Just days after the announcement of Ethiopian Airlines as a core investor in Nigeria Air with 49 percent shareholding and the federal government with just a mere five percent equity, there has been a flurry to look into the outcomes of similar arrangements in the last 40 years.
According to the report, Ethiopian Airlines is the preferred bidder for Nigeria Air and it was preparing for the commencement of operations of Nigeria’s new national carrier by mid-November 2022.
Aviation Minister Hadi Sirika said at a press briefing in Abuja that Nigeria Air will launch a shuttle service between Abuja and Lagos to establish a new comfortable, reliable and affordable travel between the two major airports and that other domestic destinations will follow thereafter.
Ethiopian Airlines will own 49 percent equity, the federal government will control five percent equity, while a consortium of three Nigerian investors [MRS, SAHCO, and the Nigerian Sovereign Wealth Fund, now dropped] will have 46 percent.
The national carrier which was unveiled at the Farnborough Air Show in England on July 18, 2018, was however immediately suspended for two months after it was announced following concerns over its relevance and sustainability.
With a proposed $8.8 million preliminary cost and $300 million as a take-off cost, many did not see anything good beyond the naira and kobo for a national carrier that is necessary to serve a country with a 200 million population; arguing that it will only go the way of the country’s defunct Carrier, Nigeria Airways, which was killed by corruption and poor management.
In July, the Federal Executive Council [FEC] approved the leasing of three aircraft to enable the airline to commence operations on a date to be announced with three initial Boeing 737-800 in a configuration very suitable for the Nigerian market.
“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 minister said.
Sirika also explained that the money that is being spent for the launch of Nigeria Air, for all the requirements to establish an AOC and as well as, starting an airline operation, is well within the 5 percent capital investment of the Federal Government of Nigeria.
The aforementioned, he said, will be the 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]; following the approval by ICRC, under the PPP act,” he added.
Meanwhile, the Minister said “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 that is making many observers worried.
The statement noted that a bidders’ conference was held online on March 28, with over 100 participants and that over 60 parties requested access to the data room and that by June 10, it said the Ministry received on time one closed bid by the Ethiopian Airline Consortium.
Analysts who were in favour of Ethiopian Airlines’ majority stake did so because they believe the arrangement would keep corruption and mismanagement in check; but none of them took into consideration the convenience, security, and integrity of Nigerians.
They even failed to take into account the ongoing political, social, and security dynamic of countries where investments into similar businesses were abruptly restricted or even banned from operating in their countries because of perceived third-party ownership.
Observers also wonder if the deal will not put Nigeria on a collision course with several countries over some bilateral agreements. Indeed, it does seem that the Ethiopians are being clever by half by using Nigeria to gain more access to their country under the reciprocity under which airline agreements are done.
Speaking, on the deal, Koiki Olusegun, President, the League of Aviation Correspondents [LAC], told African Travel Times in a telephone chat that hardly one sees a stakeholder supporting this wayward deal, except those that have positioned themselves to benefit from it.
According to Koiki, the exercise leading to the selection was kept secret as only Ethiopian Airlines was the sole bidder, which suggests that the process and the project were not attractive.
He noted that out of the eight airline deals that Ethiopian Airlines have invested in Africa, only one is doing well- the ASKY deal. At best, they are feeders to its main operations centered in Addis Ababa. ASKY, based in Lome, Togo, has achieved modest success with 12 aircraft.
Nigeria Airways: Throw Back
Nigeria Airways Ltd., commonly known as Nigeria Airways was founded in 1958 after the dissolution of West African Airways Corporation [WAAC].
It held the name West African Airways Corporation Nigeria [WAAC Nigeria], until 1971 when it was rebranded to the name it had until it ceased operations in 2003.
The government of Nigeria owned a majority of the airline [51 percent] until 1961 when it boosted its shareholding in the company to 100 percent and made it the country’s flag carrier.
Then its operations were concentrated at Murtala Muhammed International Airport and served both domestic and international destinations mainly concentrated in West Africa; the network also had points in Europe, North America, and Saudi Arabia.
Later, the airline was managed by a number of foreign companies, including British Airways, KLM, and South African Airways that never worked.
In its heyday in the early 1980s, just before the departure of a KLM team that had been hired to make the airline efficient and profitable, its fleet consisted of about 30 aircraft, but the carrier was two years behind with its accounts to the extent that aircraft were acquired for cash.
Owned or leased, the carrier operated a variety of aircraft during its history, including the Vickers VC10, the Airbus A310, the Boeing 737 and 747, and the McDonnell Douglas DC-10, of which it flew the last one ever built.
Affected by miss-management, corruption, and overstaffing, at the time of closure, the airline had debts totaling US$528,000,000 [equivalent to $777,768,452 in 2021], a poor safety record, and its operative fleet comprised a single aircraft flying domestic routes as well as two leased aircraft operating the international network.
Nigeria Airways was succeeded by Virgin Nigeria whose ground facilities were taken over by Arik Air.
Ethiopian Airlines, which is larger than the entire other African airlines put together, the proposed Nigeria Air will only be an appendage and feeder to its ambitious global expansion plans. Ethiopian Airlines’ goal here is not to serve Nigerians, but its own business interest.
The deal as proposed is not just the establishment of a national carrier, but maintenance that will be provided and sometimes seconding second-hand aircraft to service Nigeria Air, thereby making the new airline not competitive.
Also not mentioned in the deal is the silence on cargo, which to many is also very surprising, knowing fully Nigeria is almost entirely dependent on import and if the new national carrier is not going to take cargo business seriously, it would be a big miss.
Apart from those who are paid agents of foreign airlines, many Nigerians want a national carrier that would respect its passengers, and guarantee their security and comfort; this is as they express surprise that a poor country, with a less educated population and thriving private sector players than Nigeria, would hold a majority share in its national carrier.
By Our Correspondent
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