Hurdles Before Nigeria’s National Carrier

Aviation

Many Nigerians agree that the country needs a national carrier to benefit from the huge international air travel market dominated by foreign airlines, but many criticisms trail the mode of the national airline the federal government plans to establish, writes Chinedu Eze

In the aviation industry, there is nostalgia among the former staff of the defunct Nigeria Airways Limited (NAL). 

Industry analysts said that beyond the fact that the airline provided the platform for manpower development, it also made it possible for Nigeria to benefit economically from the Bilateral Air Services Agreement (BASA) and guided the government’s policies on air transport.

They recalled that NAL competed effectively with other national airlines in many parts of Africa and would have risen to become one of the best airlines on the continent today if it was not bogged down by maladministration and corruption. 

Those who hold this view yearn for the re-enactment of a new national carrier and agree largely with the government that it would be private-sector driven; so that what happened to NAL which set the tone for its liquidation in 2003 would not happen to it.

THISDAY investigations revealed that while many agree that a national carrier is desirable, they question the method in which the current one, Nigeria Air is being established. Those who do not agree that Nigeria should have a national carrier also gave their reasons, which include the fact that Nigeria already has existing airlines, which have been providing flight services for years, since 1988 when the sector was deregulated. They also insist that national carrier is no more in vogue in the world and that explains why many countries privatised their hitherto national airlines like British Airways, Air France, KLM, and Lufthansa. 

They explained that the difference is that while these airlines get good support from their governments, Nigerian airlines seemed to have been denied the needed support to enable them to operate effectively, which includes using diplomatic intentions to insist that Nigerian airlines that have the capacity must be allowed to operate to destinations of airlines that also operate into Nigeria. 

For example, if Nigeria allows US airlines to fly to Nigeria, the US should also allow Nigerian carriers to fly to the US. Such push, they said, should not be left to the airline alone.

Government’s Intention on Nigeria Air 

 Like the previous administrations, the President Muhammadu Buhari administration made it clear from the beginning that it would establish a national carrier. It set it off along with other programmes, which formed the Aviation Road Map. The federal government in September announced that it had taken Ethiopian Airlines as its strategic/ technical partner, which was given 49 per cent equity. The objective was that the airline would anchor the new national carrier and build it up to become a viable entity. 

A few days ago the federal government announced it would start sending out Request for Proposals to investors interested in owning shares in the proposed national carrier. 

It also expressed hope that the airline would be quoted on the stock exchange, adding that Nigerians would be allowed to buy shares in the airline that was being planned to commence operations with three leased aircraft. 

The Minister of Aviation, Hadi Sirka, disclosed this at a briefing recently in Abuja, where he explained that 46 per cent stake in the airline was exclusively for Nigerians, five per cent was for the government, and 49 per cent was for strategic equity partners, which were assumed to be foreign investors. 

Sirika said discussions with prospective investors had been ongoing and that a Request for Proposals would be sent out.

Legal Tussle

But a Federal High Court in Lagos, on Thursday last week, stopped the establishment of the proposed national carrier – Nigeria Air, by the federal government. 

Justice Ambrose Lewis-Allagoa reordered the federal government and domestic airlines to maintain the status quo in their suit relating to the establishment of the airline. 

The judge made the order pending the determination of the suit filed by the Registered Trustees of the Airline Operators of Nigeria and five others in the aviation industry. 

The four other plaintiffs include Azman Air Services Limited, Air Peace Limited, Max Air Limited, United Nigeria Airlines Company Limited and Topbrass Aviation Limited, who were the first to sixth plaintiffs.

Grouse of Domestic Airlines

In seeking the court to stop the full implementation of the new national carrier, Nigeria Air, eight domestic airlines under the aegis, Airline Operators of Nigeria (AON) explained why they had to go to court to stop it.

The CEO of Top Brass Aviation Limited and former Managing Director of the Nigerian Airspace Management Agency (NAMA), Captain Roland Iyayi, who spoke to the media on behalf of the airlines, explained that AON was not averse to having a national carrier but was against the structure, which it insisted was at the detriment of Nigeria’s interest.

“What we have said and what we are saying is that the structure and the design that is being put together currently by the Honourable Minister of Aviation is a bit of an issue which we believe is not going to help the Nigeria state in the long term.  

“He has come out to tell us that this is intended to be a public-private partnership. And indeed if that is the case, we have a situation where we need to query, as a matter of questioning all the issues that have happened to date.  We have found the need to question the transparency of the project because we believe that most of the issues that have been raised or that are coming up are not entirely transparent, so we have issues with that. We have also come to find out going through all the documentation that has been provided that there are undue privileges that are going to be given to this new carrier, which the current domestic operators are not enjoying. 

“For instance, the government is proposing or the Minister is proposing to have a 15- year tax moratorium to the national carrier.  And again let’s be very clear; this is not a national carrier in the context in which it is being presented; this is a flag carrier.  Simply because if you are bringing in a strategic investor at 49 per cent stakes and you have all the institutional investors one of which is 60 per cent owned by a foreign entity, in the long term what you putting together is a foreign airline being allowed to come into the Nigeria airspace to operate, which is at variance with article 7 of the ICAO (International Civil Aviation Organisation) convention which is a cabotage,” he said.

AON in the interview insisted that the structure of the planned national carrier was not in the overall interest of Nigeria, but was being executed to benefit individual interest groups and foreigners instead of Nigeria.

Benefits of National Carrier

Many Nigerians, including those who oppose the process of establishing one, agree that Nigeria needs a national carrier to check the outrageous fares foreign airlines charge Nigerian travellers, to have a favourable balance of agreement in the Bilateral Air Service Agreement, to enhance training in the aviation industry and also to have a well-developed sector in the area of maintenance, aircraft leasing and a more stable premium in aircraft insurance.

They agreed that if Nigeria has a national carrier, the country would have full weight behind it and would be given a pride of place by international aviation organisations like the International Civil Aviation Organisation (ICAO), the International Air Transport Association (IATA), the European Aviation Safety Agency (EASA), the US Federal Aviation Administration (FAA) and others.

What AON and many Nigerians worry about the national carrier being established by the current Buhari administration is the control shareholding given to Ethiopian Airlines, which has controlling shares of 49 per cent, while the Nigerian government has only five per cent and other Nigerians including MRS and Skyway Aviation Handling PLC (SAHCO) have 46 per cent. They express worry about the ownership structure, which seems to have ceded control to a foreign carrier, which is also a competitor in the Nigerian market.

Nigerians who condemned this arrangement insist that it is opaque; that the Minister of Aviation, Senator Hadi Sirika must have carried Nigerians along by making all the facts about the national carrier public.

They want to know who owns the 46 per cent, how much the federal government’s five per cent is worth, and how much Ethiopian Airlines is bringing in terms of funds, whether in equipment or cash.

Ethiopian Airlines

Ethiopian Airlines is rated as one of the best airlines in the world and the pride of Africa. For example, the airline is ranked as one of the top 10 airlines flying to the USA. It remains the most profitable airline in Africa and one of the best top 10 airlines; even rated before Emirates Airlines in the world.

Many industry stakeholders believe that with a fair deal with the airline that does not jeopardise the collective interest of Nigeria, Ethiopian Airlines would help Nigeria begin to benefit from its huge international passenger traffic by providing capacity for the national carrier.