Burdened by over N600 billion debt, the N1 billion “bail out” set aside for each airline in Nigeria’s troubled aviation industry is ridiculous, according to experts who said it would not reverse the decline in the sector. Under a facility of N500 billion unveiled by the Federal Government to ease the burdens of operators in the power, manufacturing and aviation sectors, every airline is expected to access N1 billion (about $6.7 million) to cushion the effect of the crisis that has grounded some of them, while others have been forced to scale down their operations.

Aviation experts and analysts who spoke to BusinessDay on the issue said the N1 billion per airline confirmed by BusinessDay in an industry where a single operator is indebted to the tune of N117 billion is less than a drop in the ocean and ridiculous.

They are of the opinion that the lot of the industry may worsen with the paltry sum being offered to the airlines.

The aim of the government’s offer is to ensure good cash flow for the airlines, which will, in turn, help prevent them from cutting corners and improve their operations. Government’s intervention, an analyst told BusinessDay, is to ensure that the airlines do not run into liquidity problem that would cause them to compromise flight and passenger safety.

But industry experts faulted the sum being offered by the government in three areas: •the sum is too small to cushion the debt level of the airlines; •all have varying degrees of challanges; and •adequate diagnosis of the challenges facing the airlines was not carried out before government proffered treatment.

Bismarck Rewane, a leading economist and authority in Nigeria aviation industry, told BusinessDay that for the Federal Government to think of bailing out airlines with N1 billion each shows the level of knowledge industry policy makers have of the industry.

He noted that in a situation where one airline owes about N117 billion, N1 billion bail out fund would be grossly inadequate. Rewane also estimated that the whole of the aviation industry is enmeshed in financial crisis totalling between N500 billion and N600 billion, and as such the N1 billion each to the operators is “just like a whisper that no one can hear.”

On how the industry got into the mess, he said infrastructure inadequacy is one factor that brought about the problems. According to him, the level of infrastructure in the aviation industry is not enough to support profitable operations, making the cost of doing business in Nigerian aviation one of the highest in the world.

He also listed multiple levies and taxation as factors that have caused the bottom line to depreciate abysmally. Chris Aligbe, an aviation consultant, said since the problems and operational structures of the airlines differ, coupled with the level of debt burden on them, the N1 billion flat rate would not alleviate their problems.

“What will Arik Air do with N1 billion? How can you compare the airlines? For instance, there is no correlation between Arik Air and IRS Airlines. They have different structures and problems. Arik has good equipment structure but needs to be touched on its operations; IRS’ problem is totally different and that is why government’s plan for N1billion is ridiculous”, he stated.