A new national carrier, a new drainpipe

Buhari

Buhari

AGAINST the backdrop of the massive corruption and ineptitude that collapsed the defunct Nigeria Airways, the plan by the Buhari administration to resurrect the dead national carrier, under any guise, is a step in the wrong direction. A new national carrier, be it airline or shipping, is the last thing that Nigerians would support at a time people are expecting change in the way the country has been misgoverned in the past.

The same corruption that killed Nigeria Airways also killed the Nigerian National Shipping Line (NNSL). Both were national carriers that are now dead. Reviving the Nigeria Airways now is tantamount to re-opening a closed corruption drain pipe. Why not also revive the NNSL so as to get a full measure of national pride? Let the private people do the airline business in line with the privatization policy of the Federal Government.

It is amazing how President Muhammadu Buhari, who has vowed to wipe out corruption, is scheming to revive a decadent corruption cesspit in the name of national pride. The dead Nigeria Airways was a metaphor of everything that was wrong with Nigeria. It represented how not to run corporate Nigeria. It should be allowed to rest in peace. There are many people-oriented issues that should engage the attention of government and not running an airline.

The Nigerian environment, at the moment, is not aviation friendly; the operating environment is very harsh, hence, the fumbling of several airlines operating in the country. The necessary infrastructures are lacking. The three major international airports at Lagos, Abuja and Port Harcourt, have consistently been rated among the worst in the world. The facilities at the airports are substandard.

Our airports, whether international or domestic, are an eyesore. The Lagos International Airport Road alone could scare visitors and investors because of the decadence the supposedly international gateway advertises. That road is a dark alley. The international airline operators have on many occasions bemoaned the decay that characterises Nigerian airport facilities – offices, parking lot, arrival and departure halls, conveniences, insecurity, etc.

Over the weekend, there were reports that Virgin Atlantic was pulling out of Nigeria after disengaging its entire Nigerian cabin crew. Virgin began operations in Nigeria in 2001. At a point, it flew the national flag as Virgin Nigeria, which was short lived. There is no airline in Nigeria that has good story to tell about its experience. Is President Buhari ready to stomach the sleaze that will result from this second adventure?

The corruption that led to the airlines’ bankruptcy is still rife. President Buhari should focus on how to improve the lot of suffering Nigerians and not how to how to leverage the pleasure of a few highly placed individuals and their families and cronies. If there is money, the President should begin to pay the N5000 monthly subsidy allowance he and his party, the All Progressives Congress (APC), promised Nigerians, which is now being demanded.

It would be paradoxical, indeed ironic and contradictory, for the Buhari administration that was elected on the mantra of anti corruption to begin to exhume rotten institutions that personified corruption, with the aim of reviving them.

The government move is coming on the heels of two recent reports on aviation. First was the Ahmed Joda Transition Committee report, which, among other things, advised Buhari to merge the debt-ridden Arik, Aero and others, to form a national carrier.  This is pigheaded advise that amounts to putting all our eggs in one basket, as that will mark the end of private airlines in Nigeria.

What happens if the hybrid new national carrier fails when there is no more private airlines to fall back on? What a faulty recommendation that would plunge the new national carrier into unimaginable financial crisis from the outset.

Does one need to be a business expert to know that you don’t start a new business with debt-burden that you did not incur if the business is expected to make headway? How could Nigeria’s new national carrier take over debt-ridden private airlines and expect to break even?

The second was Capt. Addulsalami Mohammed Committee’s report that was set up to work out the modalities for the establishment of a national carrier. While the Joda Committee was set up shortly after the general election in March, the Mohammed Committee was inaugurated only last August. Both reports favour the establishment of a national carrier.

Reports show that six of Nigeria’s leading airlines are heavily indebted to the tune of about N130 billion. This huge debt forced the airlines to turn to the Asset Management Corporation of Nigeria (AMCON) for a lifeline.

In 2012, virtually all the private airlines operating in Nigeria were at the verge of going under until AMCON came to their rescue with a N132 billion lifeline. Ever since then, the airlines have been managing to remain in business.

Last year, 2014, the debt portfolio of five of the private airlines with AMCON stood at over 190 billion. This excludes sundry debts owed to the Federal Airports Authority of Nigeria (FAAN), the Nigerian Airspace Management Agencies (NAMA), suppliers and other institutions.

Worldwide, in this era of privatization, having a national airline is no longer in vogue. In a country like Nigeria, having a national airline is bad business. Since 2000, government has been implementing a privatization programme that has seen major national institutions like the power sector, Nigerian ports, airports, etc, privatized or concessioned. What is the rationale for thinking otherwise with regard to a national airline?

Most governments have hands-off the running of national airlines or at best have minority share in private-public arrangement. For instance, all the major international airlines that fly into Nigeria such as Alitalia, Lufthansa, British Airways, Aer Lingus, among others, have been privatized. Government has only 6 and 18 per cent equity share in KLM and Air France respectively. How Nigeria that is battling with mundane issues bordering on governance, social and economic deprivation, add another headache in the name of a national carrier is baffling.

The future of aviation and airlines, according to experts, are among the most vulnerable to global and local shocks. That means contingencies, cash reserves, hedging of major risks such as oil prices, according to IATA.

If Buhari is interested in aviation, he should focus on providing the enabling environment by way of upgrading the facilities at the airports and making them meet international standard. Private airlines should be encouraged to operate.



4 Comments
  • Fuzio

    I cannot agree with you more. The government messes up every business it gets into. Look at the refinery business. The raw material is there in abundance, the market is insatiable and yet they cannot run it successfully. Nigeria Airways should be allowed to rest peacefully in its grave. The government should concentrate on the business of governing which it is already doing a horrible job of and live the airline business to the private sector as the writer rightly suggested. If the main reason for this new found love for a national carrier is to fly Muslim pilgrims to Mecca, then it is regrettable.

  • emmanuel kalu

    great article. if the president continues to go down this line of thinking, and continue to take advice from this committees, it would mean that he clearly doesn’t understand the country problem, nor does he understand the airline business and completely has his priority wrong. we don’t need a national airline, what we need is for the government to work on with the current airline to help them be profitable. we are yet to have a maintenance hangar in Nigeria, which means every airline has to spend millions every year to fly their planes aboard for maintenance and repairs. not to mention that regulators have also mandated that airlines do this more often than is internationally accepted or standard. This cost airlines huge amount of money, is a drain on FOREX, is capital flight, job and capacity loss. Nigerian airport are pure junk, the standard is so low compared to even smaller countries around Africa.
    Mr president, focus on what the power have being crying for. we need electricity, we need constant supply of fuel, we need good road, we need effective transportation, we need basic health care. we need an industrial and agricultural sector.

  • Anthony Alozie

    Reading through the article, I see the realities of a modern day Nigeria but you have to forgive our President, he has looked back and knew of the days of Nigerian Airways, NNSL, Nitel, NRC, etc, flying Nigerian flag and employing many Nigerians, a first choice for every Nigeria. I had to also disagree with PMB on the issues of running the refineries and building new ones. With PMB, he can enforce rules and ensure people do not abuse their office and corruption is kept very low. Hence he can finance and run these Entities successfully. Check out the airlines of the Gulf Region, (Emirates airlines etc) they are doing far better than the European and American Airlines who run purely as a private sector Entities. The question we have to answer is ‘After PMB what next’?. This is also what our president has to consider, he will not be the only Nigeria president, he has 4 years or a maximum of 8 years to enforce what he believes in and things will work. After that the wolves will come in and it becomes business as usual and these National monuments will go the way of the rest and we shall be back to square one again. The refineries will be looted through complete biannual TAM that are executed irrespective of the fact the refineries work for less than 5% of the time, salaries and all sorts of things are paid while the employees are idle and the crude for local refining are distributed to friends who sell them and account for the share of those in Govt. The Govt turns back to import products at exorbitant prices and pay subsidy for fictitious deliveries so the funds can be shared. Same as the railways, shipping lines, airlines. Check how much we spent on the railway projects from Abacha through Obasanjo to GEJ. That could build modern tracks and provide modern high speed train all over Nigeria. Where are the trains??? What happened is that we shall continue repaying all the Chinaness loans while few men are made multi billionaires from the failed contracts. I will rather advice PMB to put in required infrastructure to encourage the private sector and put up required security to attract FDI into these areas rather than government getting involved. For the refineries, it should be made compulsory that all IOC and major operators must refine at least a certain percentage of their output in country. They can be given 4 years to achieve this. This will be better than Govt going into these investments directly.
    It will take a long time for another PMB to come to power. The Tinibus, Atikus, Amechis etc of this world will soon realize what bad investments they made in PMB hence others will learn their lesson. Where will PMB have found the resources to defeat a power horse like PDP?

  • peterside Onwuta

    Reading this article works my blood up. Which infrastructure do we need to set up an airline? PMB can set up the airline by guarantee and with some percentage in order to give room for investors. Who do we have as investors in Nigeria? Do we ever ask the right questions or do we know the answers and keep mum in order not to pull down our statement. Investors in Nigeria are govt officials with serious front. We need an airline that will bring in foreign exchange and also managed prudentially. We have serious Nigerians that can run the airlines without foreign partners as they did with Nigeria Airways. There were lots of loopholes about Nigeria Airways. Our New airline would need to be managed prudentially without freebees. Strictly managed by the rules. We need to be seen helping ourselves as Nigerians to run a project for ourselves so that the world would see we can stand on our feet for once. What can we say that we are able to work and it is a pride for our Nation? Then the same people will want to pull it down. Why given up without trying except it will be sabotaged by other competitors, who would not want a Nigeria Flag bearer fly.

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