Experts fault move to take over Arik, Aero

Felix Oloyede |

The recommendation of the Ahmed Joda Transition Committee that President Muhammadu Buhari’s government should nationalize some major Nigerian airlines to form the nucleus of a national carrier has come under scathing attack by aviation experts. Notably, Nigeria has been without a national carrier since the Virgin Nigeria experiment collapsed in 2009 followed by the Air Nigeria fiasco.

In his reaction, the former spokesman of the defunct Nigerian Airways, Mr. Chris Aligbe, said that the Federal Government’s plan to takeover Arik Air, Aero Contractors and three other debt-ridden airlines and in their stead float a national carrier from the agglomeration is a bad and ill digested approach that will stifle private enterprise and competition.

He asserted that it will be impossible to implement Alhaji Ahmed Joda-led Transition Committee’s recommendation of floating of a national carrier from the take-over of five domestic airlines, whose debts the Asset Management Company of Nigeria (AMCON) bought over.

“None of the airlines would be ready to cede their equities to the combination.

It is one of the worse points to start with,” he noted.

According to him, with this approach, it would be impossible to start a national carrier in two years.

Mr. Aligbe advised the government to consult stakeholders in the nation’s aviation sector, if really means to set up at national carrier.

“AMCON mismanaged the Virgin Nigeria project.

The two new aircrafts they bought were left to rot on the ground.

There is nothing to start off,” he added.

The spokesman of Airk Air, Mr. Banji Ola told Hallmark in a telephone interview that the recommendation was targeted at the airline and constituted a hostile attempt to destroy the industry.

Meanwhile, AMCON has denied reports that the Federal Government is planning to convert Arik Air and Aero Contractors and three other domestic airlines into national carrier due to the huge debts they owe.

 The spokesman of AMCON, Mr. Kayode Lambo told Hallmark that he had no knowledge about government plans to convert these airlines to national carrier.

“I don’t know anything about the plan to make Arik and Aero national carrier. You have to go and meet those who reported that government is planning to convert these airlines into national carrier to clarify the report,” he stated in a telephone interview.

However, it would recalled that the idea of acquiring the debt ridden airlines is not new. Two years ago there was a similar suggestion to convert the debt owed by Aero to equity to form a new national carrier. Although the idea fell through because of negative public reaction, it now seems that this recommendation is in furtherance to it.

The Alhaji Ahmed Joda-led transition committee had recently recommended that the Federal Government merge domestic airlines whose debts AMCON has bought over into national carrier that would ply the West and Central African regions, with Nigeria as the regional aviation hub.

AMCON had in 2014 bought over the debt portfolio of five of the airlines from the Federal Ministry of Aviation over N190 billion.Six Nigerian owned airlines are owing about N130 billion, excluding various debts owed the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agency (NAMA), suppliers and other institutions.

The Joda-led committee urged the Federal Government to enter into a public-private partnership (PPP) agreement with all airlines currently with AMCON, and float a national carrier, suggesting a six month period for the execution of the project.

Hallmark recalls that the Federal Government had attempted to agglomerate Air Nigeria and Aero Contractors and float a national carrier, when Stella Oduah was the Minister of Aviation, but Aero Contractors went to court and scuttled the plan.

According to the committee, if the project is properly executed, it would increase government revenue from the sector, reduce capital flight, expand the local aviation industry and create more employment opportunities to the people.

The committee also recommended that the Infrastructure Concession Regulatory Commission (ICRC) should partner with the Ministries of Aviation, Finance, Industry, Trade and Investment to implement an aviation-focused PPP framework that would see to the development of aviation infrastructure, procurement and upgrade.

An audit carried out by the Federal Ministry of Aviation showed that Arik Air has the largest debt profile, owing over $600 million (N124 billion); Aero Contractors is indebted to the tune of over $200 million (N40 billion) and insolvent Air Nigeria owed about $225.8 million (N47.7 billion).

The result of the audit also revealed that IRS Airlines has a debt profile of $55 million (N11 billion), while Chanchangi Airlines is indebted to the tune of $55 million (N11 billion). AMCON has already taken over 60 per cent Aero Contractors of equity.

It would be recalled that Arik, Aero, IRS, Bellview, Chanchangi, Afrijet, Albarka, Caverton, Continental, Air Nigeria and Savannah were cash-strapped and were about folding up in 2012, before AMCON gave them a bailout of N132billion.

The Joda-led committee identified poor capacity utilisation as the major challenge bedeviling the aviation sector, adding that about 75 per cent of passenger traffic were generated from three airports – Lagos, Port Harcourt and Abuja, while over 90 per cent of the revenue earned came from Lagos and Abuja.