Controversy, suspicion trail formation of Nigeria Air

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… as misgivings grow over shareholding structure

  • Minister accused of running one-man show, lack of transparency
  • National carrier won’t fly – AON, Stakeholders
  • No going back, Sirika insists
Uba Group

 
BY MOYINOLUWA BAMIDELE-LUCAS

Like other five roadmap projects of the Minister of Aviation, Hadi Sirika, the future of Nigeria Air that he promised to deliver before the end of this administration is in limbo.

The formation of the national carrier has been a subject of controversy as industry experts insist that the project will not see the light of the day in the remaining six months of the present administration.

The Point recalls that Sirika at the first stakeholders’ meeting in Lagos in November 2015 had promised to give Nigeria a new national carrier with the country’s logo and flag.

However, investigations by The Point reveal that oppositions against the national carrier project have dwarfed its prospects.
Stakeholders, including foreign investors, are said to be afraid to go near the project, which Nigerian aviation industry experts claim is dead on arrival.

It was gathered that Sirika, the promoter of the national carrier project and others like the Maintenance, Repair & Overhaul facility, aircraft leasing company, agro-allied airports, aerotropolis and airports concession, never envisaged the level of coordinated attacks against the airline that was positioned to replace the liquidated national carrier, Nigeria Airways, but with just five per cent equity stake from the Federal Government in the new arrangement.

Most stakeholders claimed the project, which they hitherto applauded the Federal Government for, lacked transparency and also questioned the choice of Ethiopian Airlines as the Technical Partner.

Airline Operators of Nigeria, the umbrella body of indigenous airlines in the country, are also afraid that its birth would create an uneven playing field for the sub-sector and vowed the carrier would not spread its wings.

Stakeholders are of the opinion that Sirika, the longest serving Aviation Minister since the country’s independence in 1960, may go down in history as the worst performing minister despite being an engineer and a pilot in the sector.

Sirika was a helicopter pilot with the Nigeria Police for six months before he ventured into business and later politics. He was appointed as a minister in the industry in October 2015.

There has been a global debate about the relevance of a national carrier in today’s ultra-competitive market as many former national carriers have either transformed to flag carriers or shut down operations.

Industry analysts claim that the former leading national carriers, Malaysian Airways, Alitalia, Kenya Airways and South African Airways, among others, are all in debts, only surviving on continuous government interventions, a situation which they said Nigeria must avoid.

“Investigations at the Corporate Affairs Commission revealed that Tianaero Nigeria Limited was registered in 2021 and is owned by one Capt. Tillman Gabriel, a lecturer at the City University of London. Gabriel is the Head of the Transaction Advisor for the Nigeria Air project”

ALLEGED LACK OF TRANSPARENCY

In September 2022, the Federal Government had debunked the choice of Ethiopian Airlines as the Technical Partner and core investor in the national carrier project.

The government also said it needed to go through a series of stages before it concluded on a Technical Partner for the airline, saying it was at the due diligence stage.

A source close to the project had confided in The Point that before a Technical Partner or a core investor would be selected, the relevant government agencies like the Infrastructure Concession Regulatory Commission, Bureau of Public Enterprises and others must be carried along, but less than a week after the initial denial, the government named the East African carrier as the preferred and the only bidder in the project with 49 per cent equity shares.

Sirika had told journalists that apart from the Ethiopian Airlines’ 49 per cent stake, the Federal Government would also have five per cent shares, while the local investors would share the remaining 46 per cent.

“CBN"

He said Ethiopian Airline was investing $300 million in the Nigeria Air project.

Among the local investors mentioned by Sirika were Skyway Aviation Handling Company, MRS and other investors who he declined to name till date.

According to him, the new national carrier would commence flight services with three Boeing 737 aircraft by December 2022 after the approval by the Federal Executive Council.

Sirika also said the choice of Ethiopian Airlines was accepted by the Infrastructure Concession Regulatory Commission, having gone through the Request for Proposal under the Public Private Participation Act.

He had declared that the consortium had been subject to a due diligence process, after which the contract would be negotiated between the consortium and the government, thereby leading to a Full Business Case.

He said, “An interim Executive Team of highly skilled aviation experts has been working since February 2022 to set up all the necessary regulatory and industry requirements to launch the national carrier. All executives have been approved by the Nigerian Civil Aviation Authority (NCAA), the Air Transport Licence has been issued by NCAA, Nigeria Air (after having identified the first three aircraft) will now finalise all necessary Operation Manuals and then go through the inspection and approval process of NCAA.

“The money spent for the launch of Nigeria Air, for all the requirements to establish an AOC and be admitted, starting an airline operation, is well within the five per cent capital investment of the Federal Government of Nigeria, that will be overall needed to establish the national carrier initially for the AOC approval and everything else required by stringent national aviation regulations, as prescribed in the FEC approved Outline Business Case (OBC).

“This OBC is the milestone for the preferred Bidder Consortium and has been met by the submitted business plan of the preferred bidder. It is the overall share capital of around $300 million, provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years.”

Sirika clarified that no further funding would be provided above the five per cent share capital on the national carrier by the Nigerian government.

However, a few weeks after its name was mentioned as the major shareholder and core investors, Ethiopian Airlines allegedly publicized an organogram ceding positions of the Chief Executive Officer, Directors of Finance, Commercial, and Engineering; Director of Purchase, Director of Cargo Sales, and Director of Quality Assurance to it.

The airline has yet to discredit the list, while the Ministry of Aviation has also kept mute.

OPPOSITION AGAINST CHOICE OF ETHIOPIAN AIRLINES

Players in the Nigerian aviation industry say the choice of Ethiopian Airlines would negatively affect the fortunes of the impending national carrier, arguing that the new airline would be listed as a subsidiary to the East African carrier, which would limit its spread and route networks.

Stakeholders expressed fears that the choice of Ethiopian Airlines would also stop Nigeria Air from flying to the United Kingdom, United States of America, United Arab Emirates (UAE) and any other country the East African carrier has a Bilateral Air Service Agreement (BASA) arrangement with since Nigeria Air is its subsidiary.

Ethiopian Airlines has a footmark in eight African countries – Chad, Malawi, Zambia, Mozambique, Cote D’Ivoire, Guinea, Togo and Democratic Republic of Congo with various shares in those countries’ airlines.

Industry analysts also accused Sirika of being the sole decider of the work and scope of Nigeria Air, thereby raising personal interest allegations.

For instance, The Point gathered that Tianaero Nigeria Limited, the Transactional Advisor appointed by Sirika, allegedly paid the sum of $352 million for the Nigeria Air project.

Investigations at the Corporate Affairs Commission revealed that Tianaero Nigeria Limited was registered in 2021 and is owned by one Capt. Tillman Gabriel, a lecturer at the City University of London. Gabriel is the Head of the Transaction Advisor for the Nigeria Air project.

SIRIKA IS RUNNING A ONE-MAN SHOW – BADAMASI

Speaking on the issue, Capt. Mohammed Badamasi, a pilot with the former Nigeria Airways, wondered how Sirika could be the only one making such a sensitive decision on a national carrier for the country.

Badamasi emphasised that in the annals of Nigeria, there was no Presidential Adviser in the presidency in the past seven years, unlike in the past where critical issues like a national carrier and other major projects on the industry were deliberated upon by the industry technical personnel in the presidency.

He also queried the essence of the approval of FEC for the deployment of three startup aircraft for Nigeria Air and further quizzed the five per cent stake of the Federal Government in the entire business.

Badamasi explained that Ethiopian Airlines was already operating direct flights between Lagos (Nigeria) and London (United Kingdom), even without the commencement of the partnership between the two countries.

He attributed the recent wrong decisions taken on the industry to the ineptitude of those he said were given critical roles to play, but failed.

He, however, expressed the hope that some of the wrong steps taken by the government would be upturned by succeeding governments.

Badamasi said, “The government should avoid those who have shown interest in becoming post-holders in any of the government agencies in aviation. There are seasoned people in the industry who have no interest, other than how to be a part of history in the birth of a viable airline carrier for the country.

“When you have the wrong people in the right places, this is the result you get. I have said it before and I’m saying it again, another wrong foot in the wrong direction. Only a mediocre person will not see that there is no light at the beginning of the tunnel, and start searching for it at the end of it. I pray that God should correct their mistakes. I cannot wait for the end of the tenure of this meddler running the ministry.

“Presently, the aviation industry in Nigeria is on life support. All hands must be on deck to bring it back to life. The current leadership of the industry, especially the Ministry of Aviation, lacks the vision and expertise to correct the mess they have made.

“This administration has finally crippled the domestic airlines by giving Ethiopian Airlines the free hand to take the Lagos/Heathrow/Lagos routes, even before forcing Ethiopian Airlines on us. This gift is in addition to the multiple destinations into Nigeria the airline enjoys.”

PROJECT WILL FAIL, COLLAPSE SOONER THAN LATER – IYAYI

The Chief Executive Officer, Top Brass Aviation Limited, Capt. Roland Iyayi, explained that domestic airline operators in Nigeria were operating in one of the most hostile environments in the world without notable support from the government.

Iyayi, a former Managing Director of the Nigerian Airspace Management Agency, insisted that if the planned national carrier was subjected to the same conditions of the domestic operators, the airline would fail and collapse sooner than later.

He declared that the Federal Government failed to learn from past mistakes, which gave out numerous rights and privileges to Virgin Nigeria, emphasising that as it stood, Nigeria was not benefiting from the current structure.

The Top Brass Aviation boss advised the Federal Government to discontinue the plan and support the indigenous airlines to grow.

Iyayi pointed out that the interest of Ethiopian Airlines was to capture the African market, especially with the Single African Air Transport Market (SAATM), propagated by the African Union.

“We need to learn from the past. We had Virgin Atlantic in Virgin Nigeria. Virgin Atlantic came in more or less the same structure; initially it provided $3 million that was put in the Central Bank of Nigeria. When the time came to operate, they called back the $3 million, brought in all their aircraft, leases were made to Nigeria and the leases were beyond market value.

“Terminals are being set aside as we speak for Nigeria Air. Domestic airlines need office spaces at airports, but we rarely have them. We talked about the Single African Air Transport Market (SAATM), it is necessary to understand.

“What Ethiopian Airways is trying to do in essence is to make sure they have a hold on the largest aviation market on the continent, to be able to project and propel themselves, not Nigeria. If anybody is taking time to read through the Ethiopian 2025 Vision, essentially today, they have more than 135 aircraft and they hope to double it to 250 aircraft in the next five years.”

WHY IS SIRIKA DESPERATE WITH LESS THAN SIX MONTHS TO GO? – OKPERE

Also, a former Minister of Aviation, Air Vice Marshal Anthony Okpere (retd) accused Sirika of not carrying along most aviation stakeholders, including ex-ministers in his bid to birth another national carrier for Nigeria.

Okpere who was the Minister of Aviation between 1986 and 1987, regretted that most stakeholders were kept in the dark about the Nigeria Air project and its partnership with Ethiopian Airlines.

Okpere was also the Managing Director, Nigeria Airways, between 1984 and 1986.

Okpere wondered why Sirika was in a haste to reestablish a new national carrier after seven years of failed efforts, while the government winds up in the next six months.

He said, “The details of the new national carrier project are not known. Meanwhile, this administration winds up immediately after the general elections. What is the guarantee that the people coming in will continue? Has the country been carried along?
“Who are we partnering with? What are the terms of the agreement with Ethiopian Airlines? People need to know. So when this administration winds up, who knows what?”

PROJECT SHROUDED IN SECRECY – MSHELIA

The Chief Executive Officer, West Link Airline, a charter service operator, Capt. Ibrahim Mshelia, claimed that the entire arrangement was shrouded in secrecy from the outset.

Mshelia also said that despite the registration of the airline in the CAC, its Board of Directors remained unknown to the public.

He stated, “It is a company that is going to be privately run and owned. Yes, the five per cent of the Nigerian government in the airline would give it some benefits and it is ideal and normal. They will enjoy certain things over others, but the processes are the same. You cannot change the rule for the Nigerian government.

“First, it was unveiled offshore. All airlines I know that are flying in Nigeria, are unveiled onshore. For them to have the Air Transport License (ATL), the Board of Directors are supposed to be known by the Nigerian government and vetted. If that has been done, it is held secret.

“Who are the owners? Where is the money coming from? The government has given some amount of money, what is that equating to? Is that the five per cent or the Nigerian government is going to set up an airline with the Nigerian people’s money and it will just hand it over to these groups of individuals? I am confused.”

Sindy Foster of Avaero Capital Partners said that Ethiopian Airlines was a strong carrier on the continent, but doubted its success with Nigeria, especially when the carrier is the majority shareholder with 49 per cent.

She also doubted if this agreement would lead to the development potential of the Nigerian aviation industry, particularly if growing the Nigerian aviation leads to reduction of traffic and income for Ethiopian Airlines businesses, including its 100 per cent owned airline, airport, MRO and engineering, among others.

“It sounds like Ethiopian Airlines was the only choice for a technical partner and core investor. This decision is more a case of meeting an election pledge than creating a national airline effectively owned and controlled by Nigerians, and which Nigerians can be proud of,” she said.

Group Capt. John Ojikutu, an aviation analyst, also expressed worry over the rush to implement the roadmap for the aviation sector in an election year.

“From 2017, when the roadmap was defined, we barely have made efforts to develop. From the national carrier to airports concessions, MRO, Aerotropolis, and we have started adding more on cargo airports development for some states; all these are coming six months towards the end of the administration. I am not sure that we have sufficient funds that can effectively complete 30 per cent of any of the projects within the remaining time of this administration. There are no sufficient funds in the government coffers to begin any; neither is there confidence built in the projects by foreign investors.”

“The details of the new national carrier project are not known. Meanwhile, this administration winds up immediately after the general elections. What is the guarantee that the people coming in will continue? Has the country been carried along?””

AON LAWSUIT AGAINST NIGERIA AIR

On Monday, November 15, AON filed a suit challenging the establishment of Nigeria Air, citing several irregularities at the Federal High Court in Lagos.

The plaintiffs include all registered trustees of Airline Operators of Nigeria (AON), Azman Air Services Limited, Air Peace, Max Air Limited, United Nigeria Airlines Company Limited and TopBrass Aviation Limited.

The airlines claimed that the formation of the new national carrier did not follow the due process, while major stakeholders were not also carried along in the government’s plan.

The defendants are Nigeria Air Limited, Ethiopian Airlines, Hadi Sirika and the Attorney General of the Federation.

The AON prayed the court to compel the defendants to appear before it within 30 days of service of the summons.

The AON also sought the order of interim injunction restraining the defendants, either by themselves, agents, privies, principals or any other persons whatsoever from executing the proposed or draft national carrier.

They prayed the court to compel the status quo by all parties in the suit, pending the determination of the Motion of Notice. They also sought accelerated hearing of the suit.

By Tuesday, Justice Lewis-Allagoa who presided over the hearing granted the three prayers of the AON, which included restraining the commencement of operations of Nigeria Air as planned.

NO GOING BACK ON NIGERIA AIR, SIRIKA INSISTS

But despite the court ruling, Sirika insists that the Federal Government would not go back on the plan to establish the national carrier.

Speaking on Tuesday during a stakeholders’ appreciation forum for the reconstruction of Lagos airport Runway 18L, Sirika said aviation stakeholders and unions had sufficient time to participate in the process rather than engaging in a legal suit to stall the project.

He disclosed that he personally and individually engaged indigenous carriers to participate in the project, listing some of those he engaged to include Air Peace, Azman Air and Max Air. However, he said they turned down the invitation because it was not formal.

The minister reiterated that he did not see the possibility of any court of competent jurisdiction being a roadblock to the emergence of the national carrier.

“I have been very transparent in the processes put in place to deliver the national carrier. If anyone wants to invest in a company, no one can stop them from investing. You can own a company 100 per cent and if anyone wants to invest, why not? We want foreign direct investment,” Sirika said.

He noted that it was totally unacceptable and unfair for stakeholders to claim that they were not carried along on the national carrier project, adding that parading such information was working contrary to the actualisation of the aviation road map.

“Every information or documents pertaining to the project is domiciled at the Ministry of Aviation and Infrastructure Construction Regulatory Commission, which are driving processes leading to the national carrier,” Sirika stressed.