National Carrier: Investing In Another White Elephant Project
Players in the Nigerian aviation industry have argued that rather than the Federal Government to dissipate energy in re-establishing a new national carrier for the country, it should create an enabling environment for indigenous carriers and participate in aero politics to help them remain in international routes. OLUSEGUN KOIKI writes.
The carcass of the Nigeria Airways, the defunct national carrier is yet to be buried. Its over 6,000 staff are yet to be fully paid their severance packages 17 years after liquidation, while a quarter of the former workers have passed on without getting their benefits. The former national carrier was a money gulping venture for the Nigerian Government. From the corruption of government appointees, staff and the pronounced lack of accountability, the carrier was destined to fail.
At the peak period, between the 1980s and 1990s, Nigeria Airways had about 30 aircraft in its fleet, but by 1999 when the country returned to democratic governance, the fleet had depleted to just “two aircraft that were managing to fly,” according to former President Olusegun Obasanjo.
But, despite these glaring failures and mismanagement of public funds, the current government, led by President Muhammadu Buhari is still bent on landing a national carrier for the country, a policy, which most aviation stakeholders have consistently kicked against.
Outside the country, former buoyant national carriers are facing multifaceted challenges, which have further clipped their wings and plunged their governments’ national resources into murky waters.
For instance, the former glamorous South African Airways has suspended all its operations as it struggles to raise a bailout of more than 10 billion rands ($591 million).
The airline, which faces allegations of corruption and mismanagement, filed for liquidation and bankruptcy protection in December last year, despite the appointment of the business rescue team that was assigned to manage the company to raise the money needed to implement a rescue plan for the airline.
Another state-owned carrier, Kenya Airways has been in trouble for almost five years in spite of the waivers and several grants granted it by its government.
Its government is presently renationalising the carrier’s operations, which is labouring under a mountain of debt occasioned by corruption. Kenya Airways’ two Boeing 787 aircraft are currently sub-leased to Oman Air.
Besides, the Ethiopian Government is planning to partially privatise its national carrier, Ethiopian Airways. The move is part of a wider effort by Ethiopia’s Prime Minister Abiy Ahmed to reform its economy, which is dominated by the state.
In Nigeria, from 2019 till the 2021 appropriation bills, the Federal Government, has appropriated about N12.6bn as working capital for its impending national carrier, Nigeria Air that was scheduled to take off on December 19, 2018, but was “temporarily suspended” about a month to the planned date.
In the 2021 appropriation bill presently before the National Assembly, the government had earmarked N1 billion as working capital for the airline.
In 2019, the government budgeted N8 billion as working capital despite the suspension of the project as well as another N500m for transaction advisers.
In 2020, N4.6 billion was provided in the budget as working capital.
The Ministry of Aviation, also proposed to pay the sum of N250, 000,000 as “consultancy fee” for the establishment of the national carrier in 2021, while N304 million was appropriated for that purpose in the 2020 budget.
The government had planned to invest N78 billion in critical projects in the industry in 2021, including the floating of Nigeria Air.
But, the plan by the Federal Government to set up a new national carrier for the country has received skepticism among major stakeholders and professionals in the sector who insisted that the plan would kill the existing indigenous carriers.
Those spoken to by our correspondent wondered why the government was bent on implementing the national carrier plan at this time of lean resources, and downtime of the global aviation industry, rather, they advised the government to create the enabling environment for existing operators, develop the industry’s infrastructure and assist the airlines designated on international routes to play aero politics.
Analysts also argued that national carriers were no longer fashionable, while credible investors would be unwilling to invest in the sub-sector.
Alhaji Abdulmunaf Yunusa, the Founder of Azman Airline and President of Airline Operators of Nigeria (AON), while Commenting on the issue said that the government had no business in running of any business.
He noted in all the developed countries, transport business was being run and managed by private companies, noting that any attempt to float a new national carrier by the government would lead to a drain of the government’s resources.
Yunusa noted that the advocates of the national carrier were the same people who craved for privatisation of airports in the country, stressing that if they had failed in managing the nation’s airports, they could not succeed with establishing and operating an airline.
He said: “Government is not supposed to be running a business and competing with its citizens. All over developed countries, the transportation business is being run by private companies such as sea, air, road and even spacecraft. Government airline is an outdated concept and should not be allowed.
“It will drain the scarce government resources. I promise that if the mistake of setting up a national carrier is made by this government, it will definitely be shut down by the next government. Let me give you a real-life scenario, the people that are advocating for this project, are the same people calling on the Federal Government to privatise its airports. If they cannot manage the nation’s airports effectively, why do they think they can successfully manage an airline? Therefore, the contradiction is clear; the government should resist all forms of temptation to set up an airline.”
Besides, Capt. Roland Iyayi, Managing Director, TopBrass Aviation, said that rather for the government to invest its time and resources in establishing a national carrier, such energy should be channeled to airlines like Air Peace and others that are designated on international routes.
According to Iyayi, despite the success of civil aviation in United States, the country had never owned a national carrier, but supports its flag carriers on international routes.
He explained that setting up a national carrier for Nigeria at this time or whenever, would lead to imbalance working environment between such a carrier and the other private airlines, which he said had developed capacities by acquiring wide-body aircraft to boost operations.
He said: “Now, if you say you want to have a national carrier with this situation we are right now, how do you want it to play vis-à-vis the local airlines? You have airlines like Air Peace with about four Boeing B777, Med- View with one, Azman, Max with another wide-body aircraft. If you have these entire local carriers with these capacities for long hauls, why don’t you designate them to these long haul routes, designate them as a flag carrier?
“Air Peace is saying it wants to go to South Africa and currently flies to Dubai for instance, what the government needs to do is to play the aero politics so that these airlines will be able to survive. If you have a national carrier, the only way you justify having a national carrier is that all your bilateral agreements will be part of the assets of the new national carrier because what you are selling is the route.
“But, once you do that, you are disenfranchising the local carriers and it means that all the aircraft they acquired will be useless. What you are doing invariably by that national carrier is that you are already destroying the businesses of the indigenous carriers.”
Iyayi insisted that Nigeria could not run a national carrier successfully, recalling that unnecessary interference led to the close of shop of Nigeria Airways.
He added that efficiency and competency would be relegated to the background with a national carrier.
“To me, it is not a sensible option; it is a waste of government funds. Senator Hadi Sirika, the Minister of Aviation sold the idea to the government that if we have a national carrier, we are going to compete. We cannot compete. I don’t see any foreign bank that is ready to fund the national carrier project” he said.
Also, Engr. Ifeanyi Ogochukwu, aviation analyst, declared that the government needed not to invest any amount of money in the impending national carrier project.
Ogochukwu, who is also a Licensed Air Traffic Safety Electronics Specialist charged that the government should take a cue from global trends, which seem to negate state-owned carriers, adding that most governments had divested their interests in their hitherto national carriers.
He said: “Besides, the current Nigeria national carrier journey has had a lot of missteps already, which begs the fact that the government should learn from experience and global trends in this quest and let the airline industry be private-sector driven. Think of it, the huge amount of money spent so far in pursuing the national carrier, what is the benefit of this to Nigerians?
“Most countries that used to have government-funded carriers have either divested completely or have minority stakes where the carriers still exist. This is to ensure that beyond risk mitigation, other drivers for privatisation are allowing the airline’s executive management makes financial and operational decisions free from political pressure or meddling.”
He advised the government to provide national policy directions, strong foreign economic policy for aviation, particularly Bilateral Aviation Agreement (BASA) administration, address the multiple destinations and codeshare agreements with foreign airlines, develop the political will, and create an enabling environment for aviation businesses to thrive.
Ogochukwu also urged the government to ensure total deregulation of the airline industry, just as it happened in the telecommunication industry about two decades ago, adding that a strong and an independent aviation regulator would also move the entire industry forward
