Jereaghogho Efeturi Ukusare
Nigeria is currently in the process of building a new national carrier in the aviation sector. Nigeria has gone down this path in the not too distant past. Nigeria Airways had an awesome performance with about thirty aircrafts in its fleet during the days it was under the management of foreign airlines. The management of the airline was taken over by the Nigerian government and then the number of aircrafts in the airline’s fleet continually reduced and came to just one aircraft in the late nineties, with debts scattered all over the world totaling over $700 million (USD) and eventually the world witnessed the folding up of the airline in 2003.
Today, the Outline Business Case (OBC) Compliant Certificate for the new national carrier indicates that the Nigerian government will not be involved in the management of the airline. It would have been more assuring if the OBC compliant Certificate or something of its nature was issued by the International Civil Aviation Organisation (ICAO) or International Air Transport Association (IATA) or an internationally respected business/ trade organisation, rather than a document from the Nigerian government, a government that continually demonstrates disrespect for its own constitution. That the certificate will be rendered null and void once the government of Nigeria interferes in the management of the airline, does not assure investors of non interference. This only assures investors of no protection for their investment.
Nigerians must not forget that the logo of the new airline which could have been very well designed in Nigeria at a good price was done in the Middle East. Local content procurement executive order by President Muhammadu Buhari is certainly not a requirement here for the Nigerian government. Nigerians must be watchful and must hold the government accountable.
In a country where the government is known for rewarding political loyalty or business allies with sales of government owned properties through the privitisation of these properties, one wonders who the government plans to reward with Nigeria Air. A situation where the government keeps talking about an investor and on other occasions, investors, makes one want to look carefully at the body language of the government. Nigerians must not be quick to forget that Air Nigeria (originally Virgin Nigeria Airways) was taken over by an investor, today that airline is defunct. The country is on the same path to giving Nigeria Air to another investor.
Aviation business in Nigeria should be a lucrative venture considering the number of passengers that go through the major airports annually. Passenger figures show that in 2016, 15.2 million passengers flew through the Nigerian airports and in 2017, it stands at 13.3 million (National Bureau of Statistics); although there is a decline in the 2017 figures compared to 2016 figures which is evident of the local economic conditions in the country, records also show good figures (African Standard) in the area of international travel. The US – Lagos routes (Lagos – New York and Lagos – Atlanta) carry huge figures of passengers, likewise Lagos – London, Lagos – Dubai and Lagos – Johannesburg. Other lucrative routes which the airline can harness also exist. This alone should be an encouragement for investors.
However, investing in Nigeria Air as it stands at the moment is a high risk venture. Though a PPP (Public Private Partnership), at the moment, it is driven by the government and not by the private sector. The government of Nigeria should focus on creating conducive environment for airline operations in the country. Costs within this sector in Nigeria are always calculated in line with the prevailing US dollar to Naira foreign exchange regime. For maximum profitability and affordability, Original Equipment Manufacturers (OEMs) should be encouraged to open shops in Nigeria, aviation fuel should be locally available at an affordable price and type rated training facilities for pilots, technicians and cabin crew should also be locally available. These are the issues that should have been the major focus of the government at this time, however; these could still be done now.
Various international airlines have indicated interest in working with the new airline. Channels of communications with these airlines must be created to see how best these airlines can get involved. Local airlines should also be encouraged to invest in the new national carrier. Having these airlines come into the project as investors, would help in the management of the airline and ensure sustainability.
With sincerity on the part of the Nigerian government, proper planning and implementation, the airline is sure to be a highly profitable one. The government of the country only has to be very transparent with the investors, leave the business to the investors, invest in the airline and create favorable operating environment for the airline. The projected value of the airline within its first five to ten years must be made public and then apart from the initial $300 million (USD) grant already given, the Nigerian government’s 5% equity must be fully paid to show commitment to the project on the part of the Nigerian government. At this point, the project should be handed over to a consultancy (perhaps Airline Management Group currently working as advisors) for onward management of the process until all is ready for the airline to take off.