BY EKELEM AIRHIHEN
Ekelem Airhihen, a chartered accountant, is an airport customer experience specialist; and can be reached on ekyair@yahoo.com and +2348023125396 (text only)
The primary purpose of airlines is to transport people and goods by air. Aviation is one industry with global reach connecting people, cultures and businesses across continents.
Uniting Aviation by ICAO further states that historically, air transport has doubled in size every fifteen years and has grown faster than most other industries. In 2016 airlines worldwide carried around 3.8 billion passengers annually with 7.1 trillion revenue passenger kilometres (RPK). Fifty three million tonnes of freight were transported by air, reaching 205 billion freight tonne kilometres (FTK). It further states that daily, around 100,000 flights transport over 10 million passengers and around USD 18 billion worth of goods.
Also, the air transport industry supported a total of 62.7 million jobs globally, with 9.9 million direct jobs. Airlines, air navigation service providers and airports, directly employed over three million people. It further stated that the civil aerospace sector (i.e., the manufacture of aircraft, systems and engines) employed 1.1million people. About 5.5 million worked in other on-airport positions. 52.8 million indirect, induced and tourism – related jobs were supported by aviation.
Global trade and e-commerce are driven by air transport. Tourism relies heavily on aviation, too. Air transport facilitates tourism thereby generating economic growth and alleviating poverty.
“The air transport industry, including airlines and its supply chain, are estimated to support US$600 million of GDP in Nigeria. Spending by foreign tourists supports a further US$1.1 billion of the country’s GDP, totalling to US$1.7 billion”- The Importance of Air Transport to Nigeria (www.iata.org).
Indeed, the air transport action group in Aviation Benefits Beyond Borders states that air transport is at the heart of global economic activity. It creates employment, facilitates trade, enables tourism and supports sustainable development around the world. (aviationbenefits.org).
The OECD, which is the club of rich countries, in it’s 15 October, 2020 newsletter (Tackling Coronavirus (COVID-19) Contributing to a Global Effort, oecd.org) gives insight and guidelines for surviving the post covid-19 pandemic:
Recently, the OECD states, dramatic drop in demand for passenger air transport, and with freight to a lesser extent, due to the pandemic and containment measures is threatening the viability of many firms in both the air transport sector and the rest of the aviation industry, putting many jobs at stake.
The aviation industry has often been a target of government policies with the pandemic precipitating a new suite of loans, loan guarantees, wage subsidies and equity injections. These have raised concerns about competition and the efficient use of public resources.
The OECD makes suggestions to promote a sustainable trajectory for the aviation industry. It states that government policy should prioritise sector-wide measures and competition. Issues raised in this regard are:
Government policy should strike a balance between the need for support and the risk of distorting competition. Here the OECD recognizes that the global economic downturn will require government assistance and some regulatory intervention so that players in the industry value chain can survive. However, it suggests that these interventions should not tilt the playing field with other firms in the aviation industry. Some industry players should not gain undue advantage over others. Airlines who are more easily at the receiving end will be unduly placed at a disadvantage if competition is distorted. Recall that profit margins in the airline business are slim and the business is cyclical.
Government policy should preserve business dynamics and allow exit. Restarting aviation post pandemic is not likely to be smooth, the OECD suggests. This has been evident with the risks associated with the omicron virus. Shut downs of borders as well as travel restrictions have presented challenges to aviation. These affect businesses which also rely on aviation for survival. This implies that there would be job losses and shut down of business premises.
So, the OECD suggests that governments should foster restructuring and avoid backing non-viable firms. However support should be given to displaced workers.
Government policy should address sustainability along the whole aviation value chain. The OECD suggests that aircraft manufacturers and airlines are included in this value chain. The policies of the government should not consider aviation in isolation. There should be coordination across sectors of the economy and the industry also. While the OECD countries are involved in carbon transition, these should be integrated in the Covid-19 response.
For developing economies, sustainability issues as economic growth, poverty alleviation and social inclusion should be considered. The recent development plan, like the Nigerian 2021 to 2025 development plan, would be a reference point for policy interventions.
Many sectors of the economy are impacted by aviation and so there should be policy coherence and integration in addressing issues in airlines and the aviation industry in general.
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