Arik Air weathering storms against odds

While Nigerian carriers are currently at a tipping point, the challenge of Arik Air, one of Nigeria’s major carriers, has been worsened by frequent picketing by the unions as its operations were disrupted three times between September and December, Daily Trust examines the issues of contention and efforts to address them.

Arik Air at the outset of the COVID-19 pandemic implemented 80% pay cut for all members of staff of the company with effect from April while asking 90 per cent of staff to proceed on leave without pay.

But this does not go down well with the unions comprising the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN),  National Union of Air Transport Employees (NUATE) and the National Union of Aircraft Pilots and Engineers (NAAPE).

The unions in a letter to the MD of Arik Air though the Human Resource Department said the 80 per cent cut in April salary is unacceptable.  The unions are also irked that the management failed to engage the unions before taking the decision.

This is the tension that has characterized the relationship between the airline’s management and the union since the COVID-19 pandemic broke out.

For the airline which is under the Assets Management Corporation of Nigeria (AMCON’s) receivership, the event of the COVID-19 was a setback in a bid to reposition it and return it to profitability.

Daily Trust reports that AMCON, in exercise of its powers under the AMCON Act 2010 (as amended) had placed Arik Air in Receivership in February 2017 over huge indebtedness by the previous owner.

In taking over the airline which used to be the largest carrier in the West and Central Africa, the AMCON’s mandate to the receiver-manager was to reposition the airline which was obviously headed to collapse, burdened by huge debts to commercial banks with several obligations not being met to the creditors comprising fuel suppliers,  spares manufacturers, leasing firms while staff salaries and pensions were not being serviced.

According to an official of the airline, these challenges became a thing of the past after AMCON’s intervention as the operation of the airline was stabilized.

Restoring customer confidence which was virtually nonexistent was one area the receiver-manager invested on amidst low on-time performance (OTP), flight delays, cancellations which put the airline in bad light before the passengers.

“Since 2017 when we stabilized the operations of the airline, we have been quiet faithful with all the stakeholders. Statutory pension payment has been regular, salaries have been regular, except during the Covid-19 period which has negatively impacted the business, thus salaries were cut, and are now being regularly reviewed upward based on revenue.

“Customer service has improved, with Arik being one of the leading domestic airlines achieving the highest OTP over the last 46 months while vendors are being paid regularly while other trade creditors are being engaged with favorable disposition. Staff morale has remarkably improved even as aviation agencies are being paid in addition to prioritising maintenance and leases,” said an official of the airline who spoke on condition of anonymity.

But the outbreak of COVID-19 pandemic was a major blow to the airline industry globally.

This triggered massive revenue depletion, higher costs of maintenance due to foreign exchange challenges and depreciation of the naira.

Then to make worse the already bad situation, the Nigeria’s macro economic challenges like the #EndSARS protest which led to disruption of flights and others contributed to the airline’s cash crunch.

Despite this, it was learnt that staff that have been furloughed during the pandemic are paid a stipend of 20 per cent every month pending their reabsorption as revenue improves.

But the unions comprising the National Union of Air Transport Employees (NUATE), the Air Transport Services Senior Staff Association of Nigeria (ATSSSAN), among others however called for the reinstatement of the workers that had been furloughed threatening to disrupt the operation of the airline if it fails to meet their demands which also include the full implementation of the conditions of service.

The unions however made good their threat to shut down the operations of the airline following the non implementation of their demands.

Daily Trust reports that the unions picketed Arik Air in September, November and December thereby disrupting its operations nationwide and leaving thousands of passengers stranded.

The consequence of these frequent disruptions is the further depletion of revenues amidst extant crisis.

A source said the airline lost over N50m everyday the picketing exercise was carried out by the unions. “The implication is that we are  burdened by several refund requests when we are faced with this kind of situation and passengers would begin to lose trust and confidence in us.”

Experts and stakeholders in the Aviation industry believe sustainability of the carrier amidst the COVID-19 challenges and depleting revenue remains crucial. This, they argued, is because if the airline dies or AMCON decides to liquidate it, everybody- the staff, members of the flying public, and many people – will suffer.

Goup Capt. John  Ojikutu (Rtd), Aviation analyst is of the opinion that the conditions of service for workers of the airline cannot be the same under AMCON.

“We must note that the conditions under Arik management can not be the same under AMCON,” he stressed.Former General Secretary of NUATE, Olayinka Abioye said, “As an advocate of Industrial harmony and social dialogue, the only solution to the industrial impasse is compromise from both parties.

“While the employer may think it has right to disengage employees, such an employer must think twice and remember that it is the same employees that were there during the raining days and as such, there must be dignity in their relationship.”