Before Nigeria Air flies…

Nigeria’s hope of getting another national airline after the demise of Nigeria Airways 15 years ago resonated with some saying it portends danger, while others see great things for the country if it is well managed. Caution must therefore be applied to ensure it is not going to be another wasted venture. WOLE SHADARE writes

Mixed feelings

Hope, cynicism and pessimism last week greeted the unveiling of the country’s national airline, Nigeria Air. Ever since the unveiling in faraway Farnborough, United Kingdom, not a few have wondered how the government intends to pull it through and make the proposed carrier a success. Some are pessimistic about the new carrier. They cited the experiment the country had with Virgin Atlantic, which produced Virgin Nigeria. Virgin with huge government support collapsed spectacularly in less than 10 years after international businessman, Sir Richard Branson withdrew his investment in the airline.

National identity

In an increasingly globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible. It is a message that certainly hasn’t been lost on Singapore whose government owns the highly respected Singapore Airlines, or Dubai, home of Emirates. In both cases, these small states have made their airplanes part of their national identity and growth strategy.

On a good day, a national airline is an embassy with wings-transporting culture, cuisines, commerce and good will around the world. A flag carrier/national airline that instils a sense of pride when its tail is spotted on the runway of a far-off land; when it brings home the winning team or when it flies out to evacuate citizens stranded in a conflict or disaster zone.

Bad trajectory

Virgin’s ill-fated footsteps were there for all to see by setting up a new airline in Africa in conjunction with the Nigerian government. The details of the doomed attempts to crack the Nigerian market in the 2000s are better imagined.

Shortly before taking his investment out of the country in August 2012 he said, “We fought daily battle against government agents who wanted to daily make fortune from us, politicians who saw the government 49% as a meal to seek for all kinds of favour…watchdogs (regulatory body) that didn’t know what to do and persistently asking for bribes at any point…Nigeria people are generally nice but the politicians are very insane…that may be irony because the people make up the politicians,” he said.

The experience with liquidated Nigeria Airways has equally led to pessimism of the project succeeding. The Federal Government considers setting up a national airline as a matter of priority. It was one of the campaign promises of President Muhammadu Buhari.

Pessimism equally arises from the high mortality rate of Nigerian carriers. Going back to almost 40 years, the government airlines including pioneer private carriers such as Kabo, Okada failed.

Third generation airlines such as ADC, Bellview, Chanchangi, Sosoliso and others failed. Fourth generation airlines such as Virgin Nigeria, Arik, among others failed. Given the same Nigeria operating environment, the new national airline should be guided well to ensure that failure of past airlines should not come near the new one.

 

Hostile environment

 

Business and the government are permanently at variance. Cost is permanently higher than income. Tax overburden and infrastructure deficit erodes revenue steadily. Gazetted business policies that will enhance performance are not implemented. Credit is not in the Nigerian business dictionary. Yet, aviation is prone to the minutest situation in the economy ranging from weather to politics, reckless holidays and more.

The Minister of Transportation, Mr. Rotimi Amaechi and Minister of State for Aviation, Hadi Sirika, hit the ground running to deliver what they believe would be a world class airline and help the country take a slice of 80 per cent of the Nigerian market that has been taken over by foreign airlines who see the country as fertile ground to expand their operations.

Aero, Arik’s fate

As the country wait anxiously for a new airline on December 19, 2018, observers want quick questions to what becomes of the faith of Nigerian carriers whose multi billion naira business could be in jeopardy. They equally sought to know why Nigeria is taking a stake of just five per cent in an airline the government is committing $308 million while Air France/KLM paid $286million for 31 per cent stake in Virgin Atlantic.

Currently, Nigeria has three national airlines; Nigeria Air, Arik and Aero. No national except may be for China runs three airlines. Nigeria is a big market in terms of population but having three airlines run side by side each order would be counter-productive. The government seems to be at a dilemma on what to do with them especially Arik, which has become a huge waste for the Assets Management Corporation of Nigeria (AMCON).

 

The liability of Arik seems to be more than its asset. Keeping the airline is tantamount to the government pouring water into a basket. Government could be forced to sell the airline if it wins its case against the original owner; Sir Arumemi Johnson-Ikhide who sued the government through AMCON over the latter’s take-over of his airline due to N500billion debts allegedly owed by the airline.

Experts’ perspective

Pioneer and immediate past MD, Asset Management Corporation, (AMCON), Mr Mustapha Chike- Obi, expressed surprise at the birth of the new national career.He tweeted: @Am baffled. Air France/KLM paid $286million for 31% of Virgin Atlantic last year, but we (Nigeria) are paying $300million for 5% of a start-up airline. Would really appreciate a rational explanation.”

But Chairman of Air Peace, Mr. Allen Onyema, said his airline was not afraid of the national carrier but pleaded that it must not be used to frustrate existing carriers.

Speaking last weekend at a seminar in Lagos, Onyema said a level playing ground must be provided for all operators and the existing carriers should enjoy same privilege like the national carrier.

Chairman, African Business Aircraft Association (AFBAA), Nick Fadugba, lamented that Nigeria was not taking advantage of its huge market, adding that foreign carriers were the beneficiaries.

He noted that there are uncertainties over the new national carrier because of the modality adopted in the project.

Sirika’s assurance

Sirika equally disclosed that Nigeria will receive the first set of five airplanes for the airliner on December 19, 2018, just as he noted that the carrier will make profit in three years after operations.

“We will make the investments and follow the business plan through private sector management,” he said.

“We intend to get a 30 aircraft market in five years. But we will begin with five aircraft on the day of launch. It was not clear whether an order had been made for the aircraft, but the minister in May met a team from Boeing in Abuja.

But Sirika explained the business plan gave assurance that Nigeria Air would not kill the domestic airlines operating in the country.

He stated that the Nigerian government was not fully funding the airline, as it has adopted midwifing it via the option of a public private partnership (PPP), to deliver a national carrier that would stand the test of time and be world class in operation and management.

Last line

As government continue to tighten her belt, they have to remember there are some other things they simply have to protect – education, national security and infrastructure, among others, are fundamental. An airline to call your own is also useful to get your citizens around the world and bring in visitors and marvel at their achievements.

 

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