Unending flak as Nigeria Air revs for take-off
After six years of spadework, the promise by the Federal Government to deliver a national carrier- Nigeria Air, is inching towards reality. As the promoters consolidate arrangements with its core investor and technical partner-Ethiopian Airlines to see the aircraft airborne, discontent is rising against the project following unending flaks from local carriers and other industry stakeholders, reports Kelvin Osa- Okunbor
The conversation to deliver a national carrier for Africa’s most populous country, Nigeria, is gathering momentum in the global air transport industry.
Described as a big market by watchers in the global air travel space, the inability of Nigeria to deliver strong carriers to transverse both the domestic, regional and intercontinental airspace, has remained a subject of intense debate among industry players, watchers and stakeholders.
The desire to have a strong carrier for Nigeria has even become louder following the liquidation of the erstwhile national airline – Nigeria Airways Limited in 2004.
Moves by the Federal Government to deliver strong carriers that would fly its flag across the globe to reciprocate its many bilateral air services agreements with other sovereign entities also failed to yield the expected outcomes.
The government had sealed a deal with Virgin Atlantic Airways to birth Virgin Nigeria, Airways, but it failed after unfulfilled promises to the promoter of the British brand Sir Richard Branson.
There were many unsuccessful attempts before the toxic Virgin Atlantic Airways deal.
President Muhammadu Buhari during his campaign to Nigerians in 2015 promised to set up a national carrier to replace the rested Nigeria Airways Limited.
Latching on the promise, the aviation industry was excited seven years ago when the Federal Government began the process that culminates in floating a national carrier expected to redeem the image of the country in the global arena.
Timeline for Nigeria Air
The national carrier idea mooted in 2016 according to the Minister of Aviation, Hadi Sirika is one of the programmes designed under the aviation development masterplan of the government. The national carrier, Sirika at the time said would operate 30 aircraft within three to four years and provide direct and indirect jobs for thousands of Nigerians.
On July, 18 2018, the airline’s name and logo was announced at the Farnborough Air Show, in the United Kingdom.
Initially, operations were due to commence in December 2018. But, two months later, in September 2018, the Federal Government announced the suspension of the Nigeria Air project.
According to Sirika, the national carrier was billed to be a wholly private sector airline with the federal government having only a five percent stake.
46 percent stake in the project was meant for Nigerian entrepreneurs while the remaining 49 percent would be reserved for strategic equity partners including foreign investors.
In November 2021, Sirika announced that Nigeria Air would launch in April 2022 after the Federal Executive Council (FEC) gave its approval. However, the date was subsequently pushed back following the emergence of the Omicron variant of COVID-19.
In September 23, 2022, Ethiopian Airlines emerged as the preferred bidder of Nigeria Air, following a successful bid.
The Minister also disclosed that Ethiopian Airline was the only airline that met the bidding close date and other evaluation criteria.
The airline, Sirika said, will be starting with an initial investment of about $350 million from all investors based on their equity participation.
“The Request for Proposal (RFP) under the Public Private Partnership Act, governed by Infrastructure Concession Regulatory Commission is completed. After a careful, detailed and ICRC governed selection process, Ethiopian Airlines (ET) Consortium has been selected as preferred bidder, offering an owner consortium of three Nigerian investors: MRS, SAHCO and the Nigeria Sovereign Investment Authority
“The Business Case will be approved by Federal Executive Council and the PPP process should be completed by mid-November 2022.
“The contract has been finalised with Ethiopian Airlines for three Boeing 737-800 with a 16 Business Class and 150 Economy Class configuration. We will work directly with ET to provide three Boeing 737 aircraft initial crew and engineers.”
Following the denial of the Nigeria Sovereign Investment Authority’s involvement in the project, the Ministry of Aviation in less than 24 hours admitted its error in listing the organisation as part of the airline.
Read Also: Nigeria Air: A controversial start
Such early slip by promoters of the project, seem to have cast huge doubts on the transparency and credibility of the venture.
Circumstances surrounding take-off
Experts and stakeholders in the sector are, however, asking questions why the Ministry of Aviation appears to be in a hurry to package the national carrier project.
They are worried that a lot is going on underground about the project without sufficient information from the industry regulator, the supervising Ministry of Aviation and scanty details about the contributions of the core investor/technical partner.
Only recently, President Muhammadu Buhari mandated Sirika to accelerate efforts to actualise the take- off of Nigeria Air, before the end of 2022.
Industry watchers are worried that the administration seems to be racing against time to put together a project it nurtured over six years ago.
Reports indicate that Ethiopian Airlines may not be committing any cash into the venture besides the aircraft, it will provide with crew.
Local operators’ perspective
As preparations rev for the airline’s take-off, scheduled for December, there is apprehension among indigenous carriers, which are not comfortable with the emergence of the project.
Speaking under the aegis of their umbrella body – Airline Operators of Nigeria (AON), they expressed concerns over the partnership between the Federal Government and Ethiopian Airlines.
They said the agreement was tantamount to opening the nation’s domestic market to a foreign carrier; a development they said could ‘decimate” the local airline industry and lead to capital flight.
Ethiopian Airlines currently operates international flights from its headquarters in Addis Ababa, in the Horn of Africa into Lagos, Abuja, Kano, Port Harcourt, Enugu and Kaduna Airports.
The spokesperson for AON and Chairman of United Airlines Nigeria, Prof Obiora Okonkwo said the project does not bode well for the country.
He said, “We have not seen anything Nigerian in this Nigeria Air. It is a camouflage of interest. The decision to set up a national carrier in partnership with Ethiopian Airlines is a policy somersault. The people in government have continued to demonise the local operators. Aviation companies have collapsed in other parts of the world, not only in Nigeria. What the aviation sector needs is support. The private sector will collapse with this national carrier arrangement. Nigeria will be losing much. It must not be allowed to be sustained. There is nothing Nigeria in this Nigerian Air.”
Other experts also described the shareholding structure as absurd, alleging that it could plunge the aviation industry into further chaos.
The Managing Director of Top Brass Aviation and former Managing Director of the Nigerian Airspace Management Agency, Roland Iyayi, said the proposed national airline would help Ethiopian Airlines to achieve its domination of the African market.
He said Ethiopian national carriers had formed similar agreements in eight other African countries.
He said: “This approach will decimate the local market. Agreement with Ethiopian Airlines will create cabotage. Ethiopian Airlines will come into our domestic market, lower fares, non-competitive fares with the aim of taking over the market. The choice of Ethiopian Airlines will destroy our industry. We reject this totally.”
Iyayi, who is also a pilot, further said, “In anticipation of the Single African Air Transport Market, Ethiopian Airlines want to dominate the African market. The government is meant to support local carriers. Ethiopian Airlines has partnerships in eight other countries in Africa.
“ET currently has 135 planes. The Chief Executive Officer of the airline has said its plan to increase their fleet to 250 planes in the next five years. The intent is to go into the domestic market of all the African countries where they have footprints. This is simply aviation colonialism. If we take all of this onboard, you will wonder whether the government has the interest of Nigerian airlines at heart or not.”
Other concerns about the project
Also speaking, President, Aircraft Owners and Pilots Association of Nigeria, Mr Alex Nwuba, said with Ethiopian Airlines having 49 per cent stake in the proposed national carrier, it would be difficult for Nigerian Air to fly intercontinental routes.
Nwuba, a former managing director of Associated Airlines and a pilot said: “We do not think this is the best thing happening. It is not genuine. We reject it. Nigeria Air will not suffer any fate different from what befell the defunct Virgin Nigeria that could not go to the United States. This is clear in the Bilateral Air Services Agreement regulations.”
The aviation expert also queried why MRS and SAHCOL, listed as private investors in the proposed national carrier, had yet to inform their shareholders via the capital market their decision to invest in Nigeria Air.
“MRS and SAHCOL have yet to put up statements at the capital market to inform shareholders that they will be putting some money in the national airline. This is unethical,” he added.
An aviation expert and aeronautical engineer, Babatunde Adeniji, also faulted the shareholding structure of the carrier, saying, “I don’t share the sentiment; the arrangement is such that you are using government funds to bring a competitor that will distort the market. We need to create a level-playing field. How can we make the industry sustainable? There is a need for transparency in the whole process of setting up a national carrier.”
According to the Chief Executive Officer, West Link Airlines, Capt. Ibrahim Mshelia, Nigeria has the capacity to establish its own national carrier without a foreign airline.
He said, “This proposed national carrier should be stopped. The entity called national carrier is just a game to get what is touted as a national carrier owned by individuals. We have the capacity to establish our airlines. We should not allow ET to do it. Let an Ethiopian investor do it. The deal should be cancelled. It is an insult to our sensibility. We can develop our aviation sector. Some people just want to form a private carrier under the name of a national carrier.
“But we are refusing to accept that what we are doing in Nigeria is wrong and others will continue to take advantage of us and our market.
“Ethiopian airlines should be cancelled, they cannot be and shouldn’t be a strategic investor, it is an embarrassment for us as a nation with such potential and we have the ability to be able to fund our airline properly the way Ethiopian is doing and we will be able to do things right and then we allow an African country that are doing the things right and rather than us do the things right and fix it, we are now allowing them to come and show us, what will they show us? We should not accept that Ethiopians should do it.
“If they want to do it, let an individual Ethiopian businessman or somebody put in money no problem but not Ethiopian airlines.”
Clamour for transparency about the project
On his part, Head, Research, Zenith Travels, Olumide Ohunayo, wondered why the government is yet to be transparent about the deal.
“There are vested interests in what is being touted as a national carrier. We should not skew it in favour of some interests. If we must have the national carrier at all, then we should do it in a manner that will be a level-playing field.”
Also, the Chief Executive Officer, Sabre Network, an airline global distribution network, Gabriel Olowo, said the government should simply remove ‘national’ and call its deal with Ethiopian Airlines a flag carrier.
Also speaking, a former Military Commandant of the Murtala Muhammed International Airport, Group Capt John Ojikutu (retd), said, “We have tried in the past to have national carriers but failed. We should simply reduce multiple designations to foreign airlines and create more markets for domestic airlines. We need just two flag carriers.”
Awaiting demonstration flights
An aide to the Ministry of Aviation, Mr James Odaudu, said that the government was on course to set up the carrier, adding that one of the three leased planes would arrive in the country for demonstration flights in a couple of weeks.
Unanswered questions by stakeholders
But, there are many questions seeking answers concerning the project. Firing salvos, the House of Representatives Committee on Aviation headed by Hon. Nnolim Nnaji has asked the Ministry of Aviation to furnish it with the actual financial value of the 49 percent equity being ceded to the Ethiopian Airline in the proposed Nigeria Air Limited.
The Committee made the demand at a meeting with Sirika and the representatives of AON.
Nnaji had equally stressed that the essence of the interaction was to ensure that Nigerians were not shortchanged.
The committee equally urged the Minister to ensure that the members of the Airline Operators of Nigeria that were willing to acquire shares in the national carrier were accommodated.
“You must also ensure that the Nigeria Air when established will not have undue advantage over the local airlines” the committee stressed urging the Nigeria Civil Aviation Authority, (NCAA) to ensure a level playing ground for both the national carrier and the other indigenous airlines.
Experience in other countries
Over the years, Ethiopian Airlines has made strategic investments in ASKY Airlines, Ethiopian Mozambique Airlines, Malawi Airlines and Tchadia Airlines, fueling speculations that the carrier wants to build a network of feeder airlines covering as much of Africa as possible.
The airline is using the investment in other carriers as a strategy to provide the hub and spoke connection to the rest of the world.
A regulator’s point of view
Speaking in an interview, former Acting Director General of Nigerian Civil Aviation Authority (NCAA), Engineer Benedict Adeyileka said as much as the idea of a national carrier is welcome, the government should step up support for indigenous carriers.
He said: “In Nigeria, we do not like ourselves. We always want foreigners in everything we do. We should be able to source the expertise for this national carrier from within.”
Yet to be resolved issues
Raising some posers, an industry expert who asked not to be named said “The Nigeria Air project looks convincing, but the framework of implementation appears questionable. It will be unpatriotic to allow Ethiopian Airlines own major stake and control in a Nigerian carrier. What are they the airline contributing?
“Is this the best Nigeria can offer compared to how similar models failed in the past? How much is Ethiopian Airlines putting on the table as Foreign Direct Investment to get 49 percent?”