Wrong time to fly Nigeria Air
The continuing allocation of public funds by the Federal Government for the suspended National Airline Carrier is wasteful and insensitive to the preponderance of public opinion against that project. Besides the fact that a national carrier at this time is a gross misplacement of priority for a country reeling in financial crisis and on the verge of a recession, the idea of the National carrier was officially suspended in 2018; and government has not provided any justification for change of that decision. Rather, government appears to be surreptitiously seeking to reactivate the project through the back door. That is a reasonable inference to be made from the fact that the federal government has earmarked N1 billion for the national carrier in the 2021 Appropriation Bill. It is instructive that although the project was suspended in September 2018, government has consistently made budgetary provision for it since 2019 to the tune of N12.6b, mainly as working capital and for “transaction advisers.”
The national carrier was launched as a project in July 2018, and suspended in September of the same year, on the recommendation of the Economic Management Team (EMT), then headed by Vice President Yemi Osinbajo. The team was believed to have opposed the use of public funds for the purpose. The proposed airline was to commence operation in December 2018 with a target of 41 international and 40 local routes.
Subsequently, the federal government in 2019 made budgetary provision of N8bn as working capital; and another N500m for transaction advisers. In 2020, N4.6bn was provided for working capital; and N1bn for the same purpose next year. Despite the subsistence of the suspension, aviation officials have reportedly canvassed for its revival. Aviation Minister Senator Hadi Sirika was once quoted as saying that there was no going back on the project.
Against the backdrop of the massive corruption and ineptitude afflicting Nigeria presently, the suspension of the proposed national airline named, Nigeria Air, is most prudent and logical. It should be graduated into an outright cancellation. Nigeria cannot afford a whopping “N180bn ($500m) subsidy per year on average for the next 10 years to keep the airline afloat, while about 97 per cent of the 200 million Nigerian masses today are grappling for the basic necessities of life: food, shelter, electricity, water, education and good roads,” according to experts. Certainly, the project will provide yet another outlet for the corruption and inefficiency that killed its predecessor, the Nigeria Airways.
The same corruption that led to the demise of Nigeria Airways also killed the Nigerian National Shipping Line (NNSL). Both were national carriers. Attempting to revive any of them is like seeking to re-open a closed corruption drainpipe. Full government involvement in issues of a national carrier is no longer a vogue worldwide. The private sector should be encouraged to do the airline business in line with the privatization policy of the Federal Government.
The Nigerian environment, at the moment, is not aviation friendly; the operating environment is very harsh, hence, the fumbling of several airlines operating in the country. The necessary infrastructures are lacking. The three major international airports in Lagos, Abuja and Port Harcourt, have consistently been rated among the worst in the world. The facilities need to be upgraded to international substandard.
The corruption that led to the airlines’ bankruptcy is still rife. President Buhari should focus on how to improve the lot of suffering Nigerians and not how to leverage the pleasure of a few highly placed individuals and their families and cronies. The President should leverage the decadent infrastructure nationwide.
The government launched the national carrier following the recommendation of two separate committees: The Ahmed Joda Transition Committee report, which, among other things, advised the president to merge the debt-ridden Arik, Aero and others, to form a national carrier; and the Capt. Abdulsalami Mohammed Committee set up to work out the modalities for the establishment of a national carrier. In their reports, both committees were in support of establishing a national carrier.
At the time, reports showed that six of the Nigeria’s leading airlines were heavily indebted to the tune of about N130 billion. This huge debt forced the airlines to turn to the Asset Management Corporation of Nigeria (AMCON) for a lifeline. In 2012, virtually all the private airlines operating in Nigeria were on the verge of collapse until AMCON came to their rescue with a N132 billion lifeline. Ever since then, the airlines have been grappling to remain in business.
In 2014, the debt portfolio of five of the private airlines with AMCON stood at over 190 billion. This excluded sundry debts owed to the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agencies (NAMA), suppliers and other institutions.
Worldwide, in this era of privatisation, having a national airline is no longer a preferred option. In Nigeria especially, airline operation is bad business. Since 2000, government has been implementing a privatisation programme that saw major national institutions like the power sector, Nigerian ports, airports, etc, privatised or concessioned. What is the rationale for thinking otherwise with regard to a national airline?
Around the world, most governments have disengaged from running of national airlines or at best have minority shares in private-public arrangement. For instance, all the major international airlines that fly into Nigeria such as Alitalia, Lufthansa, British Airways, Aer Lingus, among others, have been privatized. Government has only six and 18 per cent equity share in KLM and Air France respectively. As Nigeria battles with mundane issues – governance, social and economic deprivation, it is illogical to add another headache in the name of a national carrier.
The future of aviation and airlines, according to international aviation experts, are among the most vulnerable to global and local shocks, including contingencies, cash reserves, hedging of major risks such as oil prices. The federal government should focus on providing the enabling environment by way of upgrading the facilities at the airports and making them meet international standard. If in addition, President Muhammadu Buhari can upgrade security in the land, private investors will be encouraged to set up national airlines or partner with government to achieve the same objective.
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