Africa: Hidden economics in the botched Nigeria Air project

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On a daily basis, thousands of passengers of Ethiopian Airlines waiting for connecting flights on arrival at the Bole International Airport are conveyed by buses at no extra cost to high-profile hotels inside Addis Ababa for a “lay over”.

Many of these passengers continue their journey the following day but not before picking one or two items from nearby grocery shops and paying for services rendered by taxi drivers. The stream of visitors to Ethiopia ensures high hotel occupancy rates and a sustained tempo in economic activities. National airlines such as that of Ethiopia can be likened to an embassy with wings flying a country’s commerce, culture, cuisine and goodwill around the world.

Against this backdrop, not a few Nigerians held high hopes for the economy when the Minister of State for Aviation, Sen. Hadi Sirika, disclosed that the country would be taking delivery of five new aircraft on December 19, 2018 in readiness for the launch of a new national carrier on December 24, 2018. This great expectation has now proved to be short-lived in the wake of the recent announcement by the minister to the effect that the Federal Government had suspended the proposed Nigeria Air project after reportedly sinking some N1.2bn into the business case design and unveiling of the logo in London a few months ago.

Although many national carriers in Africa are struggling to stay afloat, the fact is that Ethiopian Airlines (or simply Ethiopian) and a few others have remained strong performers in the sub-Saharan Africa region. The airline, which employs more than 13,000 people, has over the years proved to be the country’s major industry and a veritable institution in Africa.

The website of the airline shows that Ethiopian currently serves 100 international and 21 domestic destinations with the newest and youngest fleet in Africa. According to Reuters, Ethiopian Airlines’ net profit in the 2017/18 financial year rose to USD233 million from USD229 million the previous year. Also, the state-owned carrier, according to the International Air Transport Association, has outpaced regional competitors such as the Kenya Airways and South African Airways to become Africa’s largest airline by revenue and profit. Indeed, the airline has recorded a number of milestones since it was established in 1945 as a joint venture with the now-defunct US carrier, Trans World Airlines.

So, rather than cite the failed cases or cling to the ugly experiences that trailed the defunct Nigerian Airways and Virgin Nigeria, opponents of the Nigeria Air project are encouraged to see it as a glass half-full by drawing on the Ethiopian Airlines example. It is on record that while many African state-owned airlines are poorly managed with staffing often based on nepotism and business decisions influenced by political considerations, Ethiopian Airlines has remained professionally run and managed.

If Ethiopia, a smaller economy, could own a viable national carrier, what is stopping Nigeria, the biggest economy in Africa with the largest population? Come to think of it, if the country had a viable national carrier, she would not be dragging feet in signing the African Continental Free Trade Area agreement, one of the flagship projects of the African Union Agenda 2063 which includes a Single African Air Transport Market expected to open up and connect markets on the continent. Among other benefits, the SAATM promises to enhance air service connectivity and save time, lower fares, create job opportunities, boost intra-African trade, promote tourism, as well as grow national GDPs.

Therefore, it is vital that Nigeria does not give up her leadership influence in Africa partly by allowing the challenges in the aviation sector overshadow the promise of a bright future.

So, not going ahead with the Nigeria Air project should never be an option for the Federal Government not least because the country’s status as one of Africa’s biggest investment destinations will be diminished if she is not seen as playing a dominant role in the Single African Air Transport Market. The government should consider the private airline operators as development partners and engage them in a frank discussion regarding the challenges in the industry with a view to allaying their fears. By so doing, the buy-in and cooperation of the Airline Operators of Nigeria will be secured.

It goes without saying that by making air travel easier and accessible in Nigeria, more and more people are encouraged to travel by air especially given the poor state of roads and rail infrastructure. The Ethiopian case has clearly demonstrated that the aviation sector promotes trade, tourism and foreign direct investments, creating job opportunities and other positive multiplier effects on a country’s economy.

So, it is not all about profit maximisation. More importantly, it is about driving economic growth and development through a veritable enabler of other critical sectors of the economy. This is the hidden economics in the Nigeria Air project which must be borne in mind by all stakeholders.

Uche Uwaleke



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