The Minister of State for Aviation, Senator Hadi Sirika has directed aviation agencies to recover the huge debts owed them by airlines and terminal facility operators before the end of September.
Sirika who gave the directive stated that the government needs the money for the development of the industry and remittance to federation account. Agencies are required to remit 25 percent of their earnings to the federal government account to enable the government meet its obligations to the people.
Sequel to the directive, the agencies such as the Federal Airports Authority of Nigeria (FAAN) and the Nigeria Airspace Management Agency (NAMA), have intensified their debt collection drive and have forced airlines to abort their operations.
It was also gathered that some of the airlines have started paying up the debts while some have met the agencies to reconcile their debts and work out repayment plan.
Also, the pay as you go policies of NAMA and FAAN have been reinforced to ensure that henceforth airlines do not owe the agencies.
A source at NAMA disclosed to journalists that the agency is owed N8.08 billion; the Nigeria Civil Aviation Authority (NCAA) owed N12billion, while FAAN is owed N20billion as at the time of filing this report.
ThisDay gathered from NCAA said it has introduced no-pay, no-service policy, whereby every airline must pay before the agency would attend to its needs such as issuing certificates to its crew, aircraft inspection after maintenance among others.
ThisDay also reliably learnt that almost all the debts are owed by domestic airlines as the International Air Transport Association (IATA) collects charges from international operators for the aviation agencies.
Another source said that some of the airlines are finding it difficult to reconcile their debts with some of the agencies due to the absence of transparent system to document the debts with evidence of the provision of service as it is done in other parts of the world. Some of the airlines, according to source, believe the debt that accrued to them was exaggerated and they are shortchanged because they are being forced to pay for the services that were not rendered to them by the agenciies.
Also an airline official told journalists that if airlines were able to maximise their equipment and operate up to 14 hours a day, they would generate enough revenues to offset their charges and taxes, but expressed the regret that the circumstances have forced airlines to perform grossly below maximum capacity.
“Most airports do not have airfield lighting so you cannot operate there in the night; there is no aviation fuel and this impedes flight operations and leads to cancellation and delay of flights and the price of aviation fuel has become outrageous because it is scarce. Besides, there are some of the charges that are inexplicable; that seem as if government wants to stifle air operations in Nigeria, if not I don’t see why they should be charging VAT on air transport.
Government must increase waivers it gives to airlines so that they could operate profitably. Air transport is the catalyst of the economy and without it the economy will be adversely affected,” a source told ThisDay.
Another operator said that while the minister’s directive was in order, it is his responsibility to ensure that the necessary infrastructure is in place to ensure seamless flight operations, noting that it was unrealistic to insist that the airlines should pay all their debts knowing that there is no airline in the world that is not indebted. The operator added that government’s inaction in providing the necessary facilities that inhibits the airlines from maximising their operation.
“Government should know that if it wants the airline industry to grow it has to cut down on these charges. That is a way of supporting the airlines. It should also know that if airfield lighting is working in 10 out of the 22 airports built by the federal government, airlines could operate into the night in these airports. But it is only four airports that have working airfield lighting,” he said.
Oil Gains Slightly on Thursday as China Eases COVID-19 Measures
Oil prices rebound on Thursday following China’s announcement that it was easing COVID-19 measures imposed to curb the spread of the virus.
China on Wednesday announced the most sweeping changes to its resolute anti-COVID regime since the pandemic began, while at least 20 oil tankers faced delays in crossing to the Mediterranean from Russia’s Black Sea ports.
Brent crude rose 27 cents, or 0.4%, to $77.44 a barrel, while U.S. West Texas Intermediate (WTI) crude gained 49 cents, or 0.7%, to $72.50.
“Today, we do see some green price action,” said Naeem Aslam, analyst at Avatrade. “Prices are oversold due to the intense sell-off for the past few days. However, the price action still doesn’t show a strong bullish bias.”
The 14-day relative strength index for Brent was below 30 on Thursday according to Eikon data, a level taken by technical analysts as indicating an asset is oversold and could be poised for a rebound.
Both Brent and U.S. crude hit 2022 lows on Wednesday, unwinding all the gains made after Russia’s invasion of Ukraine exacerbated the worst global energy supply crisis in decades and sent oil close to its all-time high of $147.
Western officials were in talks with Turkish counterparts to resolve the tanker queues, a British Treasury official said on Wednesday, after the G7 and European Union rolled out new the restrictions on Dec. 5 aimed at Russian oil exports.
Wind Out of the Sails
UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase
By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
Stock markets are making small losses on Tuesday, while US futures are relatively unchanged ahead of the open.
The recovery rally has lost momentum in recent sessions which is understandable after that jobs report. That’s not to say optimism can’t and won’t return but that wages component was a huge body blow. Investors are a little winded and it may just take a little time to get their breath back.
The PPI data on Friday could offer a helping hand on that front but even then, it will be hard to ease the concern Fed policymakers will undoubtedly have about the pace of wage growth, consumer resilience and the still large savings buffer. None of this aligns with a swift and relatively pain-free return to 2% inflation.
RBA maintains flexible approach
The key takeaway from the RBA meeting today was flexibility. There is no pre-set path and while policymakers expect to need to raise rates at upcoming meetings, the data will dictate if so and by how much. That doesn’t help investors gage exactly what we can expect from the central bank but in such uncertain times, that makes a lot of sense. And you can see that reflected in the interest rate probabilities for the first quarter of next year. As it stands, no change or 25 basis points in February is a coin toss, while 3.35% in March (25bps above the current rate) is seen as being 50% likely with 25bps either side around 25% each. Clearly the RBAs communication strategy is going to plan.
Households feeling the squeeze this festive season
It will come as a surprise to no one that UK consumer spending remains subdued, with BRC reporting a 4.1% annual increase. With inflation running at 11.1%, spending is falling well behind, as is the case with wages, which suggests people are buying less and being more selective with what they do this festive season. Again, what can you expect when the economy is probably already in recession amid a terrible cost-of-living crisis that hurts those worst off most. The road to recovery for the UK is going to be long and painful, it seems.
The only guarantee for oil markets
It’s been a volatile start to the week in oil markets, continuing in much the same way we ended last, with traders still working through the announcements from the G7 and OPEC+, as well as the latest Covid moves from China. In many way, none of the above improve visibility in the crude oil space; they arguably actually make the outlook more uncertain.
But the intial response to the above has seemingly been negative for crude prices, with the loosening of Chinese Covid curbs not enough to offset the $60 price cap and unchanged OPEC+ decision. The cap is probably viewed as a business as usual for now, with Russia reportedly selling below these levels already and improving its ability to get around the sanctions. Which means output remains broadly steady.
The move from OPEC+ was probably driven by the lack of visibility on China and Russia but as the group has warned in the past, should prices fall too far and the market become imbalanced, it won’t wait until the next scheduled meeting to respond. It seems that the only thing guaranteed in the oil market for now is volatility.
Gold paring losses
The dollar recovered strongly on Monday as trade became increasingly risk-averse, hitting gold and forcing it back below $1,800 where it briefly traded above. It’s attempting to pare those losses today, up around half a percent on the day but it may struggle in the short-term. It’s been an incredible recovery until now but Friday was a massive setback. We now have to wait for PPI on Friday for some good news, with Fed policymakers in the blackout period ahead of the final meeting of the year, next week.
The risk-reversal trade on Monday took the wind out of bitcoins sails, not that it would have taken much in the circumstances. It’s trading back around $17,000 where it has spent most of the last week, which the community will probably be relieved about. Anticipating what’s going to come next for cryptos feels incredibly difficult and dependent on the ongoing fallout from FTX. To reiterate what I’ve said recently, silence is bliss.
A Nervy Start to the Week
By Craig Erlam, Senior Market Analyst, UK & EMEA, OANDA
What could have been a really positive week for equity markets is off to a much more nervy start, with stocks in Europe treading water and US futures slightly lower.
The inflation report on Friday was red hot once more, extinguishing any hope that investors could hop aboard the Fed pivot train and ride stock markets higher into year-end. Perhaps it’s not quite so dramatic but it was a real setback, something we should be used to by now.
The wages component was the killer blow. That was not just a beat, it obliterated expectations and came in double the forecasted number. It may be a blip, but it’s a huge one and it will almost certainly take more than one much cooler report in January to comfort those that still fear inflation becoming entrenched.
That’s ultimately where we’re now up to in the inflation story. Many accept that base effects and lower energy prices will drive the headline inflation figure much lower next year, among other things, while a slower economy – maybe recession – will eventually hit demand and contribute to the decline. But what the Fed fears now is fighting entrenched inflation and these wage numbers won’t make for comfortable reading.
An economic victory for China amid gloomy PMIs
Chinese stocks were the clear outperformer overnight as authorities continued to work towards a softening of the country’s zero-Covid stance with the end goal seemingly being the end of it altogether. It’s thought that it will be downgraded to category B management as early as next month with officials claiming it’s less threatening than previous strains, a huge move away from the rhetoric and approach of the last few years.
This came as the Caixin services PMI slipped to 46.7, much lower than anticipated. That said, I’m not sure anyone will be shocked given the record Covid surge, but the more targeted – albeit seemingly confused – approach being taken has ensured less disruption, as evidenced by how much better the PMI has performed compared with earlier this year.
And it’s not just China that’s seeing surveys underperforming and, in many cases, putting in sub-50 readings. Europe is either already in recession or heading for it and the surveys highlight just how pessimistic firms are despite the winter getting off to a warmer start.
Japan is among the few recording a growth reading, although having slipped from 53.2 in October to 50.3 last month, you have to wonder for how long. Input prices are punishing firms, with some now raising prices in order to pass those higher costs on. That won’t help activity or convince the BoJ to declare victory, as higher energy and food costs are also hitting domestic demand. The one major outlier is India where the services PMI accelerated higher to 56.4 buoyed by domestic and external demand. An impressive feat in this global environment.
Oil higher as China looks to ease Covid restrictions
Oil prices are higher on Monday, rallying 2%, after the G7 imposed a $60 price cap on Russian oil and OPEC+ announced no new output cuts. Both bring a degree of uncertainty, with the details of the cap and the impact on Russian sales still unclear.
From the OPEC+ perspective, it can’t be easy to make reliable forecasts against that backdrop and the constantly evolving Covid situation in China, which currently looks far more promising from a demand perspective. The decision to leave output unchanged was probably the right one for now and there’s nothing to stop the group from coming together again before the next scheduled meeting should the situation warrant it.
A major setback
It goes without saying that the jobs report on Friday was a big setback for gold as it leaves huge uncertainty around where the terminal rate will land. Of course, we should be used to bumps in the road by now, having experienced many already this year. There’s no reason why the path back to 2% should be any smoother.
But the yellow metal did recover those jobs report losses and even hit a new four-month high today. Perhaps the big difference now is momentum. It’s run into strong resistance around those August highs around $1,810 and simply doesn’t have the momentum it would have had the report been cooler. We’re now more than four weeks into the recovery rally in gold and a corrective move of some kind may be on the cards.
Silence is bliss
Bitcoin continues to enjoy a mild relief rally and has even moved above $17,000 to trade at its highest level in almost a month. It’s probably too early to celebrate yet though as these are very cautious gains that could be quickly and easily wiped out by more negative headlines related to FTX. Silence is currently bliss for the crypto community.
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