FridayDecember 31, 2021 / 11:34 AM / by CSL Research / Header ImageCredit: Ripples

Based on a Punch news report, between January andSeptember this year, output in the aviation sector rose to N146.6bn fromN114.2bn recorded in the corresponding period of 2020. The relaxation of travelrestrictions occasioned by the COVID-19 pandemic and increased economicactivities during the year drove recovery in the aviation sector in the firstnine months of 2021. The National Bureau of Statistics classifies aviation orair transport as one of the sub-sectors under the transport and storage sector.Road transport, rail transport, water transport, transport services and postand courier services are the remaining five. During the review period, thecontribution of the transport and storage sector to the GDP stood at N2.4tn,which was driven by the economic performance of road transportation (N2.2tn),air transport (N146.6bn) and transport services (N62.4bn).

The aviation sector was one of the worst-hit sectorsby the pandemic derailing the interesting prospects posed by the sector. In2019, the sector was the fastest-growing sector in the country, surging higherby 13.2% y/y. However, the sector dipped in Q2 2020, down 57.4%. In Q3 2020,the sector again contracted by a staggering 38.9%. Surprisingly, monetary andfiscal policymakers did not appear to be overly concerned with the struggles ofthe sector, despite its systemic importance to economic activities in thecountry. However, following pressures from stakeholders as well as the legislativearm, the Federal Government finally approved a N4.0bn bailout fund for airlinesat the beginning of November 2020. The sector returned to growth in Q2 and Q32021, up 4.98% and 33.3%, respectively.

Barring any new obstacles from the emergence of theOmicron variant, we believe the aviation sector is set for growth. In ouropinion, while the aviation sector does not contribute a huge percentage tooverall GDP, we note it has systemic importance for the conduct of trade andother economic activities in the country. Thus, we think the FG may need tosupport the sector more as it gets out of the deep recession it sank into. Onlyrecently, the Minister of Aviation, Hadi Sirika, announced that the country'sdelayed national air carrier, Nigeria Air, is planned to launch on or beforeApril 2022. The proposed airline was initially planned to begin in 2018 butplans stalled. We believe the launch and smooth running of the airline willalso be a boost to the aviation sector.

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