(BACKPAGE) How not to set up a national carrier

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BY KAZEEM AKINTUNDE

Uba Group

A friend and colleague, Rotimi Durojaiye, had in 2006, written an exclusive story on the shenanigans surrounding the purchase of an aircraft for the presidential fleet which landed him in troubled waters with the then-president, Olusegun Obasanjo.

Titled: ‘Controversy over Age, Cost of Presidential Jet’, it detailed how a fairly used aircraft was packaged and sold as new to Nigeria after huge sums of money in foreign currency was paid for it. Durojaiye, then Aviation Correspondent with Daily Independent, published the story on June 12, 2006, exactly 17 years today.

Another journalist, Gbenga Aruleba, of African Independent Television (AIT), escalated the matter when he chose the acquisition of the tokunbo aircraft as a topic for discussion on his programme.

A livid President Obasanjo ordered the arrest and prosecution of both Durojaiye and Aruleba. They were arrested by the goons of the then-president and detained for a week before they were eventually charged to court. But the then Federal Government had to quickly beat a retreat when it discovered that it had no strong case against the reporters.

The same sordid scenario is about to repeat itself in the aviation industry, as the former Minister of Aviation, Hadi Sirika, has allegedly perpetrated another scam in the industry, and this time, taking the entirety of Nigerians for a ride. Riding on the desire of former President Muhammadu Buhari to establish a national carrier for the country, Sirika, either due to ignorance, greed, or no proper knowledge of the industry, went about it in the most shambolic manner.

Although a trained pilot, it beggars belief that Sirika thought that he could pull the wool over the eyes of Nigerians in the manner he went about the national carrier project.
Establishing a national carrier is not rocket science that should be difficult to accomplish for a nation like Nigeria.

Buhari, on assumption of office in 2015, listed the establishment of a national carrier that would replace the defunct Nigeria Airways as one of his top priorities, having been around long enough to witness the glorious era of the defunct Nigeria Airways as a military Head of State between 1983 and 1984.

Indeed, Nigeria Airways was a pride to many Nigerians at its glorious height. Established in 1958 after the dissolution of the West African Airways Corporation (WAAC), it retained the name, WAAC Nigeria, until 1971, when it was rebranded Nigeria Airways. Nigeria owned 51 per cent of shares in the company up till 1961 when it boosted its participation to 100 per cent and made it the national carrier.

It had more than 35 aircrafts in its fleet as of 1979 but by 1999 when President Olusegun Obasanjo returned as a civilian president, only one aircraft was in operation. Within 20 years, Nigeria had ‘happened’ to the airline as it has been plagued by mismanagement, corruption, and overstaffing. It had a debt of $528 million hanging on record as of 2003, when Obasanjo angrily liquidated the airline.

But the size of the country and the economic benefits to derive from such a venture make the establishment of a national carrier a priority for Buhari’s administration.

A national carrier offers huge potential for the economic growth of Nigeria as there are numerous bilateral and multilateral agreements the country has with several countries of the world which are not being utilized. Nigeria is a huge market that could serve as the hub of commercial flight operations in the West African sub-region.

“Sirika has brought shame to the country and he should be made to account for the fraud that he made of the Nigeria Air project”

His government, in 2015, set up a committee headed by the current Rector of Nigeria College of Aviation Technology (NCAT), Zaria, Mohammed Abdulsalam, to work out the modalities for the establishment of a national carrier for the nation. The committee did a good job and submitted its report to the Federal Government. It was time for the nation to carry out the task and the responsibility for the implementation of the report fell on Sirika, as head of the supervising Ministry. But the man had other plans on his mind that were apparently not too altruistic.

Trouble started in 2018, when Sirika unveiled Nigeria Air at Farnborough International Air Show in London. The unveiling was after the transaction advisers completed the Outline Business Case (OBC) Report, and the Infrastructure Concession Regulatory Commission review and issued OBC Certificate of Compliance. Many Nigerians in the aviation sector were shocked by the Minister’s action.

Soon, Sirika made public the structure of the proposed airline. A share structure of 49 per cent equity was allocated to Ethiopian Airlines, the only foreign partner that indicated interest in partnering with the country for the establishment of a national carrier. Five per cent was allocated to the Federal Government while the remaining 46 per cent was said to have been owned by Nigerian investors. The names of those private investors were shrouded in secrecy until local airline operators went to court to challenge the action. Again, the amount of money and number of aircraft Ethiopian Airlines would inject into the venture was not made public, which left many Nigerians wondering why a whopping 49 per cent share structure was allocated to the airline.

The lack of transparency in the whole process has ensured that the dream of a national carrier remains just that – a mere dream – as nothing much was achieved despite the yearly allocation to the project in the budget by the Aviation Ministry.

From 2019 to 2021, the airline has racked up appropriation votes of N14.65 billion, yet the Federal Government was meant to own only five per cent equity. The former Minister also recently said that only N400 million had been approved thus far. Yet, in the 2023 budget, the government is proposing N1.3 billion, with N700 million as “working capital” and N200 million as consultancy fees for the project.

The Ministry, after much pressure from local airline operators and other stakeholders, announced the trio of SAHCO, MRS, and the Nigerian Sovereign Investment Authority (NSIA) as custodians of 46 per cent private sector equities.

“CBN"

But barely 24 hours later, had the ministry issued a rejoinder that NSIA was included in error.

There is nothing wrong with Ethiopian airlines partnering with Nigeria to establish a national carrier for the country, although I’m guessing stakeholders in the industry would have been more comfortable having a foreign airline from a non-African partner with Nigeria to prevent undue rivalry with the national carrier for control of the industry in Africa.

Ethiopian Airlines is indeed the most successful African carrier and an advocate of African airlines competing with other foreign carriers to wrestle the African market share, currently skewed in favour of European, American, and Gulf carriers by 80 per cent. Pursuant to its Vision 2035 to connect the nooks and crannies of the African airspace, the airline, 100 per cent owned by the Ethiopian government, already has major stakes and ownership in eight African countries. The airline recently listed Nigeria Air as its ninth “subsidiary”.

Local airline operators in the country are not comfortable with the way and manner the Minister went about the whole bidding exercise, as only the airline submitted a bid for Nigeria Air. Now, they have 135 planes. They have also said that they will increase the fleet size to 250 within the next five years and are ready to go into all domestic markets where they have footprints, with Nigeria now inclusive. What they are trying to do has been called ‘aviation colonialism’ of Africa as the airline will be in a position to operate local flights in Nigeria and charge low fares which local airlines believe will drive them out of the market.

Going by the partnership design now made public, Ethiopian Airlines is expected to deploy just three Boeing 737-800 aircrafts on domestic routes with Ethiopian crew onboard, and allegedly with no financial contribution. However, many Nigerians were shocked when, on his last day in office, a plane flew into Abuja branded in the colour of Nigeria Air and was displayed at a big show as the launch of Nigeria Air.

A few hours after the show, the branded ‘Nigeria Air’ left the country, and was immediately stripped of its Nigerian colour and name. It was at this point that many Nigerians became convinced that the country might have been duped.

The House of Representatives quickly directed its Committee on Aviation to look into the matter. The committee, last week, submitted a report to the larger House and confirmed that what Sirika packaged for the Nation was a complete fraud, prompting for the suspension of the establishment of Nigeria Air as well as the prosecution of those involved in the unveiling of the national carrier.

The House of Representatives has also urged President Bola Tinubu to constitute a high-level Presidential Committee to undertake a holistic review of the processes of the Nigeria Air project and advise the government on the way forward. The lawmakers also advised the Federal Ministry of Aviation with its Agency, the NCAA to designate some Nigerian Indigenous Airlines as Flag Carriers to take advantage of the Bi-Lateral Air Service Agreement (BASA), entered into by Nigeria, pending when a viable National Carrier comes on board. The lawmakers also stated that the $250,000,000 required to fully start a national carrier in the country could be raised by the government and its citizens without necessarily subjecting the nation to ridicule as done by Sirika.

Nigeria is gradually becoming a huge joke among the comity of serious nations and it’s high time we arrested the development. Sirika has brought shame to the country and he should be made to account for the fraud that he made of the Nigeria Air project. If the impunity committed by Sirika is allowed to be swept under the carpet, we may just as well forget about Nigeria as we would definitely have become a banana republic where anything goes.
See you next week