The Case for and against National and Flag Carriers

Stella-OduahThere are three major reasons why some Nigerians oppose national carrier. One, they believe that government should not run an airline, especially with the hindsight that it never worked in the past. Two, some Nigerians who knew about the corruption in the defunct Nigeria Airways Limited (NAL) see the planned new airline as conduit for government officers and their private sector stooges to siphon public fund, going by what happened to the intervention funds deployed by government to help some airlines in the past. Three, others feel that such designation has become old fashioned and may not work in today’s Nigeria. For this group, the prospect will not work now, as long as government has any stake in the airline. Rather they want some existing airlines to be designated flag carriers and given government’s support, including assisting them increase capacity and develop international routes.

Still there are other Nigerians that criticise the present government’s plan to establish an airline on mere cynicism and political antagonism, believing that anything this present administration has started, no matter how lofty must be excoriated. However, there are Nigerians who genuinely believe that Nigeria should recognise and empower flag carriers and have more than two or three of them.

Arik vs. Aero

The current rage going on about the national carrier is centred on the decision by the federal government to designate Aero Contractors as national carrier. Many people who oppose it from somewhat genuine concern ask the question: Why leave Arik Air that has the highest number of aircraft, 26 of them with average age of seven years, for Aero that has only nine aircraft with average age of 19? This question has continued to agitate the minds of those behind the choice of Aero. They argued that the selection of Aero Contractors as the national carrier is underpinned by the fact that AMCON, a federal government institution, already holds 60 percent stake in the airline. But tongues are still wagging that it does not sound right to exclude Arik Air from the establishment of a national carrier.

THISDAY also gathered that what is working against Arik is the allegation that it refused to go public and that its debt profile is huge. Source at Arik however denied the fact that it was approached to be part of the planned national carrier programme. The source also argued that in relation to its assets, the debt it owes is too small and therefore should not be a factor to be considered on issues concerning the establishment of a national carrier. Recently industry practitioners under the Aviation Round Table Initiative have called on the federal government to establish three strong national carriers, each having about 50 aircraft in its fleet.

The body said that the country loses billions of Naira every year because it does not have its own carriers that could largely benefit from the international traffic from Nigeria, which grows at over 15 per cent every year. One of the practitioners, the President of Sabre Travel Network, Mr Gbenga Olowo, said the designation of three airlines as national carriers with each airline having 50 aircraft is the only way Nigerian airlines could compete with the over 27 foreign airlines that operate into the country.

Over Capacity

But some other industrial operatives disagreed with the suggestion of 50 aircraft for each of such airline, noting that it would amount to over capacity. One of the major operators who spoke to THISDAY said that it would be a waste of resources for an airline to have an aircraft and would not have the route to put it to use, especially on international operations. That an airline should secure a route first before seeking to acquire the airplanes to operate the route. This is easier for an airline with relatively larger fleet like Arik which can easily secure an aircraft for service. Travel expert, Ikechi Uko said that he would prefer Nigeria to have a national carrier to having flag carriers because a national carrier has a lot of clout and it is so recognised by other airlines and the diplomatic power a country like Nigeria has is automatically bestowed on the national airline.

On why government should chose to establish a national carrier with Aero instead of Arik Air, Uko said Aero has long tradition and it is the oldest airline in Nigeria, with confirmed and established technical record. In all the years the airline has operated it has not recorded an accident. Again, Aero has weak financial condition which makes it pliable in negotiation, especially as government has taken over 60 per cent of its stakes. “Despite being there for close to 50 years, Aero has not recorded any accident, so it has a veritable status to become a national carrier,” Ikechi said. On the flip side, Uko said Aero has always lacked courage needed in aviation business. It has not been able to dominate any route as the defunct Bellview, Air Nigeria dominated the West Coast for some years and Chanchangi dominated the Kaduna route for many years, so the airline is always at the margin.

“Aero attempted to operate some routes in the West Coast but could not sustain such operations, so it lacks staying power to own a market. It is much more malleable,” Uko also said. The travel expert who is the organiser of Akwaaba African Travel Market said Arik ought to be accommodated in the national carrier programme because as an airline it has taken more risks and shown strength and character as an airline. “While I prefer a national carrier to a flag carrier is because there are more benefits, even if government has as little as five per cent stake because people seem to make orphans of private businesses in Nigeria.”

Private Business as Orphan

Uko further explained that a private business can be doing well with good government patronage and support, but when that regime is succeeded by another, the new administration may regard that organisation as an orphan and withdraw all the support and assistance the company enjoyed in the past administration. “If you rely on flag carrier, the next government may withdraw its support; the privileges of a national carrier are awesome. Government has a lot of power to encourage a national carrier,” he noted. Uko and some other Nigerians familiar with the aviation sector observed that many Nigerians prefer foreign airlines to domestic carriers to the extent that government officials would rather give a foreign carrier whatever it requests than meeting the need of a domestic operator. So, to prevent such unfavourable support which foreign airlines have been enjoying in Nigeria from unpatriotic countrymen and women, government should have stakes in an airline which should be designated as a national carrier.

Flag carriers are said to be a success in the US, where about 12 major airlines are flag carriers, because there is the policy of the Fly American Act. Many in the industry believe that it is when this policy is introduced and enforced can flag carriers work in the country. But in Nigeria, the citizens, including government officials prefer to travel with foreign airlines. You can always hear such trite expressions like, “I can never fly any other airline, only British Airways;” “Lufthansa is my airline any day”, and so on. The Managing Director of Arik Air, Chris Ndulue, attributed such prejudices to inferiority complex that has infected Nigerians since the colonial days. Uko insisted that if the Nigerian government owns a stake in Arik, Ethiopian Airlines cannot be operating 31 frequencies from Nigeria and this include Lagos, Enugu and Kano with its subsidiary, Asky, also operating from the country.

Multi Designation

So many Nigerians believe that Arik cannot be excluded from the national carrier programme, considering their operational capacity, the percentage of passengers they airlift every day, the number and age of aircraft in its fleet and the fact that it is the only Nigerian airline that firmly established international operations.

“Arik is an asset. Arik is the most valuable travel company in Nigeria,” Ikechi said. But those who support establishment of flag carriers said that empowering some existing airlines will pay Nigerian better as government would not be brainstorming over how to manage its stake and the fear of abuse of such airline by public servants would not arise. A top official of a major airline criticised the activities of the civil servants in the Ministry of Aviation who encourage the present abuse of multi designation by foreign carriers, an act that is killing the establishment of a virile, profitable airline in the country.

The official said that instead of establishing a national carrier, government should give pivotal support to the local operators and that government should urgently abolish payments for Bilateral Air Service Agreement (BASA) by foreign carriers, noting that government officials encourage BASA because of the alleged bribes they collect from the proceedings. “The way it is done is that if Arik, Aero and Med View are flag carriers, government would hand over the negotiation of routes to them and they set up a committee to negotiate with foreign airlines. That is the way it is done in other countries. Government officials do not negotiate BASA. It is the BASA committee that will renegotiate with foreign airlines operating into the country to reduce their routes,” the senior official said.

Although most countries are doing away with the idea of national carrier, the Nigerian situation calls for a national carrier that will be supported and entrenched to compete favourably for the huge passenger market. It is only when such an airline is up and going before government can divest its stake.

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