Nigeria’s government is considering a financial aid package for its aviation sector after airlines requested help with rising fuel costs, excessive taxes and a tight credit market, the finance minister said.
President Umaru Yar’Adua set up a 10-member federal committee late yesterday to recommend measures to help the airline industry, which has been hit especially hard by the global credit crunch.
“We are concerned because of what is happening in the financial sector and the aviation sector is a key driver of the economy,” Finance Minister Mansur Muhtar told reporters after meeting with dozens of industry officials.
“A direct financial intervention by the federal government is a likely option,” he added.
In its meeting with the federal panel, airline operators raised a series of concerns including excessive duties on aircraft engines, airport charges, and rising aviation fuel costs.
“The present harsh economic environment under which the airlines are operating in the country is not conducive and if urgent solutions are not offered the industry may eventually collapse,” said Mohammed Joji, president of the Airline Operators of Nigeria.
The industry was also finding it difficult to obtain loans from Nigerian banks following the central bank’s recent bailout of nine banks.
Nigeria has injected almost $4 billion into the banking sector in sub-Saharan Africa’s second biggest economy over the past two months, but financial institutions have become hesitant to lend again.
The finance minister said the federal committee would also meet airline regulators to seek their advice on resolving the industry crisis.