Business

Nigeria Air: Taking shape after an endless wait

Nigeria has tried unsuccessfully to set up a new national airline. At a point, it looked like another exercise in futility, but the Nigeria Air project is presently sounding realistic and set to launch in the next few weeks, writes WOLE SHADARE

 

Huge fillip

The Nigeria Air project is gaining currency and the detailed progression of the exercise by the Federal Government through the Minister of Aviation, Hadi Sirika, to birth a new national carrier that would be private sector-driven may have silenced pessimisms and cynicisms that had for years greeted the entire plan to bequeath to Nigerians an airline that they had yearned for.

Aviation in the contemporary world has demonstrated its capacity to serve as a catalyst for economic growth and development, given its growing popularity as the safest means of transportation for both regional and long-haul purposes. It is a powerful tool for projecting soft-power and for the promotion of enhanced regional interaction.

From day one, Sirika had tenaciously set his eyes on the ball, despite several attempts at floating an airline for Nigeria that had met brick-wall at every stage of the exercise, further dampening the morale of millions of Nigerians that the project would go the way of other past governments that promised to deliver a national airline but one whose hope faded into extinction.

It is believed that the failure of Virgin Nigeria and the inability to float the much talked about Nigerian Eagle, among others, were sore in the people’s psyche and one that deterred past ministers of aviation from the experiments of flag carriers.

 

Are national airlines still vital?

Since the liquidation of Nigerian Airways in 2003, successive administrations had pondered the idea of floating a national carrier. This has not resulted in something concrete as the giant of Africa cannot boast of one.

 

Smaller African countries such as Ethiopia and Kenya own Ethiopian and Kenyan airlines respectively. Many governments fear their nations will be irrelevant if they lose their money-losing flag airlines.

 

That’s probably a stretch. In most places, the market likely would fill the gap — provided government got out of the way.

 

But national pride is powerful, and few people want to see storied brands disappear. If airlines suffer, governments may need to ask if there’s still value to having a national carrier other than patriotism or pride. And they may wonder whether it still makes sense to prop up airlines as more countries open their skies to new entrants and foreign carriers. The most powerful national brands should be fine.

 

Airlines like Lufthansa and British Airways long ago separated from governments and their home markets have robust demand. One begins to question why Nigeria, one of the most attractive African destinations, does not have one.

 

There are also fears in certain quarters that the new carrier could go the way of many airlines such as Virgin Nigeria and Arik – two classical examples that have depressed many. But Sirika is driving the project with so much gusto.

 

Not a few reasoned that looking at the country’s experiences and other aviation successes around the world, the nation does not need any more experiments, but the ‘experiment’ of Sirika for painstakingly floating an airline for Nigeria was, last week, received with excitement following the release of the body of work put in by the promoters and the announcement that Africa’s most profitable airline, Ethiopian Airlines, as preferred bidder for the new airline, offering an owner consortium of three Nigerian investors, MRS and Skyway Aviation Handling Company Plc, with the Federal Government owning five per cent and Ethiopian Airlines 45 per cent.

 

To show importance of the project, Nigeria Air is truly on its way to being launched with three B737- 800 airplanes said to be suitable for the Nigerian market. The carrier would launch a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian airports.

Thereafter, other domestic destinations would follow.

The processes

A spokesman for the Minister, Dr. James Odaudu, said the consortium had been subjected to a due diligence process, after which the contract will be negotiated between the consortium and the Federal Government, leading to a Full Business Case, which, he noted, would be expected to be approved by the Federal Executive Council (FEC).

According to him, the process would take between six and eight weeks. He reiterated that an interim executive team of highly skilled aviation experts had been working since February 2022 to set up all the necessary regulatory and industry requirements to launch the national carrier.

His words: “All executives have been approved by NCAA, the Air Transport License has been issued by NCAA. Nigeria Air (after having identified the first three aircraft), will now finalise all necessary Operation Manuals and then go through the inspection and approval process of NCAA.

“The money spent for the launch of Nigeria Air, for all the requirements to establish an AOC and be admitted starting an airline operation, is well within the five per cent capital investment of the Federal Government of Nigeria, that will be overall needed to establish the national carrier initially for the Air Operator Certificate (AOC) approval and everything else required by stringent national aviation regulations, as prescribed in the Federal Executive Council (FEC) approved Outline Business Case (OBC).

“This OBC is the milestone for the preferred Bidder Consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around $300 million, 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 Federal Government’s funding will be provided above the five per cent share capital of the next national carrier of Nigeria, which was provided to launch Nigeria Air,” he added.

It would be recalled that the invitation to bid for the ownership of Nigeria Air under the PPP regulations of the Federal Government and overseen by the Infrastructure Concession Regulatory Commission (ICRC)  was published in the Economist and in several local Nigerian papers on March 5, 2022, with a deadline for the Request for Proposal (RFP) set for May 10, 2022, later extended to June 10, 2022, with another publication in the Nigerian local papers.

Other examples

In an increasingly globalised world, smart governments recognise the importance of having their flags fluttering on as many routes as possible. It is a message that certainly hasn’t been lost on Singapore, whose government owns the highly respected Singapore Airlines, or Dubai, home of Emirates.

 

In both cases, these small states have made their airplanes part of their national identity and growth strategy. The experience with liquidated Nigeria Airways has equally led to the pessimism of the project succeeding. Pessimism equally arises from the high mortality rate of Nigerian carriers. Going back almost 40 years, government airlines, including pioneer private carriers such as Kabo, Okada, Arik and others, failed.

 

 

Unfortunately, the limited private airlines that attempted doing so do not seem to have the wherewithal and capacity to fund such extensive foreign operations. In addition to serving as a platform for conveying passengers to their various destinations, a national carrier remains a vehicle for international relations and trade.

Last line

As Nigerians look forward to its take-off, we believe that Nigeria Air should be seen in the next few months as a positive development.

 

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