Market News

By Olasunkanmi Akinlotan

Following the unsuccessful attempts to establish a national airline after the defunct Nigerian Airways, the government has stepped up efforts to create a new national carrier. Aviation industry experts have proposed various strategies to turn this vision into reality, OLASUNKANMI AKINLOTAN writes

Nigerians recall how the government’s bid to launch Nigeria Air in the final days of former President Muhammadu Buhari’s administration ended in disappointment. Having been without a national carrier for over two decades after Nigeria Airways stopped operating in 2003 and was liquidated in 2004. The government decided to liquidate the airline due to its declining performance and debts.

After several promises to give Nigerians a national carrier, former Nigerian Aviation Minister Hadi Sirika officially unveiled Nigeria Air in Abuja on May 27, 2023, just 48 hours before the end of his tenure.

The minister had previously disclosed that Nigeria Air would begin operation before the swearing-in of a new administration on May 29, 2023. However, the airline did not start operations in April 2022 as planned.

After the unveiling of Nigeria Air on May 27, 2023, reports emerged that the minister had chartered an Ethiopian Airlines aircraft for the launch.

In response to the allegation, the minister, in an interview on AriseTV, noted that the agreement was for “the takeoff of the airline three aircraft in the name of Nigeria Air will commence the operations once the AOC is ready” but that an aircraft had to come in as part of their marketing strategy, which he said was the wishes of the owners of the airline.

He confirmed that the aircraft was internationally registered and that they could not have kept an airline on the ground when it was not ready to take off.

He added, “Ethiopian people are masters of the game,” suggesting they purposely did not keep an aircraft air until they started operations.

In July this year, Serika’s successor, Festus Keyamo, disclosed that the Nigeria Air project remained suspended.

The minister spoke through his Special Assistant, Tunde Moshood, while reacting to Ethiopian Airlines’ latest comment on the matter.

“They can say whatever they like, but as far as we are concerned, the project is under suspension and the honourable minister is awaiting Mr President’s verdict on it. They can say what they like, but our current position on the matter is what I just said to you,” Moshood said while reacting to the Ethiopian national carrier’s comment on the matter.

The Ethiopian Airlines Group Chief Executive Officer, Mesfin Tasew, had told a news outlet, the Ethiopian Tribune, that the Nigerian government was no longer interested in the project.

“The Nigerian government has lost interest in partnering with a foreign airline,” Tasew said.

The announcement by Ethiopian Airlines came barely two months after the Federal Government reaffirmed the indefinite suspension of the controversial Nigeria Air project.

Keyamo had previously criticised the deal with Ethiopian Airlines as unfair to Nigerian airlines, stating it would be irresponsible for the Federal Government to allow a foreign entity to monopolise Nigeria’s aviation industry, thereby compromising the growth of local businesses.

The national carrier, which was first unveiled at the Farnborough International Airshow in London in 2018, was officially unveiled and expected to operate under a shared ownership arrangement between the Federal Government, shareholders and a partnering airline, Ethiopian Airlines.

The plan was for the Ethiopian airline to manage its operations under a management contract, aiming to connect the local Nigerian market with international markets and destinations.

Displeased by the formation of the carrier, the Airline Operators of Nigeria dragged the Nigerian government to court. The AON said it engaged in a legal battle with the government not because it was bitter or fears competition but rather because it wanted all business dealings by the government and private initiatives on the national carrier project to show fairness, equity, and transparency.

In 2022, a Federal High Court in Lagos issued an order of interim injunction restraining the Nigerian government from establishing its proposed national carrier.

The temporary injunction was given in a suit marked FHC/L/CS/2159/2022 and filed by registered trustees of the AON, Azman Air Services Limited, Air Peace Limited, Max Air Limited, United Nigeria Airline Company Limited, and Top Brass Aviation Limited, as the plaintiffs.

In August, the Federal High Court in Lagos agreed with AON and halted the sale of Nigeria Air to Ethiopian Airlines. The court declared null and void the sale of the shares of Nigeria Air to Ethiopian Airlines after determining the issues in the suit.

Justice Ambrose Lewis-Allagoa ordered that the Federal Government’s plans to establish a national carrier, Nigeria Air, should be halted.

After large-scale irregularities were discovered in the whole process, the Federal Government had earlier stopped the process.

However, in a new twist, the Asset Management and Corporation of Nigeria has mooted the idea for Arik and Aero Contractors airlines, which are under its management, to be merged and converted into a national carrier.

An official of AMCON, who spoke on the condition of anonymity, claimed the merger of Arik and Aero Contractors was one of the simplest ways of bringing the national carrier dream to reality.

The source revealed that AMCON was selling the merger idea to the Federal Government afresh.

These experts believed that merging the airlines for the purpose of the national carrier would not only put the issues of the humongous debts behind; it would also help the Federal Government’s quick start of the airline as it would save the government the financial commitment of purchasing new aircraft.

“The former management of AMCON presented the idea of converting Arik and Aero to a national carrier. But the former aviation minister did not buy the idea. We will present it again because that is the best option.

“Unfortunately, the special purpose vehicle that was created by the former management of AMCON for the conversion of Arik and Aero to a national carrier had been sold. But we can create another SPV for this,” a senior official of AMCON explained.

However, some others believed that a flag carrier was best for the country and not a national carrier, noting that private investors were critical in the arrangement.

At one point Nigeria had a flourishing national carrier in its history. The now-defunct Nigeria Airways was established in August 1958, after the dissolution of the West African Airways Corporation.

It finally ceased operations in 2003 owing to military incursion, mismanagement, corruption and bad debts and was liquidated in 2004.

In its heydays, Nigeria Airways had over 30 aircraft. Nigeria Airways was later succeeded by Virgin Nigeria, and the ground facilities were taken over by Arik Air.

Despite the obstacles it faced, the legacy of Nigeria Airways stood as a beacon of hope, symbolising the country’s aspirations for a robust and prosperous national carrier.

Despite the cost, one would wonder why a country like Nigeria, with its dwindling resources, needs a national carrier.

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However, there are compelling reasons to consider. First, a national airline catalyses economic growth and development. Its presence can play a crucial role in facilitating trade and business connections, attracting foreign investments, and encouraging the growth of ancillary sectors such as hospitality, transportation, and tourism services.

The existence of a national carrier in any country is often necessitated by the need to reciprocate air traffic in a situation where there are no capable local carriers and the need to represent the country in other countries and create employment opportunities.

Moreover, the establishment of a national carrier allows countries to retain revenue that would otherwise be lost to foreign operations.

Nigeria, for instance, loses about $2.3bn on annual capital flights to foreign airlines, according to Ventures Africa. By owning a national carrier, a significant portion of this revenue that was previously lost would be retained within the country.

Also, a national carrier helps facilitate the repatriation of citizens during crises, ensuring their safe return home. During times of conflict or civil unrest, when commercial flights may be disrupted or unavailable, a national carrier can step in to provide evacuation services and bring citizens back to their home country.

For example, when Nigerian students were trapped in the Russian-Ukraine war and war-torn Sudan, a national carrier could have helped expedite the repatriation process. So, instead of relying solely on the goodwill of private airlines like Air Peace, which may encounter delays and logistical hurdles, a national carrier could have facilitated a more efficient and coordinated rescue operation.

Additionally, a national carrier bestows on the country a sense of national pride. It is a tangible representation of the nation’s accomplishments and its ability to compete in international space.

As Nigeria continues to push for a national carrier, watchers are eagerly anticipating the swift realisation of the dream.

The President of the Association of Foreign Airlines and Representatives in Nigeria, Dr Kingsley Nwokoma, stated that the country needed a flag carrier and not a national carrier.

Nwokoma said the involvement of stakeholders cannot be undermined, insisting that the government did not need to border itself with the financing of the airline.

He said, “No, flag carriers will be appropriate like practised in other climes. AMCON is funding these indebted airlines, pumping more money. AMCON should divest and sell them off.

“This is why a flag carrier like KLM, Lufthansa and British Airways’ burden is not on the government but on investors.

“A flag carrier will carry the name of the country, enjoy preferential treatment and country BASA arrangements. Private investors are critical here.”

Another industry expert, Olumide Ohunayo, said venturing into a national carrier was dependent on the country’s vision for the aviation industry but submitted that it was time to lift the two most indebted airlines from the control of AMCON.

He said, “It depends on what the government feels. If it is happy to have a national carrier now, then we are happy to have more aircraft, but I feel that it is time to take the most indebted airline away from AMCON. Maybe the Ministry of Aviation to take over because they cannot have the desired achievement under the control of AMCON.”

When contacted, another industry expert, Sheri Kyari, stated that for a national carrier to be successful in the country, the government must possess a high level of courage and selflessness from its officials.

He also noted that airline operators must also agree that “they don’t have what it takes to be in the international arena because of limited capital”.

He further said, “For Nigeria to have and run a successful national carrier will require courage and the political will from the government to force it to be; selflessness from government officials, because personal interest has always been an issue in all attempts to start the national carrier.

“For Nigerians to understand and stop continuous ethnic promotion and trying to appropriate the business of aviation to one tribe has and will be counterproductive.”

He further stated, “Nigerians must come together to wrestle with global aviation and have their space without too much politics but straight airline business.

“After all the above, the government can have a framework for the establishment of a national carrier with substantive shareholding by Nigerians. However, for the first ten years, there could be foreign technical partners, especially at the management level.”