Nigeria's foremost Online Energy News Platform

Reasons Behind Aviation Sector Negative Growth in Q3

-By Adeniyi Onifade

Nigeria’s aviation sector, considered as the biggest casualty of the Covid-19 pandemic has again recorded negative growth, even as government plans huge interventions for the sector.

The Gross Domestic Product report released by the National Bureau of Statistics has shown that air transport under the transportation and storage sector contracted by 38.86 per cent in the third quarter of 2020.

Accordingly, the sub-sector contracted by 57.38 per cent in the second quarter of 2020 and by 15.23 per cent in the second quarter of 2019 comparatively.

The transportation and storage sector made up of road transport, rail transport and pipelines, water transport, air transport, and transport services all recorded a growth of -35.06 per cent in nominal terms (year-on-year) while seeking to gradually recover from the restricted movements of passenger and goods.

In the report, the growth rate in Q3 was slightly better than the preceding quarter which saw a contraction of -41.63 per cent.

In real terms, the transportation and storage sector contracted by -42.98 per cent in Q3 2020. This rate represented a slightly better performance than the preceding quarter when it recorded -49.23 per cent, an increase of 6.25 per cent points. Quarter on quarter, growth was 25.81 per cent.

The report further stated that all activities under transport and the storage industry recorded negative growth rates except for post and courier services.

Hadi Sirika Aviation Minister

Part of the report read, “All activities under the transport and storage industry recorded negative growth rates except post and courier services. Quarter on quarter, growth stood at 29.69 per cent.

“Transport activities contributed 1.28 per cent to nominal GDP in Q3 2020, a decline from the 2.03 per cent recorded in the corresponding period of 2019, but higher than 1.13 per cent recorded in the second quarter of 2020.”

Rising inflation, debt burden contributory factors

Many reasons have been attributed to the contraction in the aviation sector, top among them is the rising inflation and debt burden of the country.

Consequently, figures from the apex statistics body shows that the country entered its second recession in five years following two consecutive quarters of negative growth.

2020 year’s recession is the worst in over three decades as data obtained from the World Bank indicated that the country’s Gross Domestic Product dropped by 10.92 per cent in 1983 and 1.2 per cent in 1984.

The NBS in its report for the third quarter of 2020, said the GDP, the broadest measure of economic prosperity, fell by 3.62 per cent in the three months up till September.

The damning situation colludes with the losses encountered by the aviation sector owing to the COVID-19 pandemic, which resulted in pay cuts and job losses.

Only recently, over 70 pilots were sacked by Air Peace while Bristow Helicopters fired over 100 pilots and engineers in the first half of the year.

Similarly, 10 workers, including six pilots, were sacked by Azman Air on November 7 which had threatened the peace of the sector with aviation unions threatening industrial action.

In the era of revenue, Ground handling companies have also taken a down turn as Skyway Aviation Handling Company Plc and the Nigerian Aviation Handling Company Plc, saw their combined revenue for nine months ended September 30 dip by N2.7bn to N10bn from N12.7bn in the same period of 2019.

This further represents a 21.2 per cent reduction in revenue in the period under review, according to the financial statements of the companies listed on the Nigerian Stock Exchange.

As the economy commences it’s recovery process, industry players are hopeful that the sector will also bounce back from negative growth.