Does Nigeria really need a national carrier?

As the federal government intensifies plans to set up a national carrier, several concerns have been raised by experts and stakeholders in the sector. Some of these concerns are as follows: Does Nigeria really need a national carrier? Since the project may be fully or partly managed and regulated by the government, will there be a level playing field for domestic carriers to cohabit and thrive?

In the event that a national carrier comes on stream, will policies in place be applicable to both domestic carriers and the ‘government-managed carrier’? Will it be transparent and operated using the right models? Why did the former national carriers and attempts to set up some in the past fail? Has Nigeria really learned from its mistakes?

These are myriads of questions that have been left unanswered as the road to ‘Nigeria Air’ remains littered with skeletons of failed past efforts.

These concerns are sprouting at a time when the Transaction Advisers for the establishment of a national carrier, Air Nigeria, have concluded their research and are set to submit the outcome of their research to the Federal Government.

Hadi Sirika, the Minister of Aviation, who spoke in Abuja during a meeting with executive officers of the National Air Traffic Controllers Association, assured them that plans for the country to have its own national carrier remains on the front burner.

What is a national carrier?

A national carrier is a transportation company, such as an airline or shipping company, which, being locally registered in a given sovereign state, enjoys preferential rights or privileges accorded by the government for international operations. Historically, the term was used to refer to airlines owned by the government of their home country and associated with the national identity of that country.

Does Nigeria need a national carrier?

The existence of national carrier in any country is often necessitated by the need to reciprocate air traffic in a situation where there are no capable local carriers, the need to represent the country in other climes and a need to create employment opportunities.

Tayo Ojuri, the chief executive officer of Aglow Limited, an aviation support services company said in a situation where all these factors are met by operating local carriers, it may be questionable to set up a national carrier, especially in a country that is currently facing economic downturn and battling with basic needs such as basic health care, housing, electricity, and good roads, amongst others.

Ojuri hints that if funds are channelled to the above projects, rather than a national carrier at this time, it will be beneficial for not just the economy but the common man at large.

Giant strides of the local operators that are worth recognising

Gone are the days when Nigerian carriers are being tagged ‘not capable to reciprocate traffic’ or ‘not capable of representing Nigeria outside the shores of the country.’ A pronounced example is Air Peace, Nigeria’s largest carrier has solidified its operations both in Nigeria and outside the shores of the country.

Air Peace which operates the West coast regions has also been able to sustain Sharjah operations (UAE route) almost three months after it commenced, shaking-up competition in the route with its relatively cheaper tickets.

Air Peace is currently playing the supposed role of the national carrier in the evacuation of several stranded Nigerians in South Africa as a result of the xenophobic attacks. The airline will spend over N300 million to carry out the evacuation.

Air Peace, no doubt is the highest employing carrier in Nigeria, creating over 5,000 direct and indirect employments; again playing the role of a national carrier.

Med-View Airlines Plc., with support of First Bank Plc. and foreign partners acquired B777 aircraft for its Hajj operations and revival of the truncated London and Dubai operations.

Dana Air has given its strategic route expansion plan a push with the arrival in Lagos of one of its newly acquired Boeing 737 aircraft.

Following the takeover of Arik Air by the Asset Management Corporation of Nigeria (AMCON) in February 2017 and injection of N1 billion, the airline showed signs of stability but not recovery. Besides paying salaries and meeting basic obligations, about nine out of 30 aircraft owned by Arik returned to operation, sustaining both local and regional operations.

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Air Peace is, however, the most stable of the airlines and it is not by accident that the airlines account for about 40 per cent of 2018 total passengers on the local front.

Indeed, the airlines led the way with an unprecedented investment in aircraft in its bid to make a strong case for Nigerian flag carriers on regional and international skies, even as no city is left behind on the home front.

To this effect, the airline recently placed a firm order for 10 brand new Embraer 195-E2 aircraft. The order comprises purchase rights for another 20 E195-E2 jets. Also, 124-seater jet in dual-class and 146-seater jet in single class configurations respectively. With all purchase rights exercised, the contract is valued at N640.5 billion ($2.12 billion) based on current list prices.

The carrier also set a regional record in September 2018 when it ordered 10 brand new aircraft from Boeing, increasing its fleet size then to about 37 aircraft. With the new order, Air Peace’s fleet size has increased to 67 aircraft.

Air Peace had earlier set a domestic record as the first Nigerian airline to acquire and register the Boeing 777 aircraft in the country. Three of the four wide-body aircraft it acquired for its long-haul operations to Dubai, Sharjah, Johannesburg, London, Houston, Guangzhou, and Mumbai have so far been delivered.

Industry stakeholders though marvelled at the unparalleled investment incapacity, they are optimistic that the 14 million passenger record may as well double in a year when at least half of Air Peace new orders join the current operating fleet.

It is therefore instructive to query the existence of a national carrier where there are capable airlines already not only representing the country but also creating job opportunities.

Past failed efforts to set up a national carrier

History has shown that this is not the first time government is floating a private sector-led airline as various attempts by past governments to set up national carriers failed over power play, government intervention, lack of management and unhealthy competition, amongst others.

Proposed national carriers and the ones that have gone into extinction include Nigerian Airways, Air Nigeria, NewCo, Nigerian Global, Nigerian Eagle, Virgin Nigeria, Air Nigeria, Nigerian Eagle and Nigeria one.

Richard Branson, the chairman of Virgin Atlantic said: “We have virgin’s ill-fated footsteps by setting up a new airline in Africa in conjunction with the Nigerian government. The details of the doomed attempts to crack the Nigerian market in the 2000s is better imagined. We put together a very good airline-the first airline in West Africa that was ever IOSA/IATA operational safety audit accredited but unfortunately it got tied down to the politics of the country. We led the airlines for 11 years.

“We fought a daily battle against government agents who wanted to daily make fortune from us, politicians who saw the government 49 per cent as a meal to seek for all kinds of favour, watchdogs (regulatory body) that didn’t know what to do and persistently asking for bribes at any point.”

Branson disclosed that N3billion was realised for the federal government of Nigeria during the joint venture and the government didn’t bring anything to the table except dubious debts by the previous carrier, Nigeria Airways

He regretted that the joint venture should have been the biggest African carrier by now if the partnership was allowed to grow, but the politicians killed it.

Parameters to put in place to ensure private-owned airlines survive

Rather than setting up a national carrier, aviation operators are calling on the government create enabling environment for domestic airlines to survive.

Nogie Meggison, chairman Airline Operators of Nigeria (AON) said some of the major issues that need to be addressed to grow the industry include: removal of Value Added Tax as domestic airlines were the only mode of transport still paying it; and review of the five per cent Ticket Sales Charge to a flat rate in line with the global best practices as well as harmonisation of over 35 multiple charges which add huge burdens on airlines, among others.

Nogie said, “A clear economic policy for the survival of domestic airlines is very critical at this time which has resulted over the years in the death of over 25 airlines in 30 years. Investors are in the business of aviation for the profit and can’t make a profit without safety or have a safe airline without profit.

“These are some of the main reasons for the short life span of Nigerian airlines averaging about eight years. With the growth in demand for domestic air travel, Nigeria can become the hub for Africa and easily make aviation the fourth contributor to the economy and a major contributor to the Gross Domestic Product as well as create 200,000 new jobs for our ailing youths through its direct and indirect link.”