The Federal Executive Council took the right decision when it suspended the new national carrier project indefinitely. It offered no reasons for its action save for “some strategic reasons,” the Minister of State for Transport, Hadi Sirika, volunteered to newsmen.
Right from the outset, the Federal Government was wrongheaded as the project moved against the grain. The global trend is the transfer of such public enterprise to private ownership through privatisation. As a result, the Federal Government should move a step further by cancelling the project totally. This will save the country from another Nigeria Airways’ ugly experience. All funds set aside for this project should be returned to government’s coffers without delay.
From the very outset, the whole project appeared suspicious. After obtaining the Certificate of Compliance from the Nigerian Infrastructure Concession Regulatory Commission, Sirika enthusiastically said government “can now go into the investor search.” This was in July. For an airline whose first flight was programmed to be in December, Sirika’s proposal was simply laughable and unrealistic.
This reckless optimism and misplaced energy, soon after, underpinned the unveiling of “Nigeria Air” livery in London, during an Air Show. He said that Nigeria “will make profit in three years after operations. We will make the investments and follow the business plan through private sector management.” The brashness was followed by the announcement that $8 million would be provided for the airline’s start-up capital and another $300 million for its working capital and operations from 2018 to 2020. This seemed to have made the project a fait accompli.
Apparently, these frenetic moves were indicative of the fact that the core investor was elusive. The Minister of Information and Culture, Lai Mohammed, let the cat out of the bag last week when he said lack of investors was the reason for the suspension. Therefore, the ministry of aviation officials should stop misleading the public with their preachment of illusory investment interests of Boeing, Airbus, African Development Bank and other financial institutions in Nigeria Air.
It bears repeating that Nigeria does not have the culture or discipline to successfully manage public enterprises. Apart from the defunct Nigeria Airways whose retirees got N22 billion for their gratuities and pension on Tuesday, after 15 years, our unproductive four refineries, Ajaokuta Steel Company Limited and National Shipping Lines are other monuments of ruin, which tellingly reveal that government has no business being in business.
Besides, Nigeria can learn a lot from global trends. For instance, the British Airways, a loss-making behemoth, had its fortunes changed after it was sold in 1987. The Dutch national carrier, KLM, embraced the same ownership change in 1998. By 2004, Air France and KLM merged, while Swiss Air and Austria’s national carrier were bought by Lufthansa. Apart from privatising BA, UK authorities have also privatised the British Airports Authority; sold Gatwick Airport to Global Infrastructure Partners in 2009 and Stansted Airport to Manchester Airport Group in 2013. In South America and Middle East, it is the same retreat of public ownership of airlines. This has enhanced efficiency and service delivery in the countries involved.
Nigeria should not delay in doing the same with the Nigeria Airspace Management Authority, Federal Airports Authority of Nigeria and Nigeria Civil Aviation Authority, among others, to maximise value addition and private capital inflow. Energy should be channelled towards addressing the enabling environment challenges that choke airline business in the country. Both local and international operators are complaining. Foreign airlines in July bemoaned the high and multiple charges at the Murtala Muhammed International Airport, Lagos, which they claimed was the most expensive globally, without even the appropriate infrastructure.
The consequence of this is that the cost is transferred to Nigerian travellers. On domestic routes, the story is the same. Airline Operators of Nigeria say they have 32 charges to contend with. This should not be so. Perhaps, this is why the wings of many local airlines have been clipped by debts, resulting in the extinction of over 40 of them. Among them are Bellview, Okada, Oriental, Concord, EAS, Harco, Triad, Savannah and Virgin Nigeria – owned by a Briton, Richard Branson. According to Assets Management Company of Nigeria, one of the airlines hobbled by debt owed its trade and finance creditors N375 billion in 2017, leading to the takeover of its operations.
There is no question about it: an aviation sector that is private sector-driven stimulates the economy. The Air Peace Nigeria, recently signed a Memorandum of Understanding with Boeing, for the acquisition of 10 new Boeing 737-MAX aircraft in its fleets’ expansion for international operations. This means more jobs for the country’s unemployed pilots, aircraft maintenance engineers and allied professionals and increased public revenue.
With its offer of safest and fastest means of transport for persons and cargos, the International Air Transport Association says revenues in the airline business have continued to ramp up. From $369 billion in 2004, it moved to $746 in 2014. Nigeria can leverage this boom by embracing a wholesale transparent privatisation of its air services and putting in place an effective regulatory framework. It is a catalyst for a robust socio-economic development that will serve it well as Africa’s biggest economy.
