A second chance to deliver national carrier, airport concession

Should the Federal Government aim to execute the aviation development master plan, the Ministry of State for Aviation must, this time, go the whole hog and do things differently too. WOLE OYEBADE writes.
President Muhammadu Buhari’s victory at the recent poll has presented the Ministry of State for Aviation a second chance to create a good impression by executing the aviation development master plan as promised.The master plan, introduced in 2016, has a new national carrier, concession of Federal-owned airports nationwide, Maintenance Repair and Overhaul (MRO) facility and aircraft leasing companies, as some of its tangibles. Except for the national carrier that successfully generated much smoke but no fire, all others are still figments of imagination.

Granted that some ground works had been done in the last two years, the essence of the master plan is not lost on stakeholders and how the handlers should go about it to avoid mistakes of the past. Specifically, they want the Minister of State for Aviation, Hadi Sirika, should he survive the imminent cabinet reshuffle, to be more holistic in the development agenda, defined roles for all stakeholders via policies, be less secretive in execution of tangibles and…

Chances of Sirika’s second term
All things been equal, an overdue cabinet reshuffle is in the mix ahead of May 29 handover date. But the least unperturbed of any shakeup in Buhari’s cabinet should be Sirika. Besides his family ties with Buhari, Sirika belongs to an inner caucus of president’s men and confidants – as an intermediary between the president and the northern grassroots politics, with enormous responsibilities too in and out of elections.

Sentiments aside, Sirika is a tested aviator and has the aviation development master plan as his brainchild, which also aligns with President Buhari’s 2015 campaign promises to revive the national carrier. All put together, Sirika stands a good chance of retaining his seat, as well as convince the public that the London launch of Nigeria’s national carrier was not a state sponsored flight of fancy.

Perhaps the electioneering campaign was a distraction to Sirika’s aviation master plan agenda in the last five months, Sirika especially, has another opportunity to get the agenda off the ground and to high altitude of comfort. A policy direction may be the best way to start.

Aviation policy first
Statutory provision has it that the Federal Ministry of Transportation (Aviation Sector) shall responsible to the government of the Federal Republic of Nigeria for all matters concerning civil aviation. The Minister of State (Aviation) is in charge of policy formulation, overall management of the aviation industry and shall ensure review of the Nigerian Civil Aviation Policy (NCAP) at least once every five years or as at when necessary.

The last time such review was done was 2013. Hence, the challenge of identifying the guiding aviation policy of the sector.President of the National Association of Nigerian Travel Agencies (NANTA), Bernard Bankole, said it would be difficult to rally aviation stakeholders or mitigate resistance without a clear-cut policy direction.

Bankole said it was quite unfortunate that critical stakeholders of the transport sector, like the airlines operators, and travel agencies were often left to second guess their roles in government’s initiatives in the sector, despite its effect on all and sundry.“Travel agencies are the downstream sector of the aviation, but because government has not deemed it fit to recognize the role they play, they have not formulated policies to protect, guide and structure the way the business is done. As such, our industry has become an all-comer for every tom dick and harry around the world.

“The current administration had said to us that they were working on the Civil Aviation Act, to update it, but till date, no stakeholders’ meeting has been held to look into the act that protects the entire industry. Because the entire industry has to be covered up to the travel agencies and that is why we are saying we need to look into the laws that govern activities, including that of the travel agencies. Guiding policies will solve most of the problems,” Bankole said.

Nigeria Air in concessioned airports
An albatross before Sirika and the Buhari’s administration at large is the unfinished business of creating a new national carrier, already named Nigeria Air. It was one of the dummies Buhari sold to Nigerians in 2015 and would be one of the yardsticks to measure his administration after eight years.Besides the valid arguments against a national carrier coming from airlines operators, many stakeholders are unanimous that Nigeria Air is the way to go, just as Sirika kept assuring that the airline only suffered a temporary setback but still in the offing.

Recall that the FG had in July unveiled the name and logo of the proposed national carrier, Nigeria Air, at the Farnborough International Public Air show in London, ahead of take-off in December 24. As contained in the Outline Business Case (OBC) approved by the Infrastructure Concession Regulatory Commission (ICRC), the airline is a Public Private Partnership (PPP), with 95 per cent share pushed to investors while the government will own the rest.
To get the new national carrier off to a start, the Federal Government will be injecting the sum of N3.168 billion ($8.8 million) as the startup capital of the Nigeria Air. The Guardian gathered that the initial injection of N3.2 billion startup fund is part payment of the FG’s five per cent equity in the investment, whose take-off fund in the next three years of operation has been put at N108 billion ($300 million).

Shortly after the London launch, the airline, however, became a hard sell to quality foreign investors and technical partners. The Guardian learnt that though several bids were received across the board, they were from carriers that are either struggling to earn profit or from main competitors that the Nigeria Air was designed to compete with.

The last spanner in the works, The Guardian learnt, came from the Federal Executive Council, where about four but “very strong” members voted nay for the December 24 take-off of the new carrier. Preference of the big wigs was a 2019 launch and notwithstanding their number, they carried the day, forcing Sirika to announced indefinite suspension of the launch.

Aviation Consultant and CEO of Belujane Konzult, Chris Aligbe, said despite the setback, the transport sub-sector has little chances of development outside the national carrier and concessioning of the airports.Aligbe said Sirika must, however, rally major stakeholders behind the agenda, including dissenting voices in the cabinet.He said the beauty of the project is that the 2019 Appropriation Bill already has provisions for a national carrier but the ministry must see it through the execution phase and in good time too.

“I strongly believe that our airports should be concessioned and unless they are, we will never move forward the aviation sector. It is part of their programmes for this administration and I believe they should continue. I also believe in a national carrier with government’s sovereign cover of 10 to 15 per cent equity, and not five per cent. Efforts should continue towards having a virile national carrier.

“FAAN telling airlines to move to other airports is happening because we don’t have a national carrier. If we do, national carrier that will not happen because it will easily distribute traffic. The government should maintain the focus on national carrier and concession the airport and it should not take forever,” Aligbe said.

Group Captain John Ojikutu (rtd.) concurred, saying “no requiem for the national carrier; the plan to establish it must continue but it must be done with foreign technical investors holdings of not more than 40 per cent.” Ojikutu reckoned that Nigeria credible investors should own 20; Nigerian IPOs 25 per cent; Federal government five per cent and state governments 10 per cent.

Similarly, concession of the airports must go on too, but must not be limited to the international airports alone, but must include the domestic airports. Concessions must not include the aeronautical facilities and structure initially but the non aeronautical.

“Government must audit or investigate the IGR of the three aviation agencies to confirm the actual worth of their revenues and possible to have the values of what each airport concession could be worth.“The objectives to know the actual worth of their revenues and possible wastages and to know if the government intervention funds to any of these agencies can be justified. The investigation should cover 2015 to 2018 Government would conclude at the end of the investigation that there are more revenues in these agencies than it is presently been declared and these cannot be seriously ignored. Government could open an aviation intervention account at the CBN.

“The aviation intervention account should serve the purpose of financing future projects in aviation that may require government intervention with funds from other social or economic sectors. The government 5% share holdings in the proposed national carrier should come from such funds. 3. I have suggested foreign technical partners/investors because that is the only way now for the growth of a national carrier. That was how the defunct Nigeria Airways grew

“One thought that readily comes to my mind is the role of NANTA in the National Carrier project; NANTA as a part of the Nigeria Credible Investors in the National Carrier project can advance the interests of the Nigerian airlines and Nigeria air travellers in the Nigerian national carriers project than any of the Nigerian domestic airlines.

“NANTA is the intermediary between Nigeria government aviation government and aviation market and the international aviation commercial market. Where the domestic airlines cannot achieve any growth for economic benefits for Nigeria there must be a way a role for NANTA to achieve that growth.

“In 2016 NANTA made tickets sales of over #500bn that could have given NCAA #25bn 5% sales charges, whereas NCAA was recording sales of about #380bn with 5% sales charges of #19bn

“No private airline should have government support if there are no commercial benefits from its earnings to the state. Other option available for the private airline is to go capital market for IPOs where the public can benefit from the BASA which is considered as a national commonwealth and not a wealth only for airlines. In all that I have said so far, is that the enforcement of the economic regulations a policies programmes are faulty and this needs to be vigorously and urgently addressed.”