Any Future for National Carrier, Nigeria Air?

The excitement over the bid to actualise the plan for the establishment of the Nigerian National carrier appears to be downplayed by the controversy trailing its conception, writes Chinedu Eze

Many Nigerians were surprised when the former Minister of Aviation, Hadi Sirika left office without actualising the establishment of a national carrier, which was one of the major programmes which the Muhammadu Buhari administration vowed it would accomplish in the aviation industry. Even former President Buhari himself reiterated in a media forum that he would establish a national airline, insisting that Nigeria deserved one and recalled nostalgically how Nigeria had Nigeria Airways Limited and a national shipping line. 

So when on May 26, 2023, Ethiopian Airlines registered aircraft, Boeing B737-800 was displayed as Nigeria Air’s first equipment at the Nnamdi Azikiwe International Airport, Abuja and it vanished hours later, many Nigerians described as the greatest scam in the history of the Nigerian aviation industry.

Lack of transparency 

Industry insiders and members of Airline Operators of Nigeria (AON) confirmed that what prompted AON to go to court to stop Nigeria Air was the opaque process and lack of sincerity in the plan to establish the airline. In fact, at different aviation fora where the issue of establishing a national carrier was raised, many who lauded the plan always emphasised on the transparent process.

The Infrastructure Concession Regulatory Commission (ICRC) seemed to have sincerely worked with the then Minister of Aviation towards the establishment of a national carrier, as Sirika continued to assure Nigerians. In October 2020, Sirika, while defending the Ministry of Aviation 2021 budget reiterated that assurance when he said, “This government right from inception in 2015, has been planning and strategising on how to resuscitate a national carrier for Nigeria as far as global air transportation is concerned, the plan going by what is on the ground now, will be actualised next year through the PPP arrangement.”

So, the former minister assured Nigerians then that in 2021 the national carrier project would be established.

A Member of AON and President/CEO of Top Brass Aviation Limited, Captain Roland Iyayi, said in the interview he granted ARISE NEWS Channel that the process for the establishment of the national carrier was not transparent.

“Essentially what we have gone to court to say is that the entire process, the bidding, the selection and whatever it is we have today was not transparent. Again, we went on to say that most of the things that have been alluded to, we actually have proof to indicate that these are things that run counter to the provisions of the ICRC law for the country. And we have asked the court to simply interpret our position and see if indeed we are correct. If we are correct, it means the entire process is wrong. Now, the minister approached the public and said that five per cent of this entity will be held by the Nigerian Sovereign Wealth Fund. They came out within minutes and said they are not part of it. Then again, the minister said 46 per cent will be held by Nigerian institutional investors. So far, we have MRS, SAHCO and the supposed Nigerian institutional investors.

“Meanwhile, SAHCO is a company under the group Sifax. Sifax actually put in a bid for the concession of Murtala Muhammed Airport in Lagos and they never wanted to be part of Nigeria Air. But for whatever reason, it was put as a member of that institutional investor team and they know very little about it. And that is the much we have found out so far. So, invariably, we are asking the question if Sifax is not part of this 46%, and we have not heard from MRS, who exactly is holding those shares? And if they are being held, is it by proxy and for whom? So these are questions we have raised in the document we presented to the court for interpretation. And when we see what was filed by the Ministry, their defence, indeed what they said is that this process is a PPP process. But the Ethiopian Airlines’ defence said no, that they know nothing about a PPP and the 49 per cent they have acquired in this project is absolute,” Iyayi said.

Shareholding

Iyayi and other Nigerians wanted to know how sincere is the shareholding of Nigeria Air. They want to know how Ethiopian Airlines could be given 49 per cent of the shares without committing funds to the project.

Iyayi said, “So, our question is, if 49 per cent is absolute, how much is 49 per cent worth? And then the 46 per cent, is it allocated or paid for by way of subscription and by who? All of these are questions we have asked and they have never been answered by the Minister, not by the Ministry and not by Ethiopian Airlines. All Ethiopian Airlines has said is that this is business, they have put in a bid, they have won, and it is clear that the 46 per cent is absolute. Then we now take cognisance of the fact that between 2016 and 2022, the federal government has budgeted N85.42 billion as appropriation for Nigeria Air. Where has that money gone to? 

“Now if that money represents five per cent, how much has Ethiopian Airlines paid for the 49 per cent it is holding, how much have they put in the coffers of the federal government? How much do we have in the Central Bank today? Now, Qatar Airways took out 49 per cent of Rwanda Air and they paid $1.3 billion. Rwanda does not have the market size Nigeria has. Rwanda does not have the bilateral agreement and multilateral agreement Nigeria has. So, who does the valuation? How do you value our 49 per cent? So, these are questions that have not been answered. And we are asking if indeed this whole process is transparent and it is meant to be for the benefit of the Nigerian people, why the so much desperation, particularly in the last two weeks of the Buhari administration by the honourable minister?”

 Air Operator Certificate (AOC)

For an airline to be qualified to be given an operating licence in Nigeria it must have its own aircraft registered in Nigeria and it must pass through five critical steps that include the pre-application phase, formal application phase, documentation phase, demonstration and inspection phase, and certification phase. In 2016 the process started, and Nigeria Air was still in phase one. Many industry insiders believe that it indicated a lack of seriousness. Maybe, the minister had hoped to arm-twist the Nigeria Civil Aviation Authority (NCAA) to secure certification for the airline. That is why industry stakeholders also said that in contravention of the Nigeria law and also NCAA regulation, Sirika displayed an aircraft supposedly owned by Nigeria Air that was yet to meet any set condition for citification.

AON spokesman who is also the Managing Director/CEO of United Nigeria Airlines, Professor Obiora Okonkwo, said Sirika’s promise to deliver Nigeria Air by May 29, 2023 was a contemptuous action and invitation to anarchy.

“Nigeria’s aircraft registration number is 5N and before you express the readiness to operate an airline you must have at least three aircraft registered in Nigeria, which you could buy or dry lease, but I can assure you that the document of the aircraft the minister brought in is not with NCAA,” AON spokesman said.

He said that if the minister had succeeded in having an airline without going through the required process, the International Civil Aviation Organisation (ICAO) would have blacklisted Nigerian airlines because such would cast aspersion on the credibility of Nigeria’s airline certification, AOC.

The AON spokesman also said that the people behind this airline were eyeing Nigeria’s grandfather Bilateral Air Service Agreement (BASA) rights, which is put at about $20 billion, adding that the alleged plan of Ethiopian Airlines is to force Nigerian carriers out of business with predatory prices; that is, selling tickets below profitable margins in order to force existing Nigerian carriers out of the market.

 Future 

 Is there any future for Nigeria Air? Many stakeholders are calling for a forensic audit of the process of Nigeria Air and many regard it as a scam, which the former Minister used to delude Nigerians, as no one is yet to give an account of how much had been spent on the Nigerian carrier programme.

Executive Secretary of Aviation Round Table (ART), a think-tank body in the industry, Group Captain John Ojikutu (rtd), advised that the project should be discarded.

“There should be flag carriers at least two: one regional and continental and the other intercontinental from the existing carriers. National Carrier as being envisaged will end up as government carrier and die like the Nigeria Airways,” he said.

Ojikutu added that no government of any developing country has the financial resources to solely finance an airline, not even the USA the largest economy in the world has a national carrier but flag carriers.

“Please discard what Sirika is doing with the industry at quarter to go,” he said.

Also, the Managing Director of Flight and Logistics Solutions Limited, Amos Akpan, told THISDAY that the new minister should review the entire process from ownership structure to funding arrangement, and management.

“Ethiopian Airlines cannot hold 49 per cent equity in Nigeria’s national carrier. There are Nigerians with the capacity to buy shares in our national carrier. As for management, if they set up an international standard corporate governance system, there are Nigerians that will deliver results. The system will check and vomit unacceptable practices. There are international organisations successfully managed by Nigerians because they have in place a world-class corporate governance system; African Development Bank is an example,” Akpan said.

Judging from the mood of industry stakeholders, it should be a good night for Sirika’s version of a national carrier.