Hope dims as N15.9 billion Nigeria Air lands in court

• Misses sixth take-off • FG in desperate move to salvage ‘unpopular’ venture, Buhari’s 2015 pledge
• Local airline operators, aviation unions divided on prospect • Analysts seek urgent review of model for sustainability
• Ruto to sell loss-making Kenya Airways

Any hope of a new national carrier taking off in the lifespan of President Muhammadu Buhari’s administration is fast dimming. Besides missing a sixth take-off date this month, the proposed airline, already christened ‘Nigeria Air’, now has its fate stuck in a law court, with barely five months to fly or sink.

While it continues to lick up budgetary provisions, with an additional N1.3 billion in the 2023 Appropriation Bill (cumulative N15.9 billion in five years), the high-end national venture has continued to divide stakeholders, creating landmines for potential failure.

Unimpressed by modalities of the new project, airline operators have headed to court to challenge the logic of a Nigeria Air operated by Ethiopian Airlines. They also questioned the project’s lack of transparency on funding and alleged zero consideration for local operators and national interest.

Project handlers and a section of aviation workers’ union have faulted the operators, describing them as unpatriotic. The Guardian learnt that the Federal Government has also taken measures to “rescue” the proposed airline and, at least, lay foundation for a befitting national carrier in the twilight of the Buhari administration.

Analysts, however, drew attention to the waning popularity of such venture in modern aviation and called for urgent review of the business model for mutual benefit and sustainability.

It will be recalled that Buhari had, during the 2015 electioneering campaign, promised to float a new national carrier as replacement for the defunct Nigeria Airways, which was hurriedly liquidated in 2004.

Minister of Aviation, Hadi Sirika, in 2016, rolled out an Aviation Roadmap development agenda for transformation of the sector. The plan had as priority, the new national carrier; concession of all airports for efficiency; aircraft leasing companies; maintenance facilities and development of an aerotropolis.

After five years of foot-dragging, the project gained traction with the announcement of Ethiopian Airlines’ technical partnership and the rollout of domestic operations by December 2022.

A Federal High Court sitting in Lagos, in November, however, ordered all parties involved in the proposed national carrier to maintain the status quo till February 13, 2023, effectively truncating the December take-off date as pledged by the minister.

The court gave the order upon receiving the application of Airline Operators of Nigeria (AON), urging the court to stop the national carrier deal and withdraw the Air Transport Licence (ATL) already issued to Nigeria Air by the Federal Government, through the Nigerian Civil Aviation Authority (NCAA).

Operators, like Air Peace, United Nigeria, Azman, and Top Brass, claimed that the firm that served as Transaction Adviser for the transaction was incorporated in March, last year, and alleged that the company was linked to the aviation minister. The local airlines further alleged that the ATL issued to Nigerian Air did not pass through normal security clearance.

A senior official of the Ministry of Aviation and a member of the airline implementation committee, yesterday, hinted that efforts are on course to manage the new hurdle and litigation.

He agreed with The Guardian that the ministry underestimated pushback from the “unlikeliest” of sources (local airlines). “We have treated them as stakeholders in the project and had invited them to even own the national carrier but they refused. How else should we get their buy-in? We have to move on without them.

“Trying to block the national carrier through litigation was unexpected. But we are prepared to defend the new airline in the interest of the country. Our team has succeeded in getting a January 16 date for the hearing, instead of February 13 (that was initially fixed). That attests to our commitment to quickly solve the problem.

“The minister and all of us are not happy that the airline has not taken off already, but we are more concerned about setting the right foundation. Only the court can tell how long it will last but we are determined to get it resolved and back on track as fast as possible,” he said.

Indeed, the airline has aborted take-off six times from 2018 to date. In between, Ibom Air, a state-owned carrier, was established by Akwa Ibom State, and took to the skies in 2019. In three years of operation, the airliner has gained a major foothold in Nigeria’s airspace, placing an order for 10 brand new Airbus 200-300 airplanes last year. They are due to arrive next quarter.

In 2018, lack of budgetary provision was the excuse for the December 23 terminated take-off of Nigeria Air, following its controversial christening in London. From 2019 to 2022, budgetary votes penciled for the national carrier add up to N14.65 billion. 
  
The minister, recently, denied the figures, saying only N400 million had been approved. Though the government plans to own only a five per cent stake, another estimate showed that the government proposed N7.45 billion for the national carrier in the last three years.

For 2023, the government is proposing N1.3 billion, with N700 million as ‘working capital’ and N200 million as consultancy fee. A Chief Operating Officer in one of the local airlines said unaccounted votes and general lack of transparency should bother all well-meaning Nigerians.

“Slowing down the project (Nigeria Air) is not our concern, but rather the havoc it will cause our industry and investment, if we allow them to continue the way they are going.

“It is not true that we don’t want a rival or bigger airline, but it must be fair to all and should not kill my airline for it to survive. There is too much secrecy in the national carrier. Ethiopian Airlines masquerading as Nigeria Air, to serve the interest of a few interested parties, will be injurious to our businesses and a disservice to the national interest. That is what we are challenging,” he said.

Joint Consultative and Negotiating Council (JCNC), an amalgam of four trade unions in the Ministry of Aviation, disagreed with the operators, calling them “unpatriotic, selfish and wicked”.

Speaking at the last quarter strategic meeting in Owerri, Vice Chairman JCNC, Yunusa Abdulsalam, recalled that Sirika made overtures to the airline, “stressing that it was not too late for them to buy into the new carrier, more than six months after he first appealed to them on desirability of the project.”
 
Abdulsalam said it was unfortunate that airlines that cannot offer quality services were clamouring for “monopoly of the market”. President of the Air Transport Senior Staff Services Association (ATSSSAN), Illitrus Ahmadu, reiterated that government has the right to float an airline in the interest of the general public.

“The model introduced for Nigeria Air is a legacy model of 41, 51 per cent equity, and that is the model that is applied in many parts of the world for an airline that is a start-up. Certain things against the national airline belong to old thinking and are archaic. I know the reason why the shareholding is so. We must rise now to ensure we have a national carrier,” he said.

Some analysts, however, called for caution, if the venture must stand the test of time. Head of Research at Zenith Travels, Olumide Ohunayo, said the timing does not favour such big investments. Ohunayo said activities of Year 2022, especially the political season, would certainly roll into the first and second quarters of 2023.

“Because the transition is coming at the end of May, you probably will not have any big activity till a new government comes in. Because it is an election for a new government, there will be that apprehension among investors and those that want to start new activities. This is because of our penchant for not honouring agreements and investors will be wary of this,” he explained.

Aviation security consultant, Group Capt. John Ojikutu (rtd), said it was time to ditch the idea of a national carrier. As a replacement, “government must come out boldly with, at least, two flag carriers and do away with a government carrier that is being sold to Nigerians as a national carrier. Government should not put a dime into this project. I am sorry to say that this airline (Nigeria Air) may not last and may also end up like Virgin Nigeria,” Ojikutu said.

He added that the “flag carriers” must, however, be backed by a very clear policy that has national benefits and sell shares to the general public in the capital market. Ojikutu’s rejection of a national carrier is not unconnected with growing decline in the popularity of similar ventures globally.

While the likes of Ghana and Nigeria are still itching for another go at the national carrier, Kenya’s newly elected President, William Ruto, recently spoke on a plan to transfer 100 per cent ownership of the loss-making national carrier, Kenya Airways.

The third biggest airline in Africa reported a loss of $82.4 million for the first half of 2022. The airline recorded a $95.8 million loss for the same period in 2021. It was the ninth consecutive half-year loss for the airline that had routinely depended on state bailouts.

“I’m willing to sell the whole (of Kenya Airways),” Ruto said. “I’m not in the business of running an airline that just has a Kenyan flag. That’s not my business.”

Uganda Airlines is also a source of worry for the Parliament, following the loss of $43 million in the 2020/21 financial year and another round of losses expected in the forthcoming 2021/22 report.