Six months to the December 24 take-off date for the proposed national carrier, an air of uncertainty surrounds the deadline, fueling suspicion that the project is heading for a stormy weather. Industry operators and stakeholders are also raising posers on the framework to be adopted in floating the airline. Aviation Correspondent KELVIN OSA OKUNBOR reports.
The desirability of a new national carrier is not in doubt. Beyond the need to ride on its back to restore Nigeria’s pride in the global aviation industry, there is a consensus that a formidable national airline will earn the country a reasonable chunk of the yearly ticket sales.
The cash raked in by airline operators last year was estimated at N505 billion.
Besides halting capital flight, discerning stakeholders believe that a national carrier remains Nigeria’s ticket to benefiting in the over 75 Bilateral Air Services Agreements (BASAs) to which it is signatory.
Many also believe that it will provide the much-needed opportunity for training pilots, cabin crew and other professionals.
But, much as the benefits justify the need for a new carrier following the liquidation of the Nigeria Airways Limited (NAL) in 2004, the framework for achieving the feat has been controversial for 14 years.
The latest push by the Federal Government to launch have the new carrier on December 24 has heightened the controversy. With only six months to the take-off date, the Federal Government has not unveiled the carrier’s name. Neither has it unfolded other details.
The Nation recalls that President Muhammadu Buhari, upon assumption of office in 2015, raised a panel to work out the modality of establishing a national carrier. The committee has since presented a report on how to achieve the project.
Three years down the line, Minister of State for Aviation Hadi Sirika announced December 24 of this year as the commencement date for the proposed national carrier. The minister recently inaugurated a nine-member committee in Abuja for a smooth-free of the project.
The committee, which came into being a year after the government appointed transaction advisers charged with the task of exploring funding models for the project, has Managing Director of Nigerian Airspace Management Agency (NAMA) Captain Fola Akinkuotu as chairman and the Technical Assistant to the Minister of State for Aviation, Mr. Ben Tukur, as the secretary.
Other panel members include: Nigerian Civil Aviation Authority (NCAA) Director-General Capt. Muhtar Usman; Nigerian College of Aviation Technology Rector Capt. Abdulsalami Mohammed; Accident Investigation Bureau (AIB and Commissioner of) Akin Olateru; National Carrier Transaction Adviser’s representative Capt. Tilmann Gabriel; Transaction Adviser for Maintenance Repair Organisation (MRO) and Aviation Leasing Company) reresentative Layi Are and Infrastructure Concession Regulatory Commission (ICRC) Acting Director-General Chidi Izuwah.
Operators, stakeholders pick holes
Some stakeholders within the aviation sector have kicked against the composition of the committee. In separate chats with The Nation, they faulted the inclusion of heads of aviation agencies in the panel.
The Aviation Round Table (ART), a formidable voice in the industry, has been up in arms, insisting that the involvement of agencies’ chief executive officers (CEOs) of in the planned establishment of a national carrier was against the spirit of transparency, objectivity and fair play.
ART President Gbenga Olowo urged the government to pull the brakes in its handling of the project, describing the inclusion of the NAMA managing director and the NCAA Director-General as a dent in the nine-member committee.
The ART, he said, considered it fundamentally wrong for the government to rely on a committee made up of heads of agencies to midwife the setting up of a national carrier.
Olowo said that rather than get involved, the government should create a level playing field for operators in the system.
He said: “We would encourage not just a minimal involvement of the government in the process, but also her restriction to establishing a level-playing field for the public’s participation as investors.
“If, and when as expected, this process goes ahead towards the finishing line, it would be helpful to consider the employment of reputable head-hunters in the nomination of even the start-up management team.”
Olowo recalled how management challenges wrecked the old national carrier, warning that such challenges could frustrate the new move.
According to him, the government must carefully and transparently work out the involvement of operating local airlines for the project to sail through.
The ART chief urged the government to register the proposed national carrier as a domestic entity.
The Association of Nigerian Aviation Professionals (ANAP) General Secretary, Abdulrasaq Saidu, explained his group’s suspicion for the project.
According to him, ANAP will only be convinced about the viability of the project if convinced with an official explanation on what happened to the proceeds of the sale of NAL.
Saidu said: “They are playing politics. Forming a national carrier is no tea party. You need a technical partner. Are they going to take over Arik?”
Accusing the government of under-valuing NAL and selling it cheap, he said: “We don’t know how much it was sold and you want to float a national carrier. The airline was wrongly liquidated.”
The ANAP scribe warned of the futility of floating a national carrier without settling the workers of the defunct NAL. He lamented that many of the ex-workers had died. He blamed the two aviation committees of the National Assembly for not asking questions on the liquidation of the airline and the fate of its workers.
“I challenge them (Committees of the National Assembly) to come out with the airline and let us see how they will run it. They are chasing shadows without paying Nigeria Airways workers. First, they can’t succeed without telling us how Nigeria Airways was sold,” Saidu fumed.
On why the December take-off date was unrealistic, he said: “Nothing is working in the aviation industry, and the new carrier’s take-off date will not work.”
Saidu got an ally in the FAAN chapter of the National Union of Pensioners (NUP), which dismissed the December delivery date as unrealistic, because there was nothing to show the seriousness to float a national airline.
Why national carrier is desirable
A former Director-General of the NCAA, Dr. Harold Demuren, said that despite the challenges, the establishment of a national carrier was necessary to harness the industry’s potential.
He pointed out that Nigeria would have gone far in the global aviation industry if it had established a national carrier. Demuren urged the government to support the industry, explaining that “all over the world, the government is the biggest supporter of airlines.”
Industry Consultant and Chairman of Aso Savings, Ali Magashi, also said a national carrier was desirable to buoy the aviation sector. Noting that establishing a big airline is capital intensive, he said only the government has the capacity to provide the required capital outlay.
Magashi said: “All top airlines in the world are owned by the government. The reason is simple, aviation is not competitive in terms of returns, but it benefits other sectors of the economy and that is where the government makes its profit.
“The truth is that there is no successful flag carrier in the world. So, it is evident that aviation cannot be grown by the private sector alone. It is essentially a government turf, but the major challenge in Nigeria is political interference, which inhibited the growth of the Nigeria Airways.”
Ownership model as sore point
A major bone of contention between the government and some critical stakeholders is the ownership structure. The Federal Government’s alleged use of public funds to set up a national carrier is said to be tantamount to reneging on its earlier promise that the initiative will be private-sector driven.
Some experts told The Nation that the major stakes in the proposed should be privately owned and that the government should restrict itself only supervisory and regulatory roles.
ART’s Secretary-General Group Capt John Ojikutu (rtd) said that notwithstanding the desirability of a national carrier, the government should not be the sole owner of such airline.
He lamented that past efforts by successive administrations to replace the defunct NAL were never followed through. Ojikutu insisted that there should be no going back in the latest move to float a national carrier.
On the preferred ownership model, Ojikutu said: “Discerning stakeholders in the industry and others within the travelling public would prefer that whatever the nomenclature that would be given to the planned carrier, be it national carrier or flag carrier, the government must not have a controlling ownership.”
The expert, however, said that for convenience of classification, the proposed carrier should be regarded as a national flag carrier, with the mandate to operate outside the Nigerian territory. The carrier, he added, should serve the interest of Nigerians who will constitute its stakeholders and shareholders.
Ojikutu said the government must be desirous of establishing more than one national flag carrier and ensure that such airlines are strong and equipped enough to compete with foreign airlines operating in the six international airports.
He also pointed out that the domestic airlines would and must also not be seen to be competing with the national flag carriers when established, nor should the designated national flag carriers compete with themselves as they would with the foreign airlines on the intercontinental, continental and regional routes.
He said that local airlines and willing members of the public could buy into the planned national flag carrier and be part of the ownership.
Alternatively, the private airlines, he said, could merge and establish one of the two national flag carriers, which must open partnership to other public interests through the capital market.
Ojikutu explained: “The aim should be to develop the two airlines to sufficiently compete on the international routes in so far that no private airlines can individually compete with the foreign airlines the way they are structured and managed.
‘’This is especially as none of them is yet a member of the three international air transport commercial alliances, which most of the international foreign airlines belong to.
Moreover, Ojikutu said allowing three or four privately-owned local airlines to compete with foreign airlines on the international routes would not reflect the seriousness of the government to effectively manage and reciprocate the various BASAs and other commercial agreements or treaties, which are the commonwealth of Nigerians.
For the proposed carrier to work, Ojikutu urged the government to initiate an ant-single ownership and management policy for the airline.
“Government policies must do away with the structure of single ownership management for any of the planned national flag carriers, but could invite credible Nigerian investors, companies, interested Nigerians and the capital market into the planned national flag carriers,” he emphasised.
According to him, doing so remained the only way the industry that can effectively compete with the foreign airlines on the regional, continental and intercontinental routes.
“The two national flag carriers, if eventually established, would share a great portion of the earnings from these markets in the regional, continental and intercontinental routes with the foreign airlines,” Ojikutu said.
Private airlines kick
As lofty as the project appears, indigenous operators are not excited. The Airline Operators of Nigeria (AON) Executive Chairman Capt Nogie Meggison, said the minister needs to be educated on the need not to float the national airline.
He said the umbrella body of domestic carriers is opposed to the national carrier because it is wrong to use government’s money to fund a supposed private sector airline. His words:
Meggison said: “The AON is at a loss as to the relevance and need of a national carrier at this time in the history of the nation.
“While we are not averse to the government providing a conducive operating environment and a level-playing field for the establishment of a private sector-driven flag carrier, the idea of using tax payers’money to float a national carrier in 2018 is not only counter-productive, but inimical to the overall interests of private entrepreneurs.”
The AON chief argued that a national carrier will not only be a huge distortion to the market but be a drain pipe to government’s treasury.
“In this regard therefore, we urge the Federal Government to clarify the agenda, whether it’s for job creation or for profit as well as steps being taken in the establishment of this national carrier,” he said.
Meggison said such clarification was necessary in view of the fact that Sirika, had indicated that the proposed airline will start operations on December 24.
Besides, the model, he said, is no longer practicable worldwide, as 70-80 per cent airlines in Europe are private sector-owned. “Today, 98 per cent airlines are privatised,” he added.
Push to support domestic airlines
Aviating consultant and Chief Executive Officer of Belujane Konzult, Chris Aligbe, said the government must not only ensure that the proposed national carrier works, but also support domestic airlines to grow.
He said: “We need to move ahead with the floating of a national flag carrier and then give assistance to the domestic airlines. We cannot leave them to keep suffering. Let the government ensure that what we are talking about will not go the way it has gone before.”
Air Peace Limited Chairman and Managing Director Allen Onyema said: “We don’t need to kill the domestic airlines to pave the way for a national carrier.”
Urging the government to float a flag carrier and not a national carrier, he said: “All over the world, nobody is talking about national carrier. Everywhere in the world, it is about flag carriers.
“America does not have a national carrier. British Airways is not a national carrier. The idea of a national carrier is moribund and has gone away several decades ago. Yes, Ethiopian Airlines is a national carrier, but all over the world how many national airlines have survived?”
Onyema recalled that Alitalia closed down a few years ago, while South African Airways is calling for private sector involvement.
“If a Nigerian airline succeeds in doing international operations, these national airlines in Africa will cease to exist,” he said.
A national carrier is a fully-owned government airline and a flag carrier is a privately-owned airline representing any country, such as Arik Air, Medview and British Airways.
Too late for government to drop idea
According to Sirika, the government remained committed to the national carrier project. “It will be one of the achievements of the Buhari administration before the end of its first term”, he said, noting that in the next few months, steps would be taken towards the birth of the new national carrier.
The minister said: “I think in the next couple of months, we should be able to have our outline business case of this transaction. And then, the full business case will follow almost immediately, because we are doing it simultaneously and after that we begin the process to establish the airline.
“So, I will say that we are very close to having the national carrier established. Certainly, it will be within the first tenure of this administration.”
The benefits of a national carrier, he noted, are huge.
“When established, the airline will employ as many as 300 pilots at the beginning, with potential to generate 10, 000 direct jobs and 20, 000 indirect jobs in the next five years,” Sirika announced gleefully.
He said that the project will accelerate the development of Lagos and Abuja as operational hubs in West and Central Africa and establish operational benchmarks for other airlines in the industry.
A national airline, the minister added, would cut back on capital flight in the industry, saving an estimated $1.6 billion yearly and also lay a solid foundation for maintenance hangar.
Sirika added that the proposed national carrier would be Nigeria’s voice in the International Air Transport Association (IATA), African Airlines Association (AFRAA) and other global aviation policy organisations.
NCAA gives assurance
Despite the fears and doubts, Capt Usman believes in the viability of the proposed national carrier.
He said if promoters of the project were properly guided to follow through with the regulatory requirements, the process of getting an Air Operators Certificate (AOC) will take only 90 days.
Usman said the government decided to involve aviation agencies in the Presidential Task Force because of its determination to push the project through.
He said: “The presence of the agencies inside the task force is to ensure that the right things are done. Aviation agency heads are not midwifing the national carrier, but they are guiding the process to ensure that it is done in line with the international standards and best practices.
“This time around, the government says we should go and ensure that even before take-off, nothing is short-circuited.”
