LCCI Urges FG to Tackle Crises in Aviation Sector

*NECA wants reappraisal of monetary, fiscal policies

Dike Onwuamaeze

Following the escalating prices of aviation fuel that have risen on average from N400  per litre in February 2022 to about N800 per litre in recent times, the Lagos Chamber of Commerce and Industry (LCCI) has tasked the federal government to take immediate steps toward resolving the crises buffeting the Nigerian aviation sector.

Similarly, the Nigeria Employers’ Consultative Association (NECA) has urged the federal government to reappraise its monetary and fiscal policies because of the multifaceted challenges confronting the nation.
The LCCI argued that the intervention of the government has become a matter of categorical imperative because of the systemic importance of air travel for the conduct of trade and commerce across borders.

The group insisted that the aviation sector is qualified for targeted financing to facilitate economic activities in the country, boost economic growth and avert an imminent recession.

These views were expressed in a statement at the weekend by the Director General of the LCCI, Dr Chinyere Almona.
According to the statement, “the chamber is concerned about the aviation crisis because of the systemic importance of air travel for the conduct of trade and commerce across borders.

“The organised private sector urges the government to take immediate steps toward resolving the crises in the aviation sector.
“Air transportation is considered one of the safest channels considering the despicable level of insecurity in the country. Hence, resolving the continued fuel crisis facing the safest transport channel is critical for the business community.”

Almona also said that the “government must immediately consider involving the CBN and the Nigerian National Petroleum Company Limited (NNPC) in making foreign exchange available for aviation fuel imports. However, the more sustainable solution would be refining Jet-A1 fuel for our local consumption.
“While we acknowledge that the current energy crisis is real and global, it is aggravating in Nigeria because we do not produce the oil,” adding that “the aviation sector qualifies for targeted financing to facilitate economic activities in the country, boost economic growth and avert an imminent recession.”

She noted that the government could not afford to allow this sector to suffer from these crises as operators in the industry are faced with a double whammy issue of foreign exchange scarcity and the high cost of aviation fuel, Jet-A1, which is a significant cost component in airline operations.

She said: “This crisis was (and still is) an acute scarcity of aviation fuel (Jet A1), which has caused intermittent flight delays and cancellations. Some airlines have been forced to shut down operations due to the harsh operating environment.
“With the rising insecurity that has bedevilled our road transport system, a safer option is air transportation. This portends challenges around the movement of goods and business conduct across locations.”

The director general added that “we have noted that from the beginning of the year, aviation fuel scarcity has remained a persistent and unresolved problem that has impacted the cost-of-service delivery, as reflected in the rising cost of flights.

“Aviation fuel prices have risen from an average of N400/litre as of February to about N800/litre in recent times. With the business community not sure of any intervention to provide respite, the woes of the airline operators may be far from over.

“The earlier intervention by the National Assembly alongside the CBN that saw the NNPC supply Jet-A1 at a discounted price of N480/litre may not have achieved the desired results. The sector has continued to suffer from persistent shocks and disruptions to operations.”
Meanwhile, NECA has urged the federal government to reappraise its monetary and fiscal policies because of the multifaceted challenges confronting the nation.
Its Director-General, Mr Wale Oyerinde, made the call in a statement in Lagos yesterday.

Oyerinde said that the policies had little impact either because of inherent inconsistencies or strategic sabotage by external forces.
He said that the lack of adequate consultation during their crafting and implementation could also be a factor.
“While the monetary policies aim to reflate the economy through the various interventions, the fiscal policies tend to create a bottleneck for the productive sector.

“This they do by introducing new taxes and levies, such as Telecommunication Excise Tax, Excise Duty on carbonated drinks, Beverage’s tax, NYSC Levy among many others.
“The introduction of these taxes and levies and other anti-enterprise regulations, to a large extent, will further hamper the consumption pattern of the citizens,” he said.

According to him, they can also reduce the capacity utilisation of enterprises and worsen the macroeconomic situation of the country due to the multiplier effects.
He said that the recently held Employers’ Summit in Abuja came up with some key conclusions and recommendations.
These, he said, could serve as alternative policy actions for government to consider.

Oyerinde said that as a matter of urgency, there should be deliberate alignment between monetary and fiscal policies to reduce contradictory tendencies.
“Also, a deliberate and independent mechanism with the active involvement of the private sector should be put in place to regularly gauge the effect and impact of policies and regulations.
“Ineffective ones should be changed and new ones formulated,” he said.