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Nigeria Air: Stakeholders Thumb Down Start-Up Process

Nigeria Air
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Despite the recent acquisition of its Air Transport Licence (ATL) from the Nigerian Civil Aviation Authority (NCAA ) and the conclusion of the bidding process, which brought forward Ethiopian Airlines as a core investor, some stakeholders are still not confident that the national carrier will find its feet in a few months’ time as promised.

This is just as these stakeholders picked holes in delays and transparency of processes that have been deployed since the airline was launched in Farnborough in July, 2018. During the launch, the Minister of Aviation, Senator Hadi Sirika had promised that Nigeria Air would commence operations at the end of the year 2018. Four years down the line, the airline is yet to get all the necessary requirements to commence operations.

The airline, which was originally scheduled to commence operations in December 2018, could not start as planned due to the preparation towards the 2019 general elections, while the outbreak of COVID-19 pandemic in 2020 and its extension to 2021 further scuttled the commencement date.

Even after COVID-19, the story has remained the same. First, it was planned to start in April 2022; when that failed, the option became to bring in the first out of the three wet-leased aircraft for the airline in June and then commence operations in July, 2022. Again that take-off date failed.

However, a major breakthrough was recorded recently, when the airline received the Air Transport Licence ATL from NCAA. Shortly after that, Ethiopian Airlines (ET) Consortium was selected as preferred bidder for the operation of Nigeria Air.

The Hon. Minister of Aviation, Senator Hadi Sirika who announced the emergence of Ethiopian Airlines in a press conference held in Abuja, recently, while updating status of the Nigeria Air and the PPP Bidding Process, said the business arrangement will offer an owner consortium of 3 Nigerian investors MRS, SAHCO and the Nigerian Sovereign Investment Authority (NSIA) (46 percent), FGN owning 5 per cent and ET 49 per cent.

In less than 24 hours and in a dramatic twist, the Aviation Ministry came out to state that it had removed the NSIA from core investors. It, however, noted that there are other “institutional investors” without mentioning their names.

Meanwhile, according to the Minister in his statement, Ethiopian Airline was the only bidder despite the extension of date by an additional one month.

Other bidders allegedly submitted their bids after the close of the bidding process. So, their bids were not accepted. What this means is that ET had it on a platter without any competition.

In their reactions, most aviation stakeholders have described the choice of Ethiopian Air¬lines as the core investor and technical partner in the Ni¬geria Air project as a win for the East African carrier and a huge loss to Nigeria.

Some of the experts among these stakeholders also expressed the fear that, rather than the airline to be a part¬ner with Nigeria as a result of the deal with the Federal Gov¬ernment, Ethiopian Airlines would be competing with the country on its Bilateral Air Service Agreement (BASA) arrangements with other coun¬tries, while capital flight would also increase.

To some of these experts, the rush to convince Nigerians about the commencement of operations of Nigeria Air was just to fulfill one of the election prom¬ises of the President Muham¬madu Buhari-led administration in 2015 and not for the econom¬ic development of Nigeria.

Also, players in the sector said the aircraft wet-lease ar¬rangement with Ethiopian Airlines, maintenance, crew engagement and training of personnel would add more pressure on the demand for foreign exchange, which would further weaken the naira.

Commenting on the development, Group Capt. John Ojikutu (rtd), the Chief Execu-tive Officer (CEO), Centurion Security Limited, said he is not in support of having any of the foreign airlines and a competitor with us on the BASA Routes as our technical partners, adding that foreign airlines’ interest in the partnerships will come before ours.

Ojikutu recalled that similar partnerships with the KLM and the SAA in the early 90s did not benefit Nigeria, advising that the Federal Government should therefore, look for partnerships outside the competitors in the BASA Routes in countries like Canada, Australia, and the others.

However, he cautioned that if we must still look into the US and EU, let it not be among our competitors.

He said, “We must also not forget that these competitors including the Ethiopian airline belong to the various major commercial aviation alliances which our new airline may not be given access into until the World Airline Organisation like IATA find us worthy and that will not come soon”.

“Ethiopian airlines has no good records in Nigeria when it comes to drug trafficking. The records are there with the responsible authorities, especially the NDLEA, except we want to cover up some interests or want to be diplomatic about it. My personal experience with the airlines in the 90s during the time of CP Oyakhilome in the NDLEA and what the media is reporting today on drug trafficking has not changed my mind about the airlines and we must be careful about our choice of the airline.

“The NDLEA should come out boldly with its report on drug trafficking at our major airports and give statistics records of the airlines’ involvement. What criteria have been used for giving ET 5 destinations in this country more than any other airlines? In its days, Nigeria Airways paid a lot of fines to the United Kingdom and United States for lifting passengers carrying drugs into London and New York. I do not know what has happened to us here; why we have not meted out such sanctions on any airline particularly on ET”.

Corroborating Ojikutu, Comrade Abdulrasaq Saidu, Secretary-General of Association of Nigerian Aviation Professionals (ANAP) said ET might be a good airline but that they are no longer deep rooted in Nigeria in terms of operations.

“Ethiopian Airlines is successful but they have removed their operations in Nigeria. What they do is just to come and pick passengers. No ground staff in terms of ticketing etc. In fact, they have very few staff left in Nigeria.

“Government is trying to rush everything because of the election. I have never seen a nation starting her national carrier with three aircraft only”, Comrade Saidu noted.

According to the labour leader, the whole process is being done haphazardly, warning that if care is not taken, the project may end up in failure.

In her view, Sindy Foster, aviation an¬alyst, said that Ethiopian Airlines was a strong carrier on the continent, but doubted its success with Nigeria, especially when the car¬rier is the majority shareholder with 49 percent.

She expressed reservation if the airline would be able to deliver the objectives, which Nigeria set for itself at the outset of the proposal to have a national carrier.

She also doubted if this agreement would lead to the development potential of Nigerian aviation industry, particularly if growing the Ni¬gerian aviation leads to reduc¬tion of traffic and income for Ethiopian Airlines businesses, including its 100 percent owned airline, airport, maintenance, repair and overhaul (MRO) facilities and engineering, among others.

Foster maintained that as the two airlines, Ethiopian Air¬lines and Nigeria Air, would be run on a commercial basis, it puts them in direct competition with each other.

She said, “Countries would claim it is within their rights not to allow designation of a foreign owned and effectively con¬trolled national carrier to op¬erate Nigeria’s BASA routes. The way business is done in Ethiopia and the way business is done in Nigeria may itself lead to cultural clashes”.

“It sounds like Ethiopian Airlines was the only choice for a technical partner and core investor. This decision is more a case of meeting an election pledge than creating a nation¬al airline effectively owned and controlled by Nigerians, and which Nigerians can be proud of.”

Also, Mr. Olumide Ohunayo, the Assistant General Secre¬tary, Aviation Round Table, said the deal with Ethiopian Airline was a setback for Nigeria.

According to him, the wet-leasing of three Boeing 737-800 aircraft from Ethiopia, maintenance of the aircraft fleet and crew certification all indicated negativity for Nigeria.

He also emphasised that though, Ethiopian Airlines had been a successful carrier in Af¬rica, its partner carriers on the continent like Congo Air¬ways, Tchadia Airlines, Zam¬bia Airways and others, except Asky Airline which just upped its fleet of aircraft to about 12, had all failed.

He said: “To me, this is not a good deal because we are back in the blocks again. We are leasing aircraft and crew on wet-lease, not even damp lease. With that we are probably tak¬ing all the revenues away. They will have to look for the scarce forex now to pay those crews”.

“It is a win for Ethiopia as against Nigeria. If you look at all the airlines that Ethiopian Airlines has partnered with on the coast of Africa, you will see that none is successful, aside from Asky Airlines. Today, Asky is operating a direct La¬gos-Johannesburg route. Will this new carrier be competing with Asky on this route?

“For me, I will just have to deal with this until the next government comes in, then we will know what to do with it. This is not the dream nation¬al carrier we were all looking towards.

“What is glaring here is that Ethiopian Airlines is not losing a single amount of money be¬cause we are paying for aircraft they are leasing from them. We are paying for the crew they are bringing in; we are paying for training and maintenance. So, if we call the slack tomorrow, they are not losing anything. They will just carry their bags and go.”

However, Dr. Gabriel Olowo, the President of Aviation Round Table (ART), lauded the government for the part¬nership, describing it as a “good choice for Nigeria Air.”

He declared that it would be to the benefit of Nigeria Air to partner with Ethiopian Airline for simple purposes of Code Share Agreement (CSA) and Blocked Seats Agreements (BSA) outside the airline’s intended direct services.

Olowo insisted that the merits of cooperation and col¬laboration would more than outweigh the competition, pro¬vided the management was on top of its game. He recalled that former Nigeria Airways operated to many countries indirectly through commercial agree¬ments, stressing that this would also boost the interlining and global alliances for the air line, maintaining that this was a necessity in today’s aviation industry.

Olowo stressed that the partnership would also give Nigeria Air the opportunity to deploy the Ethiopian Airlines maintenance facility for use, while manpower training and personnel exchanges would be another benefit for Nigeria.

In terms of funding, the national carrier, being one of the 2015 electioneering promises of President Muhammadu Buhari, has consistently racked up appropriation votes since 2019 to 2022, now summed up to N14.65 billion.

About 40 per cent of the sum (N6.25 billion) has been channeled to working capital, consultancy and transaction advisers’ fees.

However, clarifying issues as it concerns update on expenditure, the Minister said money spent for the launch of Nigeria Air so far was well within the 5% Federal Government stake.

“It is the overall share capital of around 300 Million USD, provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years. No further FGN funding will be provided above the 5% share capital of the next national Carrier of Nigeria, which was provided to launch Nigeria Air,”Sirika said.