The Fraud In Omale’s Claims On Aviation Bailout By Adebanji Ola

With the issue of a national carrier forced on the national agenda in the last few weeks, the airwaves appear already overtaken by a babel today. Sadly, most voices thus far are driven either by utter ignorance, mischief or both. The most recent is Captain Daniel Omale on the back page of Leadership Weekend of August 29, 2015.

Without regards for facts and figures, Captain Omale was unsparing in what clearly looks like a hatchet job against key industry players, particularly Arik Air. He was ruthless in his condemnation of the old bailout fund for Nigerian airlines and spared no word in his scathing criticism of everyone. To him, whatever ails the nation’s aviation sector starts and ends with “poor management” on the part of the airline operators. Nothing could be more misleading.

Ordinarily, one wouldn’t have bothered dignifying Omale’s laughably poor analysis with a response. But on second thought, this writer realized leaving his farrago of lies and half-truths unchallenged will amount to perpetuating same. His understanding of the intervention (or bailout) fund idea initiated by the Jonathan administration was that N300bn cash was handed out to the airlines with a large chunk of it being “kicked back” to the approving authorities or officials. Patronage? Really?

To begin with, Omale’s figures are grossly exaggerated. The amount involved in the so-called aviation intervention fund was nowhere near the N300billion he claimed. When the Bank of Industry (BOI) intervened it was also targeted at saving the banking industry by refinancing existing loans of companies in the power sector; the relief for aviation and others was not clearly defined.

In the aviation industry, the defunct Air Nigeria surprisingly got the lion’s share of N35billion at 2%, while the largest carrier (Arik Air) got N15billion at 7%, as a refinancing of part of their existing loans that were running at about 20% interest rate. Air Nigeria, being better Nigerians, closed shop barely 3 months after that BOI facility was disbursed.

Regrettably, mischievous people like Omale have managed to sell the falsehood to the public that the intervention fund was given directly to the airlines as cash. This is far from the truth. Rather, the fund was targeted at saving the banking industry by refinancing existing loans of airlines.

The banks took advantage by exacting interest rates that would make Shylock look like a saint. Matters are not helped by the progressive devaluation of the national currency, worsened by the absence of a government policy that will encourage Nigerians to fly Nigeria. While no one can rule out the possibility of poor corporate governance in a few cases – and those cases are known – that is not enough for Omale to generalize and call everyone “wasteful” or “clueless.”

From the foregoing, it is evident that Omale’s insinuation of huge kickbacks as the undertone in the disbursement of the intervention fund only exists in his imagination. The allegation only confirms one thing: that the writer is either uninformed or has other motives in his often vociferous attack on Nigerian airlines. Omale’s reference to N130 billion “very large loan portfolio of Arik Air and Aero and huge financial support by the Asset Management Company of Nigeria (AMCON),” is known only to him and his cohorts. Captain Omale may be entitled to his own opinion, but he is certainly not entitled to his own facts.

The misconception of people like Omale when they talk about Arik Air’s loan portfolio is that they don’t consider the magnitude of the airline’s investments. It is therefore absolutely normal that an airline like Arik Air, considered the largest in West and Central Africa, would also have large debt since acquisition of new aircraft go hand in hand with acquisition of debt. Elsewhere, carriers of Arik’s class enjoy massive support from their home countries in terms of concessions and subsidies. Here, the reverse is the case.

One also needs to state here that the nature of Arik Air’s relationship with AMCON is quite different from the relationship of the latter with other airlines. Although AMCON has taken over some of the loans (that emanated from financial guarantees) Arik Air has with some local banks, this should not be misconstrued to mean AMCON has equity in Arik Air. It does not.

As an industry insider, one would have expected Captain Omale to be better informed than the ordinary man on the street. The only inference one can draw from this write up is that the Captain is either deliberately falsifying the facts and figures to suit his purpose or he doesn’t have access to the records.

To grow Nigeria’s aviation sector, one expects the likes of Omale to tell the truth rather than peddling falsehood. Really, the truth today is that the operating environment for the airlines is stifling and not enabling. Apart from multiple levies, regulatory agencies in the aviation sector only seem interested in milking the local airlines to death while extorting money for services not rendered. For local carriers like Arik engaged in international haul, policies are skewed to favor foreign competitors. Yearly, foreign airlines cart away billions of dollars home in profits at the expense of the Nigerian economy. These are the real issues one expects people like Omale to help draw attention to.