Nigeria Air: Uncertainty trails new national carrier
Nigeria Air

By AYOOLA OLAOLUWA

The recent announcement of Ethiopian Airlines and a Nigerian consortium as new owners of Nigeria Air has raised fresh hopes for another national air carrier to replace the defunct Nigeria Airways, Business Hallmark can report.

The announcement received the backing of of many Nigerians, particularly financial experts and stakeholders in the aviation industry, who expressed cautious optimism.

Under the terms of agreement, a consortium led by Africa’s most profitable airline, Ethiopian Airline, will own 49% of the airline, a local consortium of Nigerian companies led by SAHCO, owned by the SIFAX Group and MRS 46%, while the Federal Government will mop up the remaining 5%.

According to the minister, a contract will be negotiated between the consortium and the FGN, leading to a Full Business Case which will be presented before the Federal Executive Council (FEC) for approval.

“The overall share capital of around US$300, will be 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.

“Nigeria Air will be launched with three Boeing 737-800 in a configuration very suitable for the Nigerian market and will launch with a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between these two major Nigerian Airports. Other domestic destinations will follow thereafter.

“A signature-ready contract has been finalized with Ethiopian Airlines for the three Boeing 737-800 with a 16 Business Class and 150 Economy Class configuration.

“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 finalize 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 5 per cent capital investment of the Federal Government of Nigeria, that will be overall needed to establish the National Carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the 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 US$300, 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 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,” Sirika had stated.

The airline, BH gathered, will start operations with a shuttle service between Abuja and Lagos before expanding to other domestic routes across the country using three Boeing 737-800 already fitted for the Nigerian market.
Also, an interim executive team of highly skilled aviation experts are working round the clock to ensure that the airlines aircraft take into the air by the end of November.

Though, many Nigerians who welcomed the announcement of the airline’s new owners are still a bit sceptical, their fears, BH learnt, is being assuaged by the pedigree of the winning team, especially Ethiopian Airlines.

Some aviation stakeholders, who spoke with our correspondent on the development, said the coming on board of the airline, with the slogan ‘The New Spirit of Africa, is the best thing to happen to the aviation industry. According to them, Ethiopian Airline’s huge experience and deep pocket will positively rub off on the country.

BH checks on the airline revealed that it has subsidiaries in six African countries, namely Asky Airlines 40%, Zambia Airways 45%, Air Malawi 49%, Air Chad 49%, Guinea Airways 49% and now Nigeria Air 49%. Ethiopian Airline has a fleet size of139 aircraft, including ten Boeing 787 Dreamliners.

The carrier was also the first African airline to order and operate the Boeing 777-200LR and the gigantic Airbus A350 aircraft. It presently flies to185 destinations (127 passenger and 58 cargo).

The airline is a member of the Star Alliance under the mentoring of Lufthansa, the third Africa-based carrier in doing so—following EgyptAir and South African Airways—and the 28th member worldwide. At the end of 2021 Full Year, the airline declared a revenue of $5 billion and has total assets in the region of $ 26.368 billion.

Apart from Ethiopian Airlines, many stakeholders are also impressed with the local consortium winners of Skyway Aviation Handling Company Plc. (SAHCO), owned by the SIFAX Group and MRS, owned by Aliko Dangote. SAHCO is the leading airport and aviation service provider and is owned by the Ijebu-Ode, Ogun State born billionaire businessman, Taiwo Afolabi.

MRS on the other hand, is an oil and gas company owned by the richest black man in the world, Alhaji Aliko Dangote. Dangote and Afolabi, 46% equity owners in Nigeria Air, BH learnt, are expected to provide the cash cover for the running of the airline, while Ethiopian Airlines, apart from running the new local carrier, will also bring its own share of the counterpart funding.

Meanwhile, reactions have continued to trail the announcement of preferred bidders for the national carrier by the Federal Government.

In her own submission, aviation, marketing and PR strategist, Sindy Forster, argued that the setting up of a national carrier without a change in Nigerian Civil Aviation Authority (NCAA) rules would not afford Nigeria the optimal benefits from Bilateral Air Service Agreement (BASA) for at least two years.

“We already have flag carriers who need support with BASA, what support have they been given? What BASA support will existing airlines continue to receive?

“An airline alone cannot take full advantage of SAATM (Single Air Transport Market), lots will be missing before SAATM can be fully utilised.
“Where is the competition when they are selectively supporting one private foreign airline over the privately owned domestic airlines. This is unfair competition and market distortion.

“Having three additional aircraft when we may lose more aircraft from unsupported airlines will not lead to competitive fares. Wet lease does not generate Nigerian employment and there is a risk that the Nigerian MRO may never see the light of the day.

“Ethiopian Airlines most likely want to use their MRO as they have with every other JV they have entered into. They use their engineers, etc. Will they use existing ground handling companies or provide their own?” she queried.

In his own reaction, the Chief Executive Officer, 7Star Global Hangar Limited, Isaac Balami, said there was the need to have a national carrier for aviation to deepen its root in Nigeria.

According to him, the partnership with Ethiopian Airlines would help in developing technical personnel through the training of pilots, engineers, marshallers and others; just as it was during the time of the defunct Nigeria Airways Limited (NAL).

“There is no doubt at all on the importance of having a national carrier. Whether the architecture or the variables are components that have to do with a flag carrier, it doesn’t matter.

“British Airways today is a national carrier but also a flag carrier. It is majority privately owned. American Airlines is privately owned, Delta and United Airlines in the United States are all privately owned but the issue is that the government over the years have put structures in place to ensure these airlines compete and survive”.

He stated further that the move is another window to achieve private sector participation in aviation, as well as the development of aircraft maintenance facilities and flight simulators.

“Having a national carrier is beyond just flying an aircraft. There are needs for aircraft maintenance and training facilities”, Balami noted.

It would be recalled that the nation’s now defunct flag carrier, the Nigeria Airways, which was founded in 1958 from the ashes of West African Airways Corporation (WAAC), was acquired by the Federal Government in 1961 after it raised its shareholding in the company from 51% to 100%.

The airline, however, retained the name, African Airways Corporation (WAAC) Nigeria until 1971 when it was rebranded to Nigeria Airways by the regime of former head of state, Gen. Yakubu Gowon (retd).

Nigerian Airways ruled the nation’s airspace largely unchallenged until it ran into troubled waters in the 90s and eventually ceased to exist in 2003.

Since the winding up of the airline by the administration of former President Olusegun Obasanjo in 2003, all attempts by successive administrations to float another national carrier had met with failure.

For instance, there were six failed attempts to float another carrier, in which the stillbirth Nigeria Eagle Airline and Nigeria Global prominently came to mind.

However, at the 7th attempt, Virgin Nigeria, conceived by the administration of former President Obasanjo and the owner of the Virgin Group, Sir Richard Branson, was set up in 2004 to operate as the de facto Nigerian flag carrier.

Unfortunately, the partnership collapsed in 2009 after Virgin Atlantic, which owned 49 per cent of the flag carrier, exited Nigeria after falling out with the newly installed administration of former President Umaru Musa Yar’Adua, which accused it of undermining Nigeria in the deal that gave birth to Virgin Nigeria.

Also, numerous attempts by the administration of incumbent President Muhammadu Buhari who had promised the nation a national carrier immediately after the inauguration of his administration in 2015, did not materialise until Friday, September 23, 2022, when the Aviation Minister, Hadi Sirika, announced Ethiopian Airline and a consortium of Nigerian firms major partners for the Nigeria Air project.

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