A new National Carrier…staging a comeback 12 years after By Kelvin Osa Okunbor

A  new National Carrier...staging a comeback 12 years after

The aviation sector is alive with a debate over the Federal Government’s plans to revitalise the national carrier. Experts and key operators are sharply divided in their perspectives on the modalities to be adopted in putting the Green-White-Green national colours back in the air, reports KELVIN OSA- OKUNBOR

The debate is on,  triggered by  a recent directive by President Muhammadu Buhari to  Aviation Ministry officials. They are to work out the modalities of setting up a new national carrier.

The rationale for such a carrier has engendered unease among experts, airline operators and watchers of the troubled aviation sector.

Expectedly, the directive has pitted against one another players in the sector on both sides of the divide. Those who are favourably disposed to the idea have described the directive as a welcome development. Others, who feel the government has no business going into such money-guzzling enterprise, have not hidden their opposition.

The divergent views raised on the proposed carrier by experts are predicated on seven failed attempts by previous administrations to reestablish a national carrier since the liquidation of the Nigeria Airways Limited (NAL) in May, 2003 by former President Olusegun Obasanjo.

Such attempts include: Virgin Nigeria; Air Nigeria; Nigerian Global Airline and Nigerian Eagle Air among others.

Since 2003, Nigeria has lost several billions of dollars to capital flights repatriated by over 27 foreign carriers that operate international flights into and outside of the Nigerians shore.

More than a decade after it went moribund, relics of the weather-beaten and decripit airplanes, that were once Nigeria’s flag carriers, have been sold  as spare parts when Arik Air got the fanchise to operate the defunct NAL’s workshop at the Muritala Muhammed International Airport (MMIA), Ikeja in Lagos.

With no strong Nigerian carriers to reciprocate the over 73 Bilateral Air Services Agreement (BASA) it signed with countries, Nigerian routes have remained not only lucrative but for foreign carriers, which enjoy multiple entry points into the country under lopsided air treaties and Open Skies Agreements (OSAs).

Worried by the trend, the President, penultimate Wednesday, directed Aviation Ministry to expedite action on the establishment of a new national airline.

President Buhari gave the directive after he was briefed by officials of the ministry, led by their Permanent Secretary, Mrs. Binta Bello.

Mrs. Bello, who apparently bought into the vision of the country having a carrier it can call its own, embraced the President’s directive to reestablish one.

“Mr. President is quite concerned with the absence of a national carrier for now and he has directed the ministry to look into the possibility of having a national carrier as soon as possible,’’ she told State House reporters.

The defunct national carrier – Nigeria Airways – was established in 1958 and was once the pride of the nation until it eventually went into liquidation in 2003. No thanks to mismanagement.

So disturbed was the erstwhile President, Chief Obasanjo, that he complained that boosted of more than 10 aircraft when he left the office in 1979 as military Head of State, had only three that were on wet lease during his second coming as a democratically elected President, 30 years after.

That informed NAL’ liquidation despite the privatisation options that could have savaged the ailing airline.

But some experts and operators in the aviation sector have hailed the presidential directive that the ministry should facilitate the setting up of a national carrier.

According to them, the resuscitation of the national carrier has become imperative as it will enable the country to utilise its many BASAs.

Such experts include: the Chief Executive Officer (CEO) of Bulejane Konzults, Mr. Chris Aligbe; President of Skyjet Aviation, Dr. Kassim Shettima; National President, Pilots & Engineers Association, Isaac Balami; aviation Analyst, Kingsley Chima; Chief Accountable Manager, DANA Air, Tony Mbanuzuo and another analyst Deba Uwadiae.

Aligbe, who is former spokesman of the liquidated NAL, berated those opposed to the proposed national carrier, describing their opposition against the project as misplaced and unpatriotic.

He accused those saying Nigeria does not need a national carrier of doing a great disservice to the country because such project will help to curb the billions of naira being taken out of the country by foreign carriers from ticket sales proceeds, the huge cost of offshore maintenance for aircraft and salaries and flight crew allowances paid to expatriate pilots, engineers and cabin crew members.

In a chat with The Nation, Aligbe said those speaking negatively about plans to set up a national carrier are fixating themselves in the past.

According to him, such people suffer from incurable fixation, which could further compound the woes of the aviation sector.

He said such fixation could discourage the government from setting up a national carrier, warning that such intervention could reorder the trend in the aviation sector through job creation, massive investment and human resource management.

He said the aviation sector faces a bleak future without a national carrier to fly the nation’s flag across the world and reverse capital flight.

Aligbe said: “Those opposed to the proposal are afraid of the nightmares of the past and therefore incurably fixated on how to stimulate the aviation sector. What they are saying about the past could be correct but what is the way forward.”

He said government could set up the new carrier without investing too much money, but create an enabling environment to allow it thrive through what he described as “sweat equity”.

Aligbe went on: “We do not have the discipline to run a government-owned airline hundred per cent. The government should not own more that 25 per cent stake. It does not need to throw money into the airline. All it needs to do is have sweat equity.

“The government should allocate land for the floatation of the new national carrier, set up the team – I mean a technical team – people who know about airline business, allocate land to the airline in Abuja, Kano, Lagos and Port Harcourt for offices, designate the airline on major routes and ask all agencies to cooperate with the floatation.

“The government should go ahead and facilitate long term loans for the airline from the Central Bank of Nigeria (CBN). It must be routed through the airlines bankers. The bankers must take that loan and pay back. It is not free money but a credit facility for a period of between 15 and 20 years at a repayment rate of single digit interest rate. All these can be facilitated by the government as its own equity stake in the business, without putting one kobo. It will have sovereign cover.”

Also speaking, Dr. Shettima, who welcomed the idea, urged the government to convoke a stakeholders’ forum to examine the intricacies involved in setting up a national carrier.

Shettima said: “In my own opinion, I think the President needs to be properly briefed with what the current situation is. He (President) needs to hear the truth and nothing but the truth.

“There should be a stakeholders meeting with the President where the he will meet face to face with players in the industry including unions and airline operators in Nigeria and so on.

“Does the President know the cost of running an airline now? Does it know that a national carrier will have to be given subsidy from time to time? Why do we have to re-invent what happened to Nigeria Airways?

“The President needs to have the forensic audit on why airlines in the country are often debt-ridden after venturing into the business. I hope it is not going to be business as usual because aviation is nothing but a serious business.

“This might be a nightmare. In as much as this is a good dream, sentiment must not replace reality like what we have presently in the aviation industry.”

NAAPE’s national president, Balami, said the establishment of a new carrier was long overdue because of the way the former national carrier was liquidated. Balami said: “Everyone who has been in, or around the aviation industry for a while would easily agree that the ill-advised liquidation of the defunct national carrier  – Nigeria Airways, was the evil wind that has bedeviled the industry till date.

“And since the forced liquidation of the Nigeria Airways, no Nigerian Carrier has been able to go near its big shoes. None has even started to move in that direction

“It is, therefore, with enthusiastic welcome, that one receives the news of the directive by President Buhari to the ministry of aviation to expedite action on the establishment of a new national carrier which can now spearhead Nigeria’s deserved quest for global reckoning in aviation.

“It is expected that the new carrier will strive for a mega carrier status which can compete at the global stage. It is also expected that a full scale Maintenance Repair Organisation (MRO) will be part of the deal for the new carrier.

“It is, however, important to sound this note of caution. Any idea of engaging a foreign airline, or foreign MRO as technical partner should be perished. This is because no sane business person who will encourage a viable competitor.

“Such partners will also not agree to terms that will give the new carrier an advantage over their vested interests in the airline business.

“It is sincerely hoped that the ministry of aviation will be open and transparent in the process of setting up the new national carrier and will allow participation by genuine industry stakeholders.

“I, and my organisation – NAAPE – welcome this development enthusiastically. And we urge all industry operators to support it with every sense of responsibility.”

Another expert, Kingsley Chima, said: “Before this decision/directive, have we done a thorough autopsy on the reasons that led to the death of Nigeria Airways. National carrier is going out of fashion in this industry as it has been demonstrated in many quarters.

“National carriers succeed in countries where corruption is tightly managed as shown in the case of Ethiopian Airlines.

“When government starts appointing directors and they start awarding elephant/juicy contracts, the airline will gasp for breath and die.

“The operation cost is high and any cost that should be avoided must be avoided. But, with a national carrier in an environment like ours, I do not see this happening. We can only have a competitive national carrier when we make our airports efficient and effective.

“The government’s involvement must not be beyond 25 per cent share. The technical partners can own about 15 per cent stake and institutional investors taking the remaining. I am not optimistic but you never know.”

In his reaction, DANA Air’s Accountable Manager Mbanuzuo, said the government, rather than creating a new airline, should create an enabling environment for the expansion of existing airlines’ operation.

His words: “With no concrete information from the government, we are unable to make any comment  although we feel that the government should create an enabling environment rather than actually running an airline.”

Uwadiae, who is an aviation analyst, urged government to be more circumspect before setting up such an airline.

He said: “Very simple. Until there is a fundamental attitudinal change towards what belongs to government whatever is set up as a Nigerian Airline will go the same way of the old airline.

“As long as I’m yet to see any concrete effort towards that change, I will advise President Muhammadu Buhari not to rush into it. Though, we need a national airline but at what cost will this be at this point in time, when the naira is counting at over N220 to $1?

“There are more fundamental needs of Nigerians than for the government to take up a humongous project of setting up a national airline again at this time or the next four years of President Buhari.”

From a fleet of 32 aircraft in 1999 to liquidation in 2003

The carrier had accumulated significant debts that outstripped its revenues virtually from the mid-1980s. While 1,000 jobs had been cut by late 1986, Nigeria ordered the airline to reduce the number of employees — 8,500 at the time, with a staff-aircraft ratio of 500:1— even more, and also to reduce or discontinue unprofitable routes.

In 1988, cost-cutting measures led to the discontinuance of flights to a number of African destinations, including Cotonou, Dakar, Douala, Kinshasa, Monrovia and Nairobi; some of these routes were resumed a year later.

In April 2000, employment was 4,516. At that time, an Airbus A310-200, three Boeing 737-200 Advanced, one Boeing 747-200B Combi and one McDonnell Douglas DC-10-30, served a route network that included Abuja, Calabar, Douala, Dubai, Jeddah, Jos, Kaduna, Kano, Kinshasa, Lagos, Libreville, London, Maiduguri, Malabo, Port Harcourt, Sokoto and Yola.

That year, the International Finance Corporation (IFC) was commissioned by the Federal Government to assist in the process of restructuring and privatisation of the airline.

Among three options, one of them was to partner with a large European airline; Air France, Lufthansa and Swissair were all considered. Other option was to liquidate the carrier. A fleet comprising 32 aircraft in 1984 gradually depleted to a three-strong at that time.

The IFC withdrew from its advisory position in 2001 citing the unwillingness of both the company and the government to carry out the necessary measures that would make the airline attractive to potential investors. Likewise, there were various allegations claiming the airline’s failure was accelerated by former leaders, who looted and mismanaged the company.

In 1997, the United Kingdom (UK) Civil Aviation Authority had banned the airline from operating into its territory citing safety concerns; the Federal Government replied, banning British Airways operations.

The UK cited safety concerns again in 2001 when it refused to allow Nigeria Airways to operate the Lagos–London route, this time regarding the Boeing 747 that was leased from Air Djibouti to fly the route.

The carrier ceased operations in 2003. The Nigerian government later came to an agreement with Virgin Atlantic Airways to found Virgin Nigeria Airways, intended as a replacement, yet the ground facilities of the folded Nigeria Airways were eventually taken over by an indigenous airline that has dominated the business till date.

NATION