Proposed new national carrier and economic development

Given the level of investment by private airline operators and their level of readiness in times of national emergency, is there a need for a national carrier? Sola Adekola asks.

NIGERIA Airways, Nigeria’s former national carrier once upon a time was the pride of not only Nigeria but that of Africa as it flew the flag of the country across the globe.

The presence of the defunct national carrier brought succour to the Nigerian traveling public in view of the available choice its existence created which put the foreign airlines operating into the country under checks and balances vis a vis the fares they charged and the manner they treated the Nigerians who preferred to patronize them at the time.In this piece, SHOLA ADEKOLA x-rayed the intrigues that played out before and after the controversial liquidation of the defunct carrier, the unending attempts to float another airline and the ongoing call by key players on government to jettison the idea for the empowerment of domestic airlines to become viable flag carriers….

 

FG moots for new national carrier:

Following the negative effects the controversial liquidation brought upon the sector including the sudden absence of the national carrier which then served as a role model to other domestic airlines using the strategies of the then national carrier to measure their operational standards, the unlimited power and the subsequent opportunities granted the foreign airlines to take over the international operations between Nigeria and their home countries down to the exploitation of the Nigerian traveling public through unequal fares, there came the call on the government to float another national carrier an idea not taken by all.

The negative impacts created by the liquidation of the defunct national carrier gave rise to the yearnings of many Nigerians for another national carrier that will reduce the shenanigans of the foreign airlines but with a clause that the federal government should not own majority shares in the new airline.

First to moot this idea was the administration of Former President Goodluck Jonathan through the then minister of aviation, Stella Oduah. All efforts to float a new national carrier unfortunately did not materialize until the administration expired.

Then came the present government of President Muhammadu Buhari who from inception declared its intention to midwife a new carrier in place of the defunct Nigeria Airways to Nigerians which engendered mixed reactions with some in support while majority argued that government had no business being in business  hinging their position on the unpalatable experience recorded through the defunct Nigeria Airways and the obvious facts that governments around the world are no longer towing the line of floating national carriers.

Despite the overwhelming opposition towards floating a new national carrier with the public funds, the minister of aviation, Senator Hadi Sirika with the goodwill from the presidency wasted no time in setting up committees to come up with recommendations on the way to go and the modalities to use. The government towards the tail end of its first term went far with the unveiling of a new name and logo for the proposed national airline in London with the December 2018 date for the commencement of operations. The high expectations of Nigerians towards the rebirth of the new carrier was dashed when the minister announced the suspension of the floating of the airline then based on logistics.

However, with the re-election of the Buhari led government and the reappointment of Senator Sirika as the minister of aviation, the suspended plan may soon be given life again as the body language of the government is tilting towards the earlier move to float a new national airline.

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Present mood of key players:

Majority of stakeholders have continued to argue on why government should not even drag the country into the debacle of running another national airline after the demise of Nigeria Airways. To many, Nigeria does not need another National Carrier. Like what operates in advanced countries of the world, what Nigeria needs they said are strong private airlines that are allowed to operate in a friendly operational environment with a level playing field and policies that ensure their survival.

In other words, according to experts, rather than dip hands into the lean national treasury to float another airline, the government should divert such energy into stabilizing the private airlines in existence through making the business environment more attractive and profitable for private investment.

 

Nigeria’s Private Airlines:

Despite the hostile business environments laced with economic hardship and low level of readiness on the part of government to support the domestic airlines, few of them are still managing to meet the yearnings of the traveling public. There are about six schedule airlines operating presently namely: Air Peace, Arik Air, Aero Contractors, Medview, Dana Air, Overland Airways.

At any given opportunity at any available forum, the airlines are ever ready to reel out the myriad of challenges distracting them from performing up to expectations. Such challenges which are mainly traced to government stemmed from the unpopular policies created which are negatively affecting their operations.

Such challenges include: multiple taxations from the government agencies, expensive aviation fuel and its constant shortage, issue of adulterated aviation fuel, unstable forex, lopsided air service agreements, undue advantages given to foreign airlines, failure of government to play international aero politics to some self inflicted problems created by some of the airlines.

 

Is there need for a national carrier?:

As the move by government to continue with the plans to deliver a new national carrier thickens, stakeholders have gathered again to draw the attention of the government to why this idea should be jettisoned premising their position on the fact that the reasons given by government for wanting to foist another national carrier on Nigerians have been punctured with the presence of some airlines that can bridge the lacuna provided by the exit of the former national carrier.

Besides the sour past experience which showed that the subsequent Nigerian governments coupled with the long years of decay in the entire system that contributed to the failure of the defunct Nigeria Airways, many have said that it has become almost obsolete for governments across the world to manage airline business in view of the various challenges grabbing for attention. Little wonder why many countries of this world like United Kingdom, Iceland, America do not have national airlines. Even the few African countries like South Africa, Ethiopia and Egypt still running national airlines are doing so in financial pains as they continue to inject funds into them for survival.

Therefore, to many key players, the federal government though have good intentions but, the huge financial burden on its shoulder makes the whole idea of floating a national carrier unnecessary.

According to the stakeholders, besides the huge finance commitment involved in running such a national enterprise, floating a national carrier at this time will tantamount to wastage when the country can boast of six domestic airlines functioning.

For obvious reasons, it has been argued that the federal government cannot run such a national carrier solely without partnering private individuals as shareholders. Even experts in support of the new national carrier have advised that government should not own more than 10 per cent shares in the carrier while the remaining 90 per cent should be distributed amongst Nigerian private investors and the supposed technical partners.

Since private investors will own the highest percentage of shares in the proposed carrier, the argument is that instead of floating a new carrier where private investors will put in private funds, why can’t government divert the 10 per cent public funds into other pressing issues while it  empowers the domestic airlines owned by still Nigerian private investors.

 

With Air Peace, what next:

The latest debate about whether to float a new national carrier or empower the existing domestic carriers operating has been hinged on the role recently played by Air Peace airline to single handedly evacuate over 1,000 Nigerians caught up in xenophobic attacks in South Africa.

The evacuation of the Nigerians which cost the airline management over N300 million according to the airline Chairman, Mr. Allen Onyema and has been generating positive vibes across the country, has obviously shored up the image of the country globally.

The role of the airline has again sparked the debate on why government should rather not go far in its quest to float a national carrier, but look inward and see how it can support the existing domestic airlines that have displayed the required capability.

The key players have argued that with the role played by the Air Peace,  that the airline with the support of government and positive business environment that Air Peace and some fellow domestic airline can conveniently fly the flag of the country around the globe.

The airline which presently has over thirty new generation aircraft with more to come can compete with the mega carriers of this world to reciprocate the air service agreements Nigeria has with the foreign countries it has been designated to,  if only the government will be willing to play international aero politics on behalf of the indigenous airlines.

 

Our Worries-AON:

In view of the plan for the proposed floating of the new national airline, the domestic airlines have expressed worries about the fate of their businesses when the government becomes both the regulator and the operator vis a vis the imperative and modality of having both national carrier and private airlines cohabit for win-win situation in the same environment.

Among the questions  domestic airlines are asking for include: the parameters to put in place or issues the government needs to address to ensure that both public and private-owned airlines survive; the giant strides of the local operators that are worth recognizing and supporting even as the sector moves forward.

The Chairman of Airline Operators of Nigeria (AON), Captain Nogie Meggison while recently reacting to the suspension of the national airline project, had lamented the lack of transparency and uncleared role of private investors in the entire process saying: “At this time of our national limited resources and struggle to recover from recession, AON would like to state that there are private Nigerian Airline Investors ready to invest and already investing heavily on the sector and only asking for a more friendly operational environment and infrastructure support.

“AON believes government should focus on governing and let the businessmen do the business!! Or, as I always say; “government has no business in business.

 

“Putting the issue into perspective, setting up of National Carrier will cost Nigeria at least $3bn (a single B777 as of today costs about $320m). Is it wise and our priority as a nation to take $3bn from the Nigerian coffers today and put into a venture that will for sure go down the drain within a maximum of 5 years to establish a “National Carrier?

 

“Bearing also in mind that the National Carrier will need an additional cash injection of $500m subsidy per year on average for the next 10 years to keep the airline afloat while about 97% of the 200 million Nigerian masses today are grappling for the basic necessities of life; food, shelter, electricity, water, education and good roads.”

 

While describing the idea of floating a national carrier as an obsolete just for ‘“EGO/PRIDE” idea, the Airline Chief said business and pride don’t go together saying: “ All over Europe South America, USA today, 90% of them have been made private including Lufthansa, British Airways etc. Also, they are all flag carriers which are completely private entities.

 

Conclusion:

While few key players still make case for a national carrier which they argued is like a Commonwealth legacy, many have asked that in the light of the strides of Air Peace through its magnanimity in blazing the trail of coming to the aid of the government at a critical moment coupled with its capacity if it was still justifiable or a wise investment for the government to have another go at a national carrier when all it needs to do is to stabilize the existing ones.

Nevertheless, it has again been suggested that should government continue with the project, that there is the need for a level playing field to be created between the private domestic airlines and the would be national carrier with government playing the role of a ‘father’. Besides creating a level playing field, government is expected to use the coming of a national carrier to tackle the myriad of problems hitherto confronting the domestic airlines such as reducing the over 32 taxes slammed on them by the government agencies, removal of routes preservation for the national carrier as in the days of the defunct Nigeria Airways with the application of the same rules to both the private airlines and the incoming national carrier. In doing this, stakeholders said government would be encouraging private investors like Air Peace to continue to boost airline business.

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