Flight resumption: Airlines can’t break even on 40% load factor-Olowo

President Aviation Round Table Safety Initiative (ART), Dr Gabriel Olowo has said that no airline can ever break even with less than 40 per cent load factor at the extremely low fares prevalent in the Nigerian market where passengers pay less than $100 per hour on jet engines.

Dr Olowo made this known responding to the planned recommencement of flight operations on June 21 and the directive to reduce passenger capacity to between 50 per cent-70 per cent something that most airlines and aviation players have canvassed against during the lockdown.

In a bid to ensure some form of social distancing, the Minister of Aviation, Hadi Sirika while announcing a possible resumption of operations of the 21st June said that airlines will have to reduce passenger capacity to between 50 per cent-70 per cent.

READ ALSO: Doubble.Ng offers investors 100% investment income, safety

Olowo who said that three weeks gave was good enough to give the airlines time to strategize and prepare also said government intervention was needed because the social distancing imposed would wreck havoc on the airlines’ economics.

He said,” Onboard, social distancing will be quite challenging except aircraft will be configured to all first-class seats for economic operations. No airline can ever break even with less than 40 per cent load factor at the extremely low fares prevalent in the market where passengers pay less than $100 per hour on jet engines.

“This was the levels 30 years ago precisely 1990. Lagos Abuja N2, 200.Exchange rate N 22/$.  The dichotomy is can the passengers afford higher levels of the tariff?”

“This is where government  intervention in Airline economics is needed in Nigeria by deliberate application of subsidies on fuel, taxes, airport charges, VAT, 5 per cent or lower interest rate on loans, quick foreign exchange availability,  etc. in order to lower Airlines cost of operations.”

On the time frame for the airlines to commence operations, he said: “Three weeks is good enough to do the needful by all stakeholders because we never stopped strategizing and talking all through the lockdown.  It’s time to walk the talk.

“It is expected that all states should open and indeed all countries should open simultaneously because aviation connects economies. So while we continue to battle with the virus, our economic lifeline must not be destroyed. The two are directly related. Just as the disease can kill, hunger can also kill and even kill faster.

“The airlines have been advancing in technology prior to Covid-19 on social distancing through self-service for online ticketing and payments, self-service check-in, self-service security and passport controls, etc. Nigeria Airports should urgently update its system if these are not already in practice.”