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Airlines, hotels’ revenues decline on Ebola fears

By BusinessNews Staff on September 2, 2014

Since the outbreak of the Ebola Virus Disease in Nigeria on July 20, the revenue of airlines and restaurants in urban areas have continued to fall, OKECHUKWU NNODIM writes

Patronage of restaurants, hotels and airports in the country, particularly in states where the deadly Ebola Virus Disease has been confirmed, has reduced by about 50 per cent.

Airline operators, hoteliers and economists stated that since the virus was imported into Nigeria by the late Liberian-American, Patrick Sawyer, all had not been well with the respective sectors.

Although the negative impact of the disease had been felt in many other sectors, operators of domestic and regional airlines in the country as well as restaurant owners stated that their sectors might have been the worst hit.

For instance, they noted that air passengers were scared, while the citizens were becoming apprehensive whenever they visited restaurants even in hotels.

Senior officials of some major airlines in the country stated that foreigners were sceptical about visiting Nigeria, a development that had “severely dragged down the revenues of many carriers.”

Similarly, operators of restaurants, particularly in Lagos, said they had lost about 50 per cent of their customers since the outbreak of the disease in July.

Specifically, the bi-monthly economic and business update by the Financial Derivatives Company, which was made available to our correspondent on Friday, stated that restaurant visits in Lagos had already declined by 50 per cent as a result of the dreaded virus.

The FDC is headed by a renowned economist, Mr. Bismark Rewane, and the firm is notable for releasing seasoned economic reports, which cut across key sectors, both locally and internationally.

According to the latest report, the firm stated that many hotel and airline bookings in the hospitality and tourism sectors in Lagos State, Nigeria’s commercial city had been cancelled by inbound travellers due to the Ebola scare.

The report stated, “This is not surprising since India and Greece have openly advised their citizens to avoid non-essential travels to Nigeria and other Ebola-affected countries. It is estimated that restaurant visits in Lagos have already declined by 50 per cent.

“The accommodation and food services sector was approximately one per cent of total GDP in the first quarter of 2014. This amount is not negligible considering the importance that restaurants play in the lives of many working-class Nigerians. In addition, a direct implication of the low turnout to social events is a decline in the events management business.”

According to the FDC, air transport was 0.09 per cent of Nigeria’s Gross Domestic Product in the first quarter and the second most used means of transport after road.

It, however, noted that since the outbreak of EVD in West Africa, several airlines, including Arik Air, Asky, British Airways and Emirates had suspended flight operations to and from the Ebola-affected countries.

It said, “Saudi Arabia also suspended giving out visas to Muslim pilgrims from West African countries. Serious screening for Ebola has also begun at several international airports before passengers are allowed to board an airplane.

“We expect revenues in the aviation sector to plunge downwards, which will affect both the airlines and the support industries, including handling companies, oil marketers, catering service provider, duty free shops, etc.”

The President, National Association of Aircraft Pilots and Engineers, Mr. Isaac Balami, told out correspondent that the airlines were bleeding as a result of revenue loss since the outbreak of the disease.

He said, “Right now, the airline revenue has dropped drastically because the people that ordinarily will fly into Lagos, Port Harcourt or Abuja are scared. A lot of foreigners that ordinarily come into Nigeria to invest have put such plans on hold until when the Ebola issue is finally controlled.

“So, the faster we all rise up to the challenge, whether in the aviation sector or whichever sector, the better for us. Another thing is that corporate organisations are not doing enough. The truth of the matter is that if we really want to fight this Ebola, we have to give the much needed support. If this disease is not controlled fast, it will get to a point when people will not be able to go to the bank to do their respective transactions.

“The only remedy is for the government to put in more effort. The public also needs to support government’s initiative in fighting Ebola, because the Minister of Health cannot fight it alone; we all have a role to play.”

Balami noted that before the outbreak of the disease, most local airlines were struggling to survive, querying, “How will they cope now that there is a disease that has led to severe drop in revenue?”

A top official of a major local and regional carrier stated that airlines in Nigeria had lost close to N1bn since the outbreak of Ebola in the country.

The official, who pleaded not to be named because he was not authorised to speak on the matter, said, “I know how much our company has lost since we stopped flying to some of these countries where the disease is widespread.

“If you add this to what other carriers have lost, it will be over N1bn, and I wonder how long this will last. Something needs to be done fast before the sector collapses.”

The FDC, in its report, noted that the disease was now threatening to cripple three economies with a combined GDP of about $13bn.

It said commodity companies were slowing production and airlines were shutting routes.

In Liberia, the government said the epidemic was threatening to derail the progress made since the end of the civil war in 2003. Sierra Leone had cancelled its first sale of bonds to foreigners.

The report added, “More than 1,200 had already died in those three countries. Attempts to quarantine infected populations and contain the virus have paralysed some companies and led to job losses.

“Africa’s richest man, Nigerian cement magnate, Aliko Dangote, has pulled some employees out of his plant in Liberia and says one percentage point of growth may be shaved off in the region this year.”

[Punch]

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