- 5 aircraft ready for takeoff Dec 19
- Operators decry secrecy in deal
An air of excitement mixed with anxiety is currently blowing across the Nigerian aviation airspace following announcements last week that the country would be taking delivery of five new aircraft by December 19, 2018 in readiness for the launch of a new national carrier on December 24, 2018.
The mood followed the many years of the country not having its own airline and the ugly experiences that trailed the defunct Nigerian Airways and Virgin Nigeria.
“I can’t wait to see it happen; I can’t wait to see our nation- al pride return to the sky,” exclaimed Ngozi Oluchukwu, a travel and tour agency operator on hearing that the Federal Government had fixed Decem- ber for the inaugural flight of the national carrier.
Oluchukwu knows the inherent benefits as well as the associated losses that go with having or not having a vibrant national airline for the country.
She had started her ticketing and reservation career as an intern with a travel agency in Lagos Island in 1995 at a time when most Nigerian air travellers to Europe, Latin America and neigbouring African countries fly no other airline than the Nigeria Airways.
“We have lost so much momentarily and in manpower training and development as a country not having a national carrier. I know that following the dearth of Nigeria Airways, the country has never been able to churn out quality pilots, aero- nautical engineers, and cabin crew as it did with Nigeria Airways flying.
“But then, I get more angry seeing foreign airlines taking advantage of this and keep- ing their airfares on the very high side even as they have not stopped abusing Nigeri- an passengers on their flight for no other reason than they won’t find an alternative in an airline that they can call their own. I am optimistic that this ugly scenario will change as from December with the new airline’s birth,” she said.
Indeed, Nigerians have every reason to celebrate the coming of a new national carrier. It will be exactly 15 years this year (December 2018) when Nige- rians last saw or had the pride of flying on a national airline as the country’s erstwhile Presi- dent Olusegun Obasanjo had in 2003 liquidated the previous state-owned carrier, then known as Nigeria Airways Limited. Obasanjo had cited as reasons for the shutdown of the national carrier gross mismanagement, misapplication of funds, corrup- tion by members of staff and its over-staffing, which he said had culminated in the depletion of the airline’s fleet from over 30 which he bequeathed to them in 1979 as a former military Head of State to just one functional aircraft upon his return as civil- ian ruler in 1999.
Nigeria’s civil aviation law demands a minimum of three aircraft for any airline engaged in commercial flight operations in the country.
For the Nigerian Manager of Dana Airlines Limited, Mr Obi Mbanuzuo, the establishment of a national airline holds a greater prospect of boosting the state of infrastructure across the Nige- rian airports, as well as creating the right environment for other local airlines to thrive.
Mbanuzuo told Sunday Sun that most of the regulatory and infrastructure deficit that have plagued the private commercial airline industry and marred their growth would certainly need to be addressed by the government for the state-owned firm to takeoff successfully.
“There are certain things that we lack now in the industry whereby if the national carrier comes, they will lobby to get those things in place or removed for them. But it shouldn’t be removed for the national carrier alone; the local airlines should also benefit from such things. If that is the case, we are happy with the idea of a national carrier,” he said.
Mbanuzuo listed issues like having night landing naviga- tional aids that allows air- ports other than those sited in Lagos and Abuja operate after 6:00p.m for optimal utilisa- tion of aircraft, as well as the abolition of multiple taxation, and the designation of multiple routes to foreign airlines as some of the inevitable chang- es he expects to see in the years ahead with the birth of the national carrier.
On his part, Nigeria’s Min- ister of State for Aviation, Mr Hadi Sirika, who is driving the new national airline project says the country has learnt a lot from the collapse of the former state-carrier, and will be approaching the new airline project differently.
Facts to note about the new national carrier
For instance, Sirika says the proposed new national carrier rather than being 100 per cent owned by the Federal Govern- ment would be a product of a Private Public Partnership (PPP), which implies that equi- ty or shareholding structure will involve both the government and private sector.
“The Federal Government will bring its contribution to kick-start the airline, but the rest of the investment will be equity injection which will happen in tranches,” Sirika said while receiving the ‘Outline Business Case Certificate of Compliance’ for the establish- ment of the national carrier from the Director General, Infrastructure Concession Reg- ulatory Commission (ICRC), Mr Chidi Izuwah, in Abuja, recently.
“The amount of equity the partners would hold would determine the Federal Govern- ment contribution. The national carrier will be entirely private sector controlled. There will be zero government interference,” he disclosed.
The proposed airline will gulp about $308.8million being the funds to be jointly contrib- uted from public and private sector investors.
While about $8.8million of that amount is earmarked as pre-start up cost for the airline, the balance of $300million is projected as the final takeoff cost for the new airline.
The Federal Government will, however, have to spend the pre-start up cost for things like the brand name, the acqui- sition of offices and other logis- tics and auxiliary materials.
“We intend to get a 30 air- craft market in five years. But we will begin with five aircraft on the day of launch.
“Nigeria will receive the first set of the five airplanes for the national airliner on December 19, 2018,” Sirika said.
It was learnt that at the Farn- borough International Public Airshow coming up in July 18, 2018 in London, the Federal Government would unveil the name, logo, colour scheme, the structure and the type of air- planes that will be on the fleet of the national carrier.
And it was also learnt that the airline is expected to start making profit after three years following its launch.
In its first five years, the air- line has the prospect of creating over 2,000 direct and indirect jobs for Nigerians.
The loses of yesterday, the opportunities for tomorrow
Whenever the issue of capital flight is mentioned in Nigeria’s aviation sector, the first thing that comes to mind is the Bi- lateral Air Service Agreements (BASA) signed with about 78 countries and for which the country has found it difficult to reciprocate. This has been so given the absence of a national or flag carrier or even a strong domestic airline to fly the recip- rocal slots allotted to Nigeria.
In 2013, according to a data from the Nigerian Civil Aviation Authority (NCAA), it was estimated that Nigeria lost about N231billion to foreign airlines due to the faulty BASA deals.
In fact, an estimated $1.6bil- lion is being lost yearly on the United Kingdom and United Arab Emirates routes where British Airways, Virgin Atlan- tic, Ethihad, and Emirate Air- lines are enjoying a monopoly.
A CBN policy which then sought to halt the capital flight on the part of the foreign air- lines had generated a lot of con- troversy as the airlines threat- ened to pull out of the country except the government allowed them access to repatriate over $600 million, which was with- held by the CBN. In naira terms it is estimated that the funds repatriated out of Nigeria by foreign airlines could hit N500 billion by the end of 2018.
The way out, according to an economic analyst, Mike Obokhale, has always been for the Federal Government to float a national or flag carrier.
“A thriving national carrier would not just go a long way in cutting down on the capital flight figures, but it would also create hundreds of jobs for Nigerians, especially pilots, aeronautical engineers, cabin crew, travel agents, and other others who offer catering and cleaning services on airlines,” Obokhale told Sunday Sun.
But the planned establish- ment of the national carrier has not been without some dissent- ing voices trailing its announce- ment, notably from investors in Nigeria’s local airline industry.
According to the Chairman of the Airline Operators of Nigeria (AON), Capt. Nogie Meggison, investors in the local airline industry were uncomfortable with the secrecy surrounding the proposed national carrier and would want the government to be more transparent in its dealings with the industry and Nigerians on the project.
Till date, he said that the government has refused to yield to their demand to disclose the technical partners and foreign equity stakeholders in the airline.
With barely six months to the takeoff date of the airline, the government has not come out clearly with the tax incentives it is lining up for the national carrier, he said.
The AON are also querying the rationale for the investment of public funds in the establishment of a govern- ment-owned carrier that tended to negate the global trend of the contemporary time.
“Whilst we are not averse to the government providing a conducive operating busi- ness environment and a level playing field for the establish- ment of a private sector-driven flag carrier, the idea of using tax payers money to float a national carrier in 2018 is not only counter-productive, but inimical to the overall interests of the present corps of private entrepreneurs.
“In the overall scheme of things, a national carrier can only result in a huge distortion to the current market and will be a huge drain-pipe to govern- ment’s treasury. Moreover, this model is no longer practicable worldwide. We urge the Federal Government to provide clarity on the agenda whether it’s for job creation or for profit, as well as steps being taken in the establishment of this national carrier, especially when viewed against the background that this airline will commence opera- tions on December 24, 2018,” Meggison said.
On his part, aviation analyst and member of the Aviation Round Table (ART), Capt. John Ojikutu, wants the national airline floated on the Nigerian Stock Exchange (NSA) for transparency, accountability and enthronement of good corporate governance practices in its management.
“Judging from our past ex- periences, nothing qualifies the government and private opera- tors as the sole operator of the proposed national carrier. The structure for a Nigeria national carrier needs a new experiment that must include credible foreign technical operators and investors, credible Nigerian investors and boardroom guru with financial management experience, as well as the Ni- gerian public all as the share- holders.
“This way, we can avoid the single ownership syndrome in the defunct Nigeria Airways and the range of the Nigerian domestic Airline Operators.
“The defunct Nigeria Airways for all the intent and purposes was more of a gov- ernment carrier than a national carrier as the Nigeria public were never shareholders, there- fore, the airline could not have been a national carrier. Were it to be a national carrier defined sufficiently with the Nigerian public as shareholders, govern- ment would not have unilater- ally liquidated it the way it did in 2002.
“From all the past experienc- es, it is wrong for the Nigeria private operators to assume that the proposed national carrier must only be private sector driven. If we are talking of a national carrier not a private airline, the ownership of the na- tional carrier should be driven by the Nigeria public and not private nor government only. It is a national project that must not be allowed to be hijacked by government officials, politi- cians and businessmen as they did with the Nigerian Airways and Virgin Nigeria. Whoever amongst the private operators and businessmen who want to continue with single ownership of airlines should be allowed
to do so, but must ensure they learn lessons from the expe- riences of the likes of Virgin Nigeria, Nigerian Airways, Arik, etc. They should learn some corporate lessons from foreign technical investors too as the likes of Emirates, Qatar, and Etihad too are products from the defunct Gulf Airlines and some corporate organisa- tions like Lafarge, Dangote, Julius Berger, Nestle, UAC, Nigeria Breweries, Guiness, Flour Mills. All those are public quoted companies
at the Nigeria Stock Exchange not seen to be owned by gov- ernment or private individual, but are doing exceptionally well in the Stock Market who yearly return investment dividends to the public including fed- eral tax and VAT,” Ojikutu posited.