I just could not see eye-to-eye with him on the matter of a national carrier. It was going to be a waste of time and resources, I argued. I had evidence.
For decades, the Nigerian government has satisfactorily shown that it cannot run any business professionally. There is no single commercial entity run by the government that does well. We always end up burning money.
The defunct national airline, Nigeria Airways, started off so well in 1958 but eventually crashed in 2003 as the Nigerian disease of mismanagement ate it up.
Its business class seats were reserved for government officials and their cronies, girlfriends and families most of whom flew free of charge.
That is the way government business is run in Nigeria. Nigeria Airways flew from turbulence to turbulence despite the economic opportunities in the aviation industry.
Ethiopian Airlines, Kenya Airways and South African Airways, owned by their respective governments, were doing fairly well but our own Nigeria Airways was descending both in service quality and profitability.
President Olusegun Obasanjo assumed office in 1999 lamenting that Nigeria Airways had 32 aircraft when he left office as military ruler in 1979.
Twenty years later, only one aircraft was functional. He promised to revive the airline. I was in the team of journalists that flew to South Africa in 2000 for the signing of a lucrative code-sharing deal with South African Airways on the Johannesburg-Lagos-New York route.
We were told the deal would breathe a new life into Nigeria Airways. It was only on paper. While SAA is still going strong, our own national airline finally collapsed under heavy debts in 2003, unable to keep head above water despite subventions and subsidies.
The climax of the sad Nigeria Airways story, as narrated by a passenger, was in May 2002. A New York-Lagos flight was delayed for 24 hours because the airline couldn’t pay for fuel. Passengers had to contribute to fuel the aircraft. One passenger gave a loan of $5,000 to the airline.
It turned out to be the last flight. Another sad story is that of the Nigerian National Shipping Line (NNSL), set up by government in 1959. It sank in 1995 under the weight of debts and mismanagement.
All its 21 vessels were sold off. With these stories at the back of my mind, I was not excited when the Buhari administration started talking about setting up a national carrier.
But I am having a rethink with the unveiling of the Nigeria Air brand on Wednesday. Sirika said the federal government will own only 5% as well as raise the start-up capital for operations to commence in December.
He said it is going to be a public private partnership (PPP) to be privately managed. Investors will own the remaining 95%. There is already an international drive to market the venture to partners and investors.
The proposed carrier is expected to be a major player in the aviation sector, serving domestic, regional and international routes. The business projection is that in five years, it will be carrying four million passengers and boasting of a fleet of 30 aircraft.
For starters, national carrier is not the same as national airline. A national carrier flies the country’s flag and gets preferential treatment in international operations while a national airline is owned by the government.
A national carrier, sometimes called flag carrier, does not have to be government-owned. There are different models. For instance, British Airways is the UK flag carrier but it is not owned by the British government. It’s the same for Lufthansa (Germany) and Japan Airlines.
But Ethiopian Airlines and EgyptAir are 100% state-owned. Kenya Airways was wholly state-owned until 1996. It is now public-private.
Actually, my interest in Nigeria Air is fuelled by many factors. One, government will not have a say in the management. With 5% stake, it will be a minority shareholder. If the airline runs well, therefore, Nigeria will be reaping dividends rather than burning subventions.
We will now have to pray that Nigeria Air will not be managed by the mindless and clueless Nigerian big men and buccaneers who have not the foggiest idea about how the airline business is run. There are too many failed examples in our aviation industry.
The success of Nigeria Air will depend on the quality of management. But, to start with, the government will not be involved. That sounds better.
Two, the benefit of solid start-up capital means we can be assured of good aircraft. When Arik launched operations in 2006, its selling point was the tear rubber or brand new aircraft. Despite all its troubles, Arik’s safety record is still intact.
That is a benefit of a well-invested capital and maintenance. Government should invest in businesses that require huge capital outlay in order to spark off investors’ interest.
When no investor was interested in building hotels in Abuja, federal government built Hilton and Sheraton, which it later privatised. Can you count the number of hotels in Abuja today?
Nigeria is not enjoying much benefit from its bilateral air service agreements (BASA). For instance, British Airways flies to Lagos and Abuja daily and Virgin Atlantic flies to Lagos also daily, but there is no Nigerian airline flying to the UK.
Not even one flight! You are not likely to find this anomaly in many countries with a huge market like ours. According to Sirika, Nigeria Air will fly 41 international routes, in addition to 81 domestic and 40 regional.
If anything, virtually every sector of the Nigerian economy should benefit from the business, not forgetting the little matter of job creation in a country direly trying to tackle unemployment.
Four, the fact that government is investing in a business does not mean it is doomed. A ready example is Nigeria LNG Limited, in which government owns 49% but which it does not run. It is one of the best NLGs in the world.
If it was run by government, it would have become another NNPC — which is just a sleazy centre for the distribution of political patronage. We have not only recovered our investment in NLNG, we have continued to enjoy the fruits of our seed capital.
Therefore, that government is investing in an idea does not necessarily doom it. What makes the difference is who manages it. The government must not have the power to play patronage politics with Nigeria Air.
Economists will say everything has an opportunity cost. I agree that the money government is going to invest in Nigeria Air can be used for other pressing needs in education, healthcare, water, roads, bridges, and so on.
However, the fact that we need roads and schools does not mean we don’t need to improve options for Nigerian travellers and incentivise competition in the aviation space. We can do many things simultaneously. One does not stop the other.
Given the expected multiplier effect, this looks like an investment worth making, all things being equal. It is more than national pride, it is sowing seed in an economic driver.
Virgin Nigeria was running fairly well until the Nigerian factor ruined it. Its successor, Air Nigeria, was a natural disaster. Arik was considerably successful until it was infected by the Nigerian disease of mismanagement.
Nigerian billionaires are always guaranteed government bail-out whenever they ruin their businesses. The moral hazard encourages bad behaviour.
If Nigeria Air ends up in the hands of these buccaneers, then its fall will be mightier than that of Nigeria Airways. Ironically, Nigeria Airways was profitable when it was managed by KLM. Nigerians took over in the 1980s and please help me complete the sentence.
Ex-workers of Nigeria Airways are still being owed. In September 2017, President Muhammadu Buhari approved N45 billion for the settlement of their severance benefits. The national assembly did not pass it. This issue has to be resolved before we can start a new carrier.
Investors are expected to inject between $150 million and $300million over a number of years. We need to know how much in total Nigeria will be committing to it and how the funds will be raised. We can use all the transparency at this stage. Already, the PDP has described it as a scam.
Finally, my understanding is that PPP has three stages — development, procurement and implementation. The idea has been developed. That is what we saw with the unveiling of the brand at the Farnborough Airshow in the UK last week where the biggest guys in the global industry usually gather.
The next phase is procurement. Where will Nigeria get the funds to pay for the aircraft? Will it a recoverable loan from the federal government? Will we source funds from Exim Bank, AfDB or commercial banks? We need to know.
Investors are expected to inject at least $150 million by 2019. Have investors started showing interest? We need answers, Senator Sirika.
Except there is a supernatural dimension to this issue, I still don’t know why the federal government will not release Col. Sambo Dasuki (rtd) from detention. The former national security adviser has been granted bail by the court countless times.
The attorney-general, Mallam Abubakar Malami, says Dasuki was responsible for the death of 100,000 people and will not be released on bail. Does that mean Dasuki is already serving a prison sentence?
Normally, it is a court of law that pronounces an accused guilty. The attorney-general would be better off arguing his case against bail in court. But he has now assumed the role of a judge.
While we await the final word on the controversial NYSC discharge certificate of Mrs Kemi Adeosun, the minister of finance, I must confess that I have learnt a lot from this saga. For one, I never knew you have to serve even if you are 60, as long as you graduated before clocking 30.
I just assumed if you return to Nigeria after 30, you will be exempted. I also never knew that even if you never set a foot on Nigerian soil, as long as one of your parents is a Nigerian, you are automatically a Nigerian.
Meanwhile, now that a generation of Nigerians are schooling abroad, I hope their parents will remind them to come home and serve, even if they will still return to live abroad.
Minister of Aviation, Sen. Hadi Sirika, on Thursday ruled out government’s interference in the recruitment and operations of new national carrier, Nigeria Air.
Sirika gave the assurance at a lecture, held at the Air Force Institute of Technology’s 47th convocation in Kaduna.
He explained that the airline was unveiled in London for visibility but that investors in the company would decide the running of the airline.
Minister of Aviation, Sen. Hadi Sirika, on Thursday ruled out government’s interference in the recruitment and operations of new national carrier, Nigeria Air.
Sirika gave the assurance at a lecture, held at the Air Force Institute of Technology’s 47th convocation in Kaduna.
He explained that the airline was unveiled in London for visibility but that investors in the company would decide the running of the airline.
There will be no management control whatsoever. But I want to warn you that the people who are going to do recruitment ab initio will be a company that is world-class, he said.
Sirika said that Nigeria Air would be different from the grounded Nigeria airways.
The ownership is different. It is different because it is private sector-driven.
Minister of Aviation, Sen. Hadi Sirika, on Thursday ruled out government’s interference in the recruitment and operations of new national carrier, Nigeria Air.
Sirika gave the assurance at a lecture, held at the Air Force Institute of Technology’s 47th convocation in Kaduna.
He explained that the airline was unveiled in London for visibility but that investors in the company would decide the running of the airline.
There will be no management control whatsoever. But I want to warn you that the people who are going to do recruitment ab initio will be a company that is world-class, he said.
Sirika said that Nigeria Air would be different from the grounded Nigeria airways.
The ownership is different. It is different because it is private sector-driven.
Government will own minority share of less than five per cent.
Nigeria Airways died due to so many reasons, including governance issues and also that of finance.
Nigeria Airways was owned by the government of Nigeria and over time it lost track and lost funding and someone, therefore, decided to shut it down and it died, he added.
Tourism Observer
No comments:
Post a Comment