• Monday, March 04, 2024
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BusinessDay

Beyond Ibom Air, China state run airlines model may help Lagos Air succeed

Hardship: Sanwo-Olu appeals to Lagos residents to stay calm

The financial and reputational growth of Akwa-Ibom State’s Nigerian-run airline, Ibom Air, are perhaps some of the several factors that may have inspired the Lagos State governor, Babajide Sanwo-Olu, to push the idea of establishing an airline that represents Lagos State.

The governor disclosed this information at a recent Lagos West Senatorial District People’s Town Hall Meeting, unveiling intentionsunveiling intentions for the airline to accompany the upcoming Lekki airport, scheduled for completion under the current administration.

Ibom Air, conceived by Idom Emmanuel, the former governor of oil-rich Akwa-Ibom State, was established in 2019 and currently operates nine aircraft. The Lagos State government is optimistic that, with its significantly larger population and numerous revenue-generating commercial ventures surpassing any other state in Nigeria, it can quickly outpace Ibom Air once the Lekki airport becomes fully operational alongside Lagos Air.

ibom air

Looking beyond Ibom Air, Lagos Air might find inspiration in the successful China model, which has led to increased passenger traffic and profitability for several airlines. With 16 out of 28 indigenous airlines fully state-controlled in China, emphasising strong government support, investment, and strategic partnerships, Lagos State can effectively utilise these features for the development of Lagos Air.

An examination of these factors and how they have been used could help the state government develop a workable model for the airline.

Government Support and Investment: The Chinese government has provided substantial support and investment to its state-owned airlines, enabling them to expand their fleets, develop infrastructure, and compete globally. This support includes financial assistance, access to capital, and favourable policies.

Market Dominance: Chinese state-owned airlines, such as China Eastern Airlines, China Southern Airlines, and Air China, dominate the domestic market due to their extensive route networks, efficient operations, and competitive pricing. With China being the world’s most populous country, there is a high demand for air travel, which these airlines effectively capitalise on.

Strategic Partnerships: State-owned airlines in China have formed strategic partnerships with international carriers, joining global airline alliances such as SkyTeam and Star Alliance. These partnerships enhance their global reach, improve service quality, and facilitate code-sharing agreements, allowing them to offer a wider range of destinations to passengers.

Government Control and Stability: Being state-owned, Chinese airlines benefit from government control and stability. This ensures continuity in strategic planning, regulatory compliance, and long-term investment, providing a sense of security to both investors and passengers.

Modern Fleet and Infrastructure: Chinese state-owned airlines operate modern fleets equipped with advanced aircraft, offering passengers a comfortable and safe travel experience. Moreover, China has invested heavily in airport infrastructure, including the construction of new airports and the expansion of existing ones, to accommodate the growing demand for air travel.

National Development Goals: Chinese state-owned airlines align with the country’s broader development goals, including promoting tourism, boosting trade, and enhancing connectivity. As key players in China’s aviation sector, these airlines contribute to the country’s economic growth and international influence.

In light of the above facts, find below the best 10 state-run airlines in the world.

Recent rankings by Simple Flying highlight the top 10 best-run state airlines worldwide, shedding light on their ownership structures, financial performances, and operational scopes.

Turkish Airlines: With 340 destinations, Turkish Airlines stands as the world’s third-largest airline. The Turkish government’s Ministry of Privatisation Administration holds a 49.12% stake, contributing to its $3.2 billion profit in 2022.

Turkish Airlines
Turkish Airlines

China Eastern Airlines: Majority-owned by the Chinese government, China Eastern operates 248 destinations, facing a $4.4 billion loss last year. Notably, foreign investors like Delta Air Lines and the Vanguard Group hold significant stakes.

China Southern Airlines: Serving 216 destinations, China Southern boasts a fleet of 650 aircraft. Despite a $2.5 billion loss in 2022, the carrier’s foreign investors, including American Airlines and the Vanguard Group, play influential roles.

Air France: As a subsidiary of Air France-KLM, the French government maintains a 28.6% share. Noteworthy foreign stakeholders like China Eastern Airlines and Delta Air Lines contribute to its diverse ownership structure.

Coronavirus: Air France lands in Lagos, evacuates 260 nationals to Paris
Air France

Air China: With a 53.46% stake held by the Chinese government, Air China faces challenges, posting a $5.6 billion loss in 2022. Cathay Pacific, representing Hong Kong, also holds a substantial interest.

Qatar Airways: Fully owned by the Qatari government, Qatar Airways profited over $1.2 billion in 2022, partly due to the FIFA World Cup. Political tensions, including the Saudi-led blockade, have impacted its operations.

Qatar Airways
To mark this milestone, the new service was inaugurated by the airline’s state-of-the-art Boeing 787 Dreamliner featuring 22 seats in Business Class and 232 seats in Economy Class.

Emirates: The Dubai-based carrier, fully state-owned, operates over 130 destinations. Its parent company, the Emirates Group, reported a $3 billion profit in 2022.

Vueling: Despite being a Spanish carrier, Vueling is owned by the Qatari government through the International Airlines Group (IAG). Its 25.43% stake reflects Qatar’s influence within the conglomerate.

Korean Air: South Korea’s flag carrier, Korean Air, sees diversified ownership. While the Korean government holds a 10% share, other state-owned entities contribute to its stake.

Aeroflot Russia’s flag carrier, Aeroflot, is 73.77% state-owned. Amid geopolitical tensions and sanctions, its financial reporting has faced challenges.