By AYOOLA OLAOLUWA
Controversy has continued to trail the newly unveiled national carrier – Nigeria Air, Business Hallmark can report.
The Minister of Aviation Minister, Hadi Sirika, it would be recalled, had on Friday, September 24, 2022, announced Ethiopian Airlines and a Nigerian consortium as owners of the new carrier, raising fresh hopes of another national air carrier replacing the defunct Nigeria Airways.
Under the terms of agreement, a consortium led by 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 for approval.
“The overall share capital of around US$300m 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.
“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 AOC approval and everything else required by stringent national aviation regulations, as prescribed in the FEC approved Outline Business Case (OBC).
“It is the overall share capital of around US$300m 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,” the visibly elated Sirika had announced.
However, the announcement has continued to come under fire, with stakeholders in the aviation industry voicing their outrage against the deal that would birth the new airline, especially the vexed issue of ownership and the expected crowding out of indigenous carriers operating on domestic routes.
Most aviation experts, who spoke to BH on the development, queried the decision of the Federal Government to cede 49 per cent stake of Nigeria Air to a foreign airline, when the carrier is supposed to be owned by Nigerians.
“How can the government cede control of what supposedly should be our national heritage to a foreign entity? To worsen the matter, Ethiopian Airlines is a competitor in the nation’s air transport market, competing against local airlines for market share.
“Already, Ethiopian Airlines currently flies into five Nigerian cities of Abuja, Lagos, Kano, Enugu and Kaduna. Making it a national carrier could be counterproductive.
“What stops the airline (Ethiopian) from running the likes of Air Peace out of operation so that it can monopolise the market? I pray they prove me wrong, but I think it is a disservice to indigenous carriers”, an aviation engineer who did not want his identity told BH.
Another issue bothering the minds of Nigerian aviation experts is the decision of the preferred bidder to list Nigeria Air as one of its subsidiaries on its website.
When BH visited the airline’s website on Saturday, it listed Nigeria Air as one of its six subsidiaries with majority control.
The subsidiaries are Asky Airlines 40%; Zambia Airways 45%; Air Malawi 49%; Air Chad 49%; Guinea Airways 49% and the newly acquired Nigeria Air 49%.
The categorization of Nigeria Air as subsidiary of Ethiopian Airlines, experts argued, could be likened to the tail wagging the dog, instead of the other way round.
“Nigeria Air is regarded as the new national carrier and the nation’s flagship. How come a relatively smaller country is referring to it as one of its subsidiaries? In other words, the airline belongs to Ethiopian Airlines, solely owed by the Ethiopian government and not Nigeria since the government only has 5% equity in the carrier.
“I think it is a joke. A slap on our faces and denigration of national pride. What stops us from framing the agreement the way the Nigerian Liquefied Natural Gas Limited ( NLNG) deal was framed?
“NLNG is an Incorporated Joint Venture (IJV) owned by the Nigerian National Petroleum Company Limited (NNPC) 49%; Shell Gas B.V. 25.6%; TotalEnegies Gaz and Electricité Holdings 15% and Eni International N.A. N.V. S. àr.l 10.4%.
“Despite Shell, Eni and Total owing a combined equity of 51 and the NNPC owing the remaining 49%, they never referred to NLNG as their subsidiaries.
“Yet, the entity is privately managed. No government interference. Why not adopt the NLNG arrangement instead of causing us this national embarrassment?”, demanded a other stakeholder.
Apart from the issue of national pride, the decision of the Federal Government to allow the new airline operate on domestic routes, is causing disquiet in the aviation industry.
Local operators argued that the concession will give undue advantage to Ethiopian Airlines, which already fly directly into five Nigerian cities.
According to Captain Olabode Elliot, a retired pilot with the defunct Nigerian Airways, allowing Ethiopian Airlines to fly direct into Enugu, Abuja, Kaduna, Kano and Lagos is an anomaly.
“All over the world, countries protect their indigenous airlines by not allowing foreign carriers fly directly into more than two cities, the political and economic capitals.
“For example, no matter your destination in England, you either disembark at Heathrow or Gatwick Airports, before connecting to your final destination.
“The same applies to most countries of the world, even the United States. By that arrangement, you give preference to only local airlines to operate domestic shuttles.
“That literally gives room to local players to operate without needing to worry about competing with bigger and more established foreign airlines. This also guarantee the survival of indigenous airlines.
“However, Ethiopian Airlines and some others are allowed to fly directly into five cities from abroad. By the time the new carrier comes on board with newer and wider body aircraft that can carry more that 200 passengers at a go, most, if not all local airlines will close shops”, Elliot warned.
Elliot was backed by the former President of the National Association of Aircraft Pilots and Employees (NAAPE), Isaac Balami, who said he would have preferred if Nigerians own at least 80 percent of the new national carrier.
“I would have preferred it to be at least 80 per cent Nigeria-owned. As it is, the largest chunk of the stake is going to a country and an airline that, ordinarily, should be under us or we should be ahead of them.
“I just pray that one day we would correct the wrongs and get Nigerian businessmen that would look inward and invest and not allow foreign airlines to come and take everything out of this country.
“I don’t know the nitty-gritty, I have not gone through the contract, but anything that is not going to empower Nigerians is not good enough,” Balami maintained.
Likewise, foremost aviator, Group Captai John Ojikutu (retd), kicked against the choice of Ethiopian Airlines as the core investor in the new airline.
“I am not in support of having any foreign airlines and a competitor with us on the Bilateral Air Services Agreement (BASA) routes as our technical partners. The foreign airline’s interest in the partnership comes before ours.
“Secondly, similar partnerships with the KLM and the SAA in the early 90s did not benefit us. We should, therefore, look for partnerships outside the competitors in the BASA routes in countries like Canada, Australia,” Ojikutu advised.
In an effort to verify Captain Elliot’s claims, BH visited the official websites of top airlines like Air Peace, Ibom Arir, Azman Air, Max Air and Dana Air to check on their fleets and passengers capacity.
The airlines aircraft mainly comprise of Bombardier CRJ900; Airbus A220-300; McDonnell Douglas MD-82 and 83; Boeing 737-100/200/300 and 500 series; Boeing 747-400; Boeing 777-300 and Embraer ERJ-145, among others
Check revealed that the aircraft, starting from the smaller Embraer ERJ-145, has a seating capacity of 50 passengers, to the biggest, Airbus A220-300 with a seating capacity of between 120 to140 passengers.
Meanwhile, Nigeria Air’s three newly acquired Boeing 737-800 come with a 16 Business Class and 150 Economy Class configuration, making 166 seats in all.
The aircraft, it was gathered, could carry up to 210 passengers if configured for economy class only.
“That is over 50 passengers carrying capacity more than the biggest aircraft in the fleet of local carriers. You can see that there is no way they can favourably compete with Ethiopian Airlines if the government allows it to operate on domestic routes”, declared Captain Elliot.
Though, our correspondent gathered that the trio of Air Peace, Max Air and Azman also have wide body planes like the Airbus A340-600 and Boeing 777-300 that can ferry from 220 to 413 passengers at a go, they are long range aircraft built for international travels.
Meanwhile, the President of Aviation Safety RoundTable Initiative (ASRTI) and Chief Executive Officer of Sabre West Africa, Dr. Gbenga Olowo, disagreed with Elliot, Balami and Ojikutu, saying he didn’t see anything wrong in the government unveiling Ethiopian Airlines as preferred bidder for the national air carrier.
According to him, Ethiopian Airlines could be a good partner to birth a national airline for Nigeria.
“My position remains the same. Since the issue of Air Nigeria has been laid to rest, given government’s insistence to do so, my endorsement is based on the need for the success of any new start-up airline in Nigeria.
“The merits of cooperation and collaboration will more than outweigh that of competition, provided the management is on top of its game. Nigeria Airways, in the past, operated to many countries, not directly but by commercial agreements.
“That is not all, interlining and global alliances, which is a necessity in today’s aviation, comes with ease given this partnership rather than the airline struggling on its own for relevance and partnership for route expansion and penetration purposes.
“The robust maintenance facility of Ethiopian Airlines and its varied fleet will be very helpful to the young airline. Manpower training and personnel exchanges would be another benefit.
“Ethiopian Airlines as an African partner is inward-looking and it’s very good for the implementation of the Single African Air Transport Market (SAATM) under the African Continent Free Trade Agreements (AfCFTA).
“Without any intention of being the brand manager for this project, it is my call to salute any good decision be it by individual operator or the government”.
The Sabre West Africa boss, however, expressed reservation with the Federal Government’s decision to own 5% equity in the airline.
“Government having a stake in the airline, no matter how little, might not be necessary after all, since it is midwifing a privately owned airline.
“It is a general contention that the government has no business in business due to incessant political interferences. It is also expected that the carrier is not treated as a ‘mere flag carrier” than others already flying the flag, including Air Peace and one-time Arik.
“I want to discountenance the national carrier nomenclature as no single airline can quickly and easily reciprocate BASA belonging to Nigeria. Two or three strong airlines are desirable.
“The playing field must be leveled for all flag carriers in the interest of Nigerian aviation. This is the voice of a solution provider rather than a mere critic,” Olowo noted.