Kick at partner’s selection process
The hopes of floating a new national carrier before the end of 2022 may be derailed if the federal government fails to address major concerns from Nigerians and stakeholders in the aviation sector.
The concerns include foreign exchange scarcity, minimal support from the federal government, and acute scarcity of aviation fuel otherwise known as Jet A1, amongst others.
Nigeria since independence had made 10 attempts to float and run a virile national airline but virtually all failed. In its eleventh attempt, last month the Ministry of Aviation selected Ethiopian Airlines, ET, as its core investor and technical partner for Nigeria Air, giving it 49 percent equity stakes.
However, ahead of moves for the operational kickoff of the new national carrier, stakeholders who spoke to Vanguard Aviation World accused the federal government of competing with Nigerian aviation industry operators including the airlines, pilots, flight crews, and engineers, with the new national carrier as it will be run under a wet lease.
They also lamented that the selection process of partners by the federal government has not been transparent, stressing that there are a lot of hidden details.
ET partnership camouflage of personal interest — Experts
Speaking on the development, Principal Partner, Avaero Capital, Sindy Foster, stated that, “The FG will own five percent of the “National Carrier”. This means that the government will be a shareholder in a private company which will be competing with existing Nigerian airlines.
The government through its parastatals which regulate and manage the aviation industry via the Ministry of Aviation, the Nigerian Civil Aviation Authority, NCAA, Federal Airport Authority of Nigeria, FAAN and Nigerian Airspace Management Agency, NAMA (all headed by political appointees) will be a part owner of a competing airline. It is natural for any shareholder to want to ensure their investment is secure and fruitful.
“The government controls import of aviation fuel through the Nigerian National Petroleum Company Limited, NNPC and regulated fuel marketers. “The government controls access to forex via the CBN. The government also controls access to bilateral air service routes. Therefore, this imbalance or conflict of interest may not favour existing private owned Nigerian airlines.”
Also, a former military airport commandant, Capt. John Ojikutu said: “Our competitor should not be our partner or part owner. If it does our interest becomes subordinated and the competition disappears.
“What I believe we have with Ethiopian Airline is not partnership but commercial agreements on our Bi-lateral Bilateral Air Service Agreement, BASA, routes, the national interest comes first for each of the partner.
“I said earlier that how to ensure the 49 percent equity will be the foremost interest of the Ethiopian airline on BASA routes.
“Most passengers on Ethiopian airline are transiting Addis Ababa not destined there; so, transiting passengers must pay the price in addition to the airfare; that is a plus for the country.
“Do we have such in Lagos for those transiting on Ethiopian Airlines? Go for partnership with airlines that are not competing with us on the BASA routes is my gospel.”
Speaking at a webinar on Nigeria Air: The Solution to Nigeria’s Aviation Problem” facilitated by Avaero Capital Partners, the Chief Executive Officer, Mr. Obiora Okonkwo, noted that ET entrance as the major partner in the Nigeria Air is not in the best interest of the country.
He stated that the partnership with ET is a camouflage of personal interest and a policy somersault.
“The Airline Operators of Nigeria, AON, in the past few years have built a strong image for the country’s aviation sector globally.
“ET is getting support from it home government, why are we not getting same support from our own government?
“Most of our aircraft can go any route in the world. In the aviation sector, short haul is even more complex than long hauls.
“AON need support and protection from the federal government. We are yet to see anything Nigeria in this new national carrier.
Also, the Chief Executive Officer of TopBrass Airline, Capt. Roland Iyayi, warned that the fate that befell the defunct Virgin Nigeria set up in partnership with Virgin Atlantic of United Kingdom could befall the Nigeria Air.
According to him, it doesn’t make any strategic sense to enter into a partnership with Ethiopian Airlines. He said it would be zero value addition to domestic market in Nigeria, aside from killing the domestic market.
FG budgets N30bn for new national carrier, others
Meanwhile, the Federal Government, FG, has earmarked the sum of N29.87bn as working capital for the proposed national carrier, Nigeria Air, and for 46 new projects in the aviation sector.
An analysis of the 2023 budget presented to the National Assembly by President Mohammadu Buhari, indicated the amount allocated for the different new projects and the new airline.
The national carrier, which was described as an “ongoing” project in the budget, got an allocation of N700m as working capital for its establishment.
Similarly, in the same national budget, on a different column, the Federal Government allotted N400 Million for the same project, while consultancy for the establishment of national carrier totalled N200 million.
Vanguard