‘Why Aero, Arik merger will not work for national carrier’
The proposed merger of Aero Contractors and Arik Air airlines as a potential national carrier has again been faulted by stakeholders, describing the proposal as a distraction to the cause of a fresh start.The concerned parties reminded the Federal Government that a new airline is often complex business and too delicate to succeed from “the remains of unsuccessful ventures”.
Recall that the Asset Management Corporation of Nigeria’s (AMCON) Chief Executive Officer, Ahmed Kuru, recently proposed the adoption of Arik Air as the new national carrier. Kuru said the airline had sufficient asset to kick-start a new national carrier, instead of a fresh start being mid-wife by the Minister of Aviation.
The proposal made to the Senate Committee on Banking, Insurance and other Financial Institutions has, however, raised eye-brows among advocates of a new national carrier in the status of the defunct Nigeria Airways in its hey days. Aviation consultant, Chris Aligbe, said the idea of merging two airlines to form a new carrier is fraught with so many intractable challenges that would make the product a disaster ab initio. He observed that there were still a few who believed that Aero and Arik are airlines that belong to the government, hence, a natural proposal for the new carrier.
But on the contrary, he said, the government did not own the airlines, because if they were, they would be under aviation and not AMCON that has no statutory responsibility on aviation but on debt collection. “Any attempt to move outside this statute will occasion international litigations that could be unresolved for many years. This is because both the original owners and creditors will head to court to challenge the Federal Government,” Aligbe said.He added that AMCON and supporters of airline merger should first consider the Outline Business Case (OBC) of their proposition in line with the current dispensation.
“For those who are not aware, the Nigeria Air national carrier project had gone through this process, passed two to three approvals by the Federal Executive Council (FEC), successfully concluded the Development stage and was at the Procurement stage in compliance with Infrastructure Concession and Regulatory Council (ICRC) approvals and guidance.
“In the entire three-year period of due process, Arik and Aero were never in consideration. AMCON’s proposal is therefore an unnecessary distraction at best and, at worst, an uncanny step to truncate the Nigeria Air Project. Kuru took his proposal to the National Assembly, having failed to secure consent from the Ministry of Aviation.
“Was it in good faith or an attempt to arm-twist? Any which way, the NASS has no statutory/constitutional right to compel the Ministry’s acceptance of Kuru’s fantasy. I wish public officials should know and act within statutes. Kuru’s push is outside the oversight role of the NASS.
“It is hoped that if the CBN and NDIC buy over AMCON’s N6.3trillion debt and sell it off internationally at a discounted rate as proposed by Kuru, then Arik and Aero may come fully alive again and become formidable. This will be great since our country is in dire need of at least three to four virile airlines to cope with the Single African Air Transport Market (SAATM) and the travel requirements of our people,” Aligbe said.
AMCON in February 2017 took over Arik Air and placed the carrier under receivership over alleged mismanagement and debt in excess of over N300 billion by its erstwhile owners. With the sum of N1 billion injected by the Federal Government, the airline has been stabilised.The Minister of Aviation, Hadi Sirika, earlier said Arik airline would not be suitable for a national carrier despite its stability under AMCON.
“The carrier that I intend to bring is such a carrier that will support the national economy, with $450 million GDP for 200million people, very equipped to compete favourably.“So, Arik, as presently constituted, is not in line with the thinking of the ministry. It will not be able to give us that airline that we need. However, Arik as an entity, since it is private-sector driven, can either buy shares in the new ventures or invest in any manner in the business as presently approved. “We are not saying once we have a national carrier, every other airline goes down. No. It is our duty to continue to support businesses.”