Domestic airlines expected to merge as the Covid-19 induced economic slowdown bites hard

SEVERAL Nigerian domestic airlines are expected to merge over the coming years as the economic impact of the coronavirus pandemic and the ensuing reduction in passenger numbers looks set to force them to consolidate their operations.

This year has been a nightmare for Nigerian aviation operators as the Covid-19 pandemic has reduced volumes, increased their operation costs and made it hard for them to access finance. Unlike industrial countries such as Germany and France where the government has come to the sector's aid with huge bailout packages, Nigeria does not have the deep pockets to afford this.

Last week, Arik Air made 300 staff redundant and there are signs that this will affect other domestic airlines. Over recent weeks, several Nigerian airlines have begun laying off staff and Captain Musa Nuhu, the director-general of the Nigerian Civil Aviation Authority (NCAA), says he foresees this ending in mergers.

Captain Nuhu said: “The Covid-19 pandemic exaggerated a bad situation. Some airlines may not survive but the industry will come back better. It has always gone through crisis but has come out stronger.

"Airlines operators are coming together to see what they can do to help the situation and they met with me, the industry will be different altogether. I am sure a lot of them will see changes in their model. I won’t be surprised if there would be merger activities around airlines to reduce costs and survive.”

Reacting to the increase in airfares, he stressed that airlines were in financial distress so needed to raise cash from somewhere.  “The airlines carry their maintenance out of the country and it is done in foreign exchange, so they need to raise enough money to service the aircraft.

“The airlines have to find a source of raising more naira as passenger load has decreased during the pandemic. That is why they have been significant increase airfares, they are trying their best and by the time the bailout kicks in, things will be better," Captain Nuhu added.