Mixed Reaction Trail FG’s Choice of Ethiopian Airlines

Chinedu Eze

Since it became public that the federal government is in talks with Africa’s most profitable carrier, Ethiopian Airlines as its choice of core investor/ technical partner for the planned national carrier, Nigeria Air, industry stakeholders have reacted differently to the report.

Last week, a team from the Ministry of Aviation met with Ethiopian Airlines management in Addis Ababa over its selection as the core investor for the national airline and being the only airline that bided after the Ministry advertised for bidders.

THISDAY learnt that after waiting for some time and no other bidder showed interest, the Ministry of Aviation started talks with Ethiopian Airlines.

From the Ethiopian end, it was learnt that the CEO of Ethiopian Airlines, MesfinTasew confirmed that Ethiopian participated in a bid floated by the Nigerian government inviting airlines interested in partnering with the government in establishing a new national airline.

After evaluating the proposal, the Ministry of Aviation picked Ethiopian as a preferred strategic partner.

“They have sent a letter to us informing us of their decision,” Tasew told local media in Addis Ababa.

In addition to that; THISDAY confirmed that a Nigerian government delegation led by the Minister of Aviation, Mr. HadiSirika went to Addis Ababa and held a meeting with the executive management team of Ethiopian Airlines Group on Monday September 12, 2022.

Although the Ministry of Aviation and Ethiopian Airlines have not signed agreement for the kickoff of the partnership, which the minister who promised to engage the media on the issue stated recently, but talks have been on-going for the birth of the national carrier.

According to Nigerian officials, the proposed national carrier, Nigeria Air, would be driven by the private sector. The Nigerian government would retain 5 per cent stake while Ethiopian will have a 49 per cent stake and 46 per cent of the airline would be owned by Nigerian investors. The Nigerian government anticipates raising 250 million dollars from the private sector.

“We plan to have some stake and work with them to establish a successful national airline,” Tasew was quoted to have said.

Ethiopian Airlines is the largest aviation group in Africa registering a 20-25 per cent annual growth. It is one of the most profitable airlines in the world. In the 2021-2022 budget year the national flag carrier made a net profit of $937 million. The airline generated $5 billion dollars revenue, a whopping 79 per cent growth from the previous year.  The airline marked its 76th anniversary last April.

However, a lot of reactions have followed the announced partnership. While many industry stakeholders applauded the plan, others criticised it, saying that Nigeria should have partnered with a carrier outside Africa. The critics talked about Nigerian pride and how Ethiopian Airlines may not provide the support Nigeria Air would need.

Some critics also said that instead of giving Ethiopian 49 percent stake, there could have been better partnership arrangement that would benefit Nigeria more.

The Minister of Aviation, Senator Sirika is expected to speak on the deal to affirm whether government had decided to continue with Ethiopian Airlines.

Reacting to the planned partnership, the Chief Executive Officer, 7Star Global Hangar Limited, Isaac Balami, was reported to have stressed the importance of the national carrier.

Balami reportedly stated that for aviation to deepen its root in Nigeria and develop further, there was the need to have a national carrier, which would help in developing technical personnel through the training of pilots, engineers, marshallers and others; just as it was during the time of the defunct Nigeria Airways Limited (NAL).

“There is no doubt at all on the importance of having a national carrier. Whether the architecture or the variables are components that have to do with a flag carrier, it doesn’t matter. British Airways today is a national carrier but also a flag carrier. It is majority privately owned. American Airlines is privately owned, Delta and United Airlines in the United States are all privately owned but the issue is that the government over the years have put structures in place to ensure these airlines compete and survive.”

He emphasised that the national carrier was another window to achieving private sector participation in aviation, as well as the development of aircraft maintenance facilities and flight simulators, stressing that having a national carrier is beyond just flying an aircraft, but needs aircraft maintenance and training facilities.

Balami said it was not enough to have aviation colleges in Zaria but having advanced courses and simulators, adding that there should be a hybrid model of private and government participation, which he described as the best bet for the development of the aviation industry, saying that all the variables must be looked into to enable the sector to survive and support other players in the industry.

But industry consultant, Marketing and PR Strategist, Sindy Forster, observed that the national carrier without a change in Nigerian Civil Aviation Authority (NCAA) rules would not be able to attempt to gain optimal benefits from BASA (Bilateral Air Service Agreement) for two years.

“We already have flag carriers who need support with BASA, what support have they been given? What BASA support will existing airlines continue to receive? An airline alone cannot take full advantage of SAATM (Single Air Transport Market), lots will be missing before SAATM can be fully utilised. What ‘competition’ when they are selectively supporting one private foreign airline over the privately owned domestic airlines. This is unfair competition, and market distortion, having three additional aircraft when we may lose more aircraft from unsupported airlines that will not lead to competitive fares. 

“Wet lease does not generate Nigerian employment and there is a risk that the Nigerian MRO may never see the light of day. Ethiopian will most likely want to use their MRO as they have with every other JV they have entered into. They use their engineers, etc. Will they use existing ground handling companies or provide their own?” she queried.

She also observed that so far the “national carrier” has been 100 per cent driven by government officials and contractors paid to do what they are told.

“Why will the government be focused on creating an enabling environment for one airline rather than all? What support will existing airlines receive? How will they compete for BASA routes? Why provide fiscal incentives for a private airline you only own 5 per cent of? They should buy 5 per cent of all for it to be a level playing field,” she added.