedures for routine cleaning and disinfection of frequently touched/exposed surfaces and security equipment including trays • Measures to protect screeners/security personnel and passenger/staff (where applicable) during operations to reduce the spread of the communicable disease (COVID-19) • Procedures for handling suspect cases who might have failed temperature screening and requiring further medical attention 4. Aircraft Maintenance Engineers (AME): AMEs requiring AMEL renewal will be required to submit evidence of attending Human Factors Training or recent aircraft maintenance experience.

Measures to be applied for safety and security in work environment AT ALL TIMES: a. Air operators are to carry out disinfection on of the aircraft on a weekly basis and as determined by a risk assessment by the Nigerian Civil Aviation Authority (NCAA) in

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https://ncaa.gov.ng/media/shllynwa/advisory-circular-ncaa-ac-fsg-001-post-covid-19-airline-restart-plan-finalrev-o.pdf 20 https://ncaa.gov.ng/media/poolzbg3/new-appendix-c-advisory-circular-ncaa-ac-avsec-001-final.pdf

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coordination with the Port health services, using materials known to be effective against COVID19 and safe for use in the aircraft, in accordance with Nig. CARs. 18.8.19, NCAA All operators Letter (DG 012/20) “National Interim guidance on Aircraft/Aviation facilities cleaning and disinfection in relation to the COVID-19 pandemic” and WHO guidance “Operational considerations for managing COVID-19 cases or outbreak in aviation”. (https://apps.who.int/iris/bitstream/handle/10665/331488/WHO-2019-nCoVAviation-2020.1eng.pdf) i. Cockpit disinfection during crew changes is highly recommended. Air operators are required to provide crew with the necessary disinfection materials and personal protective equipment (PPE). ii. Operators are to carry out some form of aircraft disinfection after every flight except for transit flights where passengers may be on board. b. Crew identified as having had close contact with a suspected COVID-19 case must self-isolate pending the result of testing of the suspected case. During this period, such crew must be relieved from the flight duty roster. c. Crew identified as having had close contact with a positive COVID-19 case must be relieved from the flight duty roster for 14 days from the date of exposure and follow the instructions of the Nigerian Centre for Disease Control (NCDC). d. Crew displaying any symptoms suggestive of respiratory tract infection, even if mild, has a fever, a new persistent cough, difficulty breathing, or feeling unwell in any way, must be relieved from flight duties, self-isolate and seek medical advice as soon as practicable. e. Crew are to observe physical distancing practices, including both when on and off duty, and minimise contact with the public in accordance with local health requirements a. when off-duty. f. Given the current situation and as far as Flight Time Limitation (FTL) permits, air operators should operate turnaround flights and avoid long layovers and transits for their crew as far as reasonably practical. For turnarounds, crew is advised to stay within the aircraft (except for aircraft walk-around checks). Consideration should be given for unforeseen delays (e.g. due to unplanned testing procedures). g. Access on-board the aircraft by authorised personnel such as ground/technical personnel must only be allowed with physical distancing measures adopted and the wearing of PPE (Face mask and gloves). h. Oxygen masks must be disinfected using available means, after each use. In-flight rest shall have bedding for each crew member for their individual use. The bedding must be packaged and stored individually.

Overall impact to the air passengers in Nigeria

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In a webinar titled ‘Impact of Covid -19 on Aviation sector”21, experts at the Institute of Directors suggested that while Nigeria would fly again, a new normal would be inevitable: Passengers will need a lot of psychological empowerment to embrace aircraft as the safest means of travel Given the technicalities of observing physical distance on board, passengers will have to be physically fit to travel. There may be need to substitute Yellow cards with Covid-19 cards Passengers will have to arrive earlier than in the past, to allow for additional health screening.

Sanitizing aircrafts every time they land will translate to possible delays Drastic reduction in physical interactions will translate to adoption and adaptation to the digital space Direct notifications on risk of travel and safety measures in place will be received through technological support Reduced rate of actual leisure travel, especially internationally

Way Forward for African Airlines 2223 Temporarily convert some of fleets from passengers to cargo planes to respond to the growing demand for delivering health equipment and food supplies among others to limit possibilities of going bankrupt Implementing the Single African Air Transport Market (SAATM): SAATM is an African Union initiative meant to create a single unified air transport market in Africa having at least 28 African countries ready to open up their skies to liberalize civil aviation.

The SAATM initiative will enable African airplanes to improve efficiency and reduce emissions through the free route airspace benefit. Free route airspace allows airplanes to plan more efficient, direct routes with stable trajectories, saving time and fuel hence minimizing the cost of operation over a long period.

Africans will afford to travel more frequently and move perishable cargo in high volumes when the cost of travel tickets has lowered as a result of a reduction in the cost of operation due to time and fuel saved through the free route airspace initiative.

Adaption to newer aircraft fleet with modern technology:

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https://nairametrics.com/2020/05/17/covid-19-the-new-normal-for-nigerian-aviation-industry/ https://movinon-lab.michelin.com/lab/s/article/Over-400-million-loss-to-hit-the-African-AviationIndustry?language=en_US 23 https://aviationbusinessjournal.aero/2020/06/01/strengthening-african-airlines-financial-position-forsustainable-life-post-covid-19/ 22

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African airlines can acquire funds through Government assistance loans, trading their shares, sourcing for both local and foreign investors to raise enough money to purchase newer airplanes like the Airbus A350 and Boeing’s 787, which consumes on average less than three liters of fuel per 100 passengerkilometers hence saving on fuel cost in the long run.

Manufacturers are increasingly using light-weight materials such as carbon composites to build new aircraft and components. The Boeing 787 and 777X, Airbus A380, A220, and A350XWB aircraft all use these cutting-edge materials and technologies to deliver exceptional gains in environmental performance something that would be an advantage to the African airlines concerning sustainable aviation.

African airports should emulate first world airports in developing ground facilities and procedures to save fuel and reduce emissions: First world airports are now equipping their terminal gates with fixed electrical ground power and pre-conditioned air, allowing pilots to switch off the Auxiliary Power Unit (APU) on the plane, saving fuel, reducing pollution and noise while still on the ground.

African airports should reduce taxiing and holding times by creating more direct taxiways and holding aircraft at the gate until departure slots are confirmed, generally reducing congestion and fuel burn.

Installation of modern air traffic control measures in all African airports In many African airports, mid-20th-century technology is still being used to direct air traffic. This requires aircraft to zigzag between ground-based radar posts throughout their journey resulting to delay in travel time, an increase in fuel usage, and emissions.

By using new satellite-based navigational technologies and procedures known as ‘performance-based navigation’, aircraft can follow optimized, more direct routes with greater accuracy and efficiency. Cutting out unnecessary travel time saves fuel, reduces CO2 emissions, and enables air traffic control to use the extra airspace to accommodate increasing air traffic, reducing congestion and delays.

What Nigerian Airlines could do 24 renegotiate loan agreements/leases, leveraging on some contractual/legal protections; take advantage of any stimulus package made available by the Nigerian government; explore the limited opportunities that remain available during the pandemic; cut cost and prepare for a quick restart by observing the following:

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https://www.templars-law.com/wp-content/uploads/2020/05/Templars-Thought-Leadership-Nigerian-Airlinesand-the-Covid-19-Pandemic-1.pdf

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Temperature screening: This should be done efficiently either at entry point to the terminal building or prior to the security checkpoint, and upon arrival in customs halls or baggage pick-up areas.

COVID-19 testing: This can be implemented when the issues as to the efficacy of the tests, their reliability and timeliness are adequately addressed, possibly by generally accepted standards on a global scale. It should be implemented when ready but should not prevent a restart of the industry if all other measures have been put in place.

Use of PPE (Protective Personal Equipment) by crew members: This is very important but will be implemented with proper guidance for customers and airport staff and would ultimately require a standard and recommended practices document to be produced.

Social distancing: This can be managed inside the terminal buildings. Proper distancing should also be implemented as much as possible throughout the check in, security and boarding process.

Aircraft cleaning: It is expected that IATA will finalize and communicate a standard implementation of grooming and sanitization onboard aircraft and in the terminal buildings.

Face masks and sanitizers: It should be made compulsory for passengers to wear face masks at all times––during check-in, boarding and while on board.

Passengers should also be provided with sanitizers and disinfectant wipes at all times.

Airport Terminal buildings should be considered for customer and staff use only, therefore limiting access and reducing the amount of people in the facility.

Self-Service options should be promoted and utilized as much as possible to limit contact at all at passenger touchpoints, and eventually allowing for the greater use of touchless technology and biometrics.

Conclusion Without a doubt, the aviation industry was one of the most hit by Covid-19 pandemic. To come out of the crisis, the industry will need to use a multi-agency approach. This is because the aviation industry is dependent on the success of other sectors like hotel, tourism, oil prices, and agriculture. To cushion Nigerian airlines against the wrath of this pandemic will need serious government interventions, not just for the present, but in readiness for the unforeseen future.

With flight operations scheduled to resume on June 21, 202025, stakeholders are hopeful that this will go a long way in rebuilding and strengthening our economy as a people. According to the NCCA, only five airports will kick off operations in the first phase. They include: the Nnamdi Azikwe International Airport (Abuja), Murtala Mohammed International Airport (Lagos), Mallam Aminu kano International Airport (Kano), Port Harcourt International Airport 25

https://allafrica.com/stories/202006050120.html

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(Omagwa), and Sam Mbakwe Airport (Owerri). Following a successful review and assessment, the other airports will gradually follow suit. And that is where the catch is! Going forward, all stakeholders must earnestly embrace the proposed changes, so that we don’t halt along the path to recovery. National teamwork will be a major requirement. And although it’s said old dogs are not taught new tricks, none of us has a choice, we must adopt new measures, and the earlier we adapt them the better for everyone within our borders.

Appendix 126

Source: https://www.cgdev.org/blog/economic-impact-covid-19-low-and-middle-incomecountries (Broad channels of short-term Economic Impact of the Pandemic)

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https://www.cgdev.org/blog/economic-impact-covid-19-low-and-middle-income-countries

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Appendix 227

Adopted from: PwC Nigeria’s Webinar: COVID-19: Economic Implication and Policy Responses

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https://www.pwc.com/ng/en/assets/pdf/Covid-19-economic-implictions-webinar-presentation.pdf

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List of References A UN Framework for the immediate socio-economic response to Covid-19, April, 2020; accessed https://unsdg.un.org/sites/default/files/2020-04/UN-framework-for-the- immediate-socioeconomic-response-to-COVID-19.pdf

at

PwC Nigeria’s Webinar: COVID-19: Economic Implication and Policy Responses, 8 April, 2020; Covid-19 and the Nigerian Economy; accessed at https://www.pwc.com/ng/en/assets/pdf/Covid-19-economic-implictions-webinar- presentation.pdf United Nations Development Programme, March 24, 2020: The Impact of the Covid-19 Pandemic in Nigeria.

A socio-economic analysis; accessed at https://www.undp.org/content/undp/en/home/coronavirus/socio-economic-impact-ofcovid19.html https://africa.cgtn.com/2020/04/24/3-million-jobs-in-africas-aviation-sector-at-risk-due-to-covid-19-iata/ https://allafrica.com/stories/202005070013.html https://allafrica.com/stories/202004240163.html https://aviationbusinessjournal.aero/2020/06/01/covid-19-predicting-uncertain-times-for-african-airlines/ https://aviationbusinessjournal.aero/2020/05/07/iata-calls-on-nigerian-government-to-provide-aviationspecific-financial-relief-measures-to-aviation-in-nigeria/ https://www.businessdailyafrica.com/news/IATA-calls-on-states--financiers-to-rescue-Africa-sairlines/539546-5568078-yjma03z/index.html https://businessday.ng/opinion/article/the-impact-of-covid-19-on-the-aviation-industry/ https://www.iata.org/en/pressroom/pr/2020-04-23-02/ https://www.icao.int/sustainability/Documents/COVID19/ICAO%20COVID%202020%2006%2001%20Economic%20Impact.pdf https://www.icao.int/sustainability/Pages/Economic-Impacts-of-COVID-19.aspx https://nairametrics.com/2020/04/24/arik-air-bows-to-pressure-implements-80-salary-cut-for-staff-inapril/ https://www.pwc.com/ng/en/assets/pdf/Covid-19-economic-implictions-webinar-presentation.pdf https://www.tralac.org/documents/resources/covid-19/3218-impact-of-the-coronavirus-covid-19-on-theafrican-economy-african-union-report-april-2020/file.html https://www.von.gov.ng/tackling-impacts-of-covid-19-on-nigerias-aviation-sector-2/

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