Aviation’s dilemma…to open or not to open?
Revenue shortfall now over 90%
GCAA, Airport Company may require gov’t bailout
Staff proceed on leave without pay; non-critical projects suspended
The aviation sector, like other sectors of the economy, is counting its losses and grasping at straws to survive.
With players expressing mixed feelings about continuous closure of the borders, everyone agrees that the decision taken by President Nana Addo Dankwa Akufo-Addo to close the land, air and sea boarders to human traffic effective March 22 is by far the most decisive move in fighting spread of COVID-19 in the country.
But the closure has come at significant costs to all operators in the sector. Revenues have dropped for airlines, services providers and other stakeholders such as the Airports Company and the industry’s regulator – to the extent that punitive cost-cutting measures have been introduced to survive.
With government’s clarion call for the new normal taking root, and preparations being made for citizens to adapt to and live with the virus, there seems to be a lifeline for the aviation sector.
This means that some of the stakeholders – including tenants at the various airports, ground handlers and cargo handlers – will also have it tough to keep their operations even if they are paying reduced or no charges, as currently is happening with the GACL and GCAA.
Director General of the GCAA, Simon Allotey, in painting a picture of the current situation alluded to the fact that salary payment is one of the huge challenges his office is grappling with, since aeronautic and non-aeronautical revenues have seen an over-90 percent shortfall.
“For now, there are no commercial flights. We only allow humanitarian flights; evacuation of stranded citizens by foreign embassies and countries; and cargo flights coming in to bring much needed medicines, food and so on.
“The bulk of revenues are the passenger charges; the airport depends on passenger service charges, Civil Aviation safety charges etc. All these are zero, so virtually we have lost the bulk of our revenue, over 90 percent – but we are taking appropriate measures to cut down on our operational expenditure to be able to survive this crisis,” he said.
But he added that there are several measures the industry’s regulator have put in place to cut down operational cost: staff have, for example, been asked to proceed on leave (without pay); and there’s a ban on new recruitments, promotion and anything that will add to existing cost.
Also, he pointed out that some non-critical projects have been suspended with companies contracted for such projects already notified. “Any measure that will help to reduce cost we are doing that, since we are not getting any extra revenue.”
But even with the airspace opening, it is not projected that the nation will make any reasonable returns considering the low number of flights globally due to the COVID-19 pandemic and its subsequent strict flight requirements outlined by the International Civil Aviation Organisation (ICAO) in its new safety guideline for the world’s civil aviation authorities.
When will aviation get back to pre-COVID-19 times?
An industry expert, speaking anonymously, opined that “assuming the airport is opened, are we going to get the traffic that will let us make profit? No, because there is no vaccine and the risk involved in travelling is huge. You may even have to be quarantined when you get to the other country.
“Therefore, if it is not very essential it would not make sense to travel. Looking around, which airports have been opened globally; where are you people travelling to, who is likely to come in? From all projections those number would be low and cannot give agencies the needed revenue to cater for their operations,” the expert noted.
To the expert, the country can open up only if it is certain about going the way of the United Arab Emirates (UAE), where there is an instant test result for all air passengers as the world is yet to get a vaccine for the virus.
“Government must find a way and bailout the GCAA and GACL. People can be willing to receive passengers from your country when they know that they are free of the virus. Even with this, it means that the time one has to spend at the airport before flying will have to be increased because of safety protocols,” he said.
Hope is never far away
Nonetheless, Minister for Aviation Joseph Kofi Adda told the B&FT that the country wants to take advantage of the pandemic and finish up plans with the yet-to-be established new national air carrier, so it will be able to be roped into normal air operations post COVID-19.
“We are pursuing it; we believe that if we get it done properly and we are ready, by the time this whole thing tapers off and we begin normal flights end of the year or somewhere in the middle of the year, we should be ready to be part of that.”
From the above, it is a very challenging call for the country to open its air borders. For now, fingers are crossed; just maybe, the president will feature the sector in the next nation’s address as plans to ease COVID-19 restriction gather momentum.