NIGERIA AIR: TOO EARLY TO CELEBRATE THE RETURN OF ‘THE PRODIGAL SON’
July 22, 2018
Aviation minister Hadi Sirika confirmed that he would commence negotiations with investors with a view to unveiling a new national carrier at the ongoing Farnborough International Air Show in the UK.
Some Nigerians have already began celebrating this move as an achievement of the President Muhammadu Buhari’s administration, of course owing to the fact that as presumed ‘giants of Africa’ we lost the opportunity to maintain our dominance in the sky several decades ago when Nigeria Airways gradually disappeared as a result of so many known factors.
The biblical prodigal son vividly shows how a very wealthy father of a man who had demanded and squandered his inheritance, throw up a huge celebration upon the return of his son after years of languishing in penury despite the status of his father.
The story of Nigeria Air may not entirely be different from the prodigal son, as the national carrier, despite several efforts at investing huge capital resources to resuscitate it, remain moribund after several years, yet Nigerians are quick to throw a party over its return with a new name and logo.
Richard Branson, MD/CEO of Virgin Atlantic Airlines had signed an MOU with the Nigerian government in September 2004 to return Nigeria’s national carrier back to the sky via a partnership with an internationally and renowned aviation expert on a 49%/51% ownership structure with Nigeria getting the extra advantage.
But after 5 years Mr. Branson in 2009 said, “The behaviour of the then Nigerian authorities was similar to the way the “Mafioso” behaved in the United States in the 1930s. Recall that this was deal which was struck with fanfare when operations began in June 2005 by former President Olusegun Obasanjo’s administration was hailed by the brokers as a capable replacement for the moribund Nigerian Airways which was said to have been killed by corruption and inefficiency.
However, the proposed Nigeria Air in the view of most experts raises various red flags. Why are we getting just 5% for our sovereign name use despite the many attendant leverages we offer?
Why are the so called investors being shrouded in secrecy despite the Minister of State for Aviation, Hadi Sirika leading negotiations.
A Daily Trust report in 2009 revealed what Captain Sam Akerele, then Secretary-General of Aviation Round Table in a media chat said about what went wrong with Virgin Nigeria. “Right from day one, the case of Virgin Nigeria was shrouded in mystery. It was the hand of Esau and the voice of Jacob. The brand colour was that of Virgin Atlantic but the name was Virgin Nigeria. And this was not normal. For him, this was not a proper arrangement as it was a clever trick played on the intellect of Nigerians giving them the false impression of a national carrier”.
Could we be heading the same direction 14 years down the line with very sketchy details surrounding this new transaction?
A comparative look at other indigenous African airlines operating at the global level, reveal that Rwanda Air is 99% owned by the Rwandan Government, Kenya Airways is 48% owned by the Kenyan government. Ethiopian airlines similarly, is owned 100% by the Ethiopian government, while
South Africa Airways owned in huge percentages by the South African government with its alliance partners
everywhere in Africa.
Significant fact to note here is that there is a deliberate rate of high ownership percentages for the various African national airlines, except for the newly proposed Nigerian Air which we are been told will only be 5% owned by the Nigerian Government with over $310m pumped into the project as its take off investment share.
Records available show that Virgin Nigeria was capitalised with $50 million. As at that time, $50 million seemed sufficient bearing in mind the reservation of routes that was given to the airline, which was a source of revenue. Airline revenue is basically dependent on its routes. But if you want to set up a domestic airline, you need about $200 million. If you want to set up a long haul airline, you need about $400 million, to get aircraft, personnel, training, infrastructure, insurance and what have you.
Before we begin to dance and celebrate the return of the proverbial ‘Prodigal Son’ of the aviation sector, Nigerians may need to ask why we have to spend over $300m to set up a national carrier and still have 5% ownership, which means that our partners are literally coming with mind blowing figures to cover their part of the 95% share capital. That should give us better insight into the ‘fantastic’ airline being revived by President Buhari’s administration.
Although it is lauded by many Nigerians as a novel effort at restoring nation’s lost glory, we need to approach this proposal with cautious optimism – knowing that we have traveled this road before – while jubilating over any meaningful gains or any achievement in this regards by the Buhari administration, because celebrating the ‘naming’ of an unborn child is not a typical African way of life (I stand to be corrected).
Nkemnji Global Tech
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