N14.6bn national carrier operation not feasible — Stakeholders

By Seun Ibiyemi

Stakeholders in the Aviation sector have said the country’s national carrier, Nigerian Air, is not feasible following the failure to begin its operation in April 2022 as proposed by the Minister of Aviation, Hadi Sirika and failure to get investors despite getting its Air Transport Licence from the Nigerian Civil Aviation Authority.

The national carrier, which means a country’s national airline, is locally registered under a given statute and enjoys preferential rights or privileges accorded by the government for international operations.

The Federal Government had approved N14.6 billion budget for the project in the last three years, analysis of the budget have shown.

The latest appropriation for the project was N400 million for working capital and another N150m as consultancy. Both are listed as ongoing projects in the 2022 appropriation Bill presented last week by President Muhammadu Buhari

Since 2019 to date, budgetary provision has been made for the national carrier project beginning with N8bn as working capital and another N500m for transaction advisers.

In 2020, N4.6bn was provided in the budget for working capital while in the 2021 Appropriation Bill, another N1bn was provided as working capital for the national carrier. It was listed under ongoing projects’ list of the Federal Ministry of Aviation.

With the latest N550m, the sum of N14.6bn would have been approved as budget for   the project since 2019 despite the suspension of the project.

The airline was scheduled to commence operations on December 19, 2018. The proposed national carrier targeted 81 routes, comprising 40 domestic, regional and sub-regional and 41 international routes.

About three years after its unveiling in London, the Federal Government raised hope of the new national carrier with a funding offer above $250 million.

The project was suspended two months after it was announced after critics raised concerns over its relevance and sustainability. The proposed airline was expected to gulp $8.8 million preliminary cost and $300 million as takeoff cost.

Nigeria’s defunct carrier, Nigeria Airways, had collapsed due to corruption and poor management.

But the Nigerian government dismissed all concerns raised, saying the airline would begin operation before the end of 2018, following President Buhari’s promise to establish a national airline during his 2015 electioneering campaign.

Eight months ago, the Federal Executive Council (FEC) approved April 2022 as the commencement date for the operations of the country’s national carrier, Nigeria Air.

“Nigeria Air Limited received from Nigerian Civil Aviation Authority (NCAA) an Air Transport License (ATL), signaling the end of the beginning of operations of the Airline. Commencement date of domestic operations will be announced in due course,” Mr Sirika tweeted.

The Ministry of Aviation, in a memo, disclosed that the private sector would avail the fund, in line with the Public-Private Partnership (PPP) design for the ‘Nigeria Air.’

Sirika also revealed then that 49 per cent of the Nigeria Air project will be owned by equity partners and 46 per cent by Nigerians while the Federal Government will own five per cent of the shares.

Meanwhile, an expert and CEO of Centurion Aviation Safety and Security Konsult, John Ojikutu, said the national carrier is not feasible with the way it is being handled undercover in the ministry, saying it will end up as a government carrier.

He said, “For now forget about the national carrier talk about two flag carriers; one Continental and the other Intercontinental but they must go public at the NSE if they must operate a bilateral aviation safety agreement (BASA) Routes which the National Commonwealth. That is the global trend if we don’t want to end up having a government carrier as we did with the Nigeria Airways.

“Who are the shareholders, why is it so hard to be open about the partners? If it’s a national carrier, who are the partners, why don’t they have a name? As far as I’m concerned, that airline will not work.

“If we continue like this, I’m not optimistic about it. Since we haven’t done it in the last four years, I don’t know what we will do in the next few months that will make a change.”

Ojikutu added that “Is there a gap for Nigerian airlines to fill? Could this be an opportunity?

“First remove the multiple destinations given to the foreign airlines and limit them to either Lagos or Abuja and one other airport in the alternative geographical area to their choice in Abuja or Lagos; let them make as many frequencies as they wish to the given destinations. But they must make interlining arrangements with the domestic airlines to help distribute incoming international passengers to their final destination and connect outbound international passengers to the nearest international airport but payment must be done for the interlining connection in dollars.

“This way, you remove the foreign airlines out of our domestic routes and domestic markets of the domestic airlines. Finally, ensure that a Domiciliary Aviation Commercial Account is opened with the CBN where money generated by the operators in Aviation and Maritime are kept and naira equivalent given to the depositors. This dollars can be taken back when needed and the naira returned.

“The Domiciliary Account can be a succour for the repatriation of the foreign airlines money. There is also a  BASA Account with the CBN where the repatriation money can substantially be taken.

“There was substantial money too once generated by Commercial Agreements, whatever was the reasons for the cancellation of those agreements can only be explained by those in the management of the civil aviation administration in and out of government.”

Also reacting, an Aviation expert and Head of Research at Zenith Travels, Mr Olumide Odunayo, registered his displeasure at the move to get a national carrier for the nation.

In his words, “Personally, I’m not for a national carrier that protects a set of investors against another set of investors who are already in place because they have a title ‘national carrier.’”

He said, “They  got the ATL, what is left now is getting the Air operator’s Certificate (AOC). For that, we are talking about a minimum of one year.

“I don’t know how they want to finish it before the departure of this regime because you know once the elections start, everyone and even the government will be focused on it and after the election you will have the handover. Now, will the investors be interested in investing in a government that is terminating next year?

“The time is quite short and I doubt they might be able to get credible investors who would want to invest at this time. Well, we need more airlines, airlines can come together and become a national carrier. We can even have national carriers or flag carriers, but that depends on the policy of the government in place.”