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Africa: Why national carrier plan failed

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The inability of the Federal Government to yet get credible technical partners and investors to support the proposed new national carrier may have stalled its roll-out plans, 18 months after it was unveiled in London.

But The Guardian learnt that the airline project, though has remained a hard sell to more credible investors, has not been abandoned by the government.

By comparison, similar projects in neighbouring African states are not facing similar hurdles. Ghana, Uganda, and Senegal have attracted investors and made more progress in the re-launch of their national carriers in less than 12 months.

Despite the lull in the national carrier plan since its December 2018 launch was suspended indefinitely, some stakeholders remain optimistic that the project, already christened as ‘Nigeria Air’, will succeed at the completion of its due diligence.

The Federal Government in July 2018 unveiled the name and logo of the proposed carrier at the Farnborough International Public Air show in London, United Kingdom (UK) ahead of the planned initial take-off on December 24 of that year. The lack of budgetary provision, and criticism by the public forced the Minister of Aviation, Hadi Sirika, to “temporarily” ditch the December roll-out plan.

A top official at the Ministry of Transport hinted that the project was a work in progress and that the government was still “reaching out to people that matter”.

“Setting up an airline, and a national carrier for that matter, is not like other projects. You need the right partners to bankroll and offer technical backing. You need their commitment before making some moves, especially in this our environment,” the director said.

He said that the project handlers already had interested parties, but “the feeling is that Nigeria deserves a better deal from more credible partners out there.”

“It is not by how quick we can float the airline, because Nigeria is not like other countries (that have made headway with national carrier). Everything is being done with caution and in accordance with rules. There are bills at the National Assembly that will also help the national carrier and other projects.

“With the type of backlash that greeted the London launch in 2018, I doubt if anyone will want to rush anything or put the progress in the public domain,” he said.

The national carrier is intended to replace the defunct Nigeria Airways that ceased operations in 2003. The replacement was designed as a Public-Private Partnership (PPP) project with the Federal Government likely to own as much as 10 per cent stake. The equity was backed by N47 billion in the 2019 budget to help the airline take off after it reached the procurement stage just before the 2019 general elections.

Aviation consultant and Chief Executive Officer (CEO) of Beljune Consult, Chris Aligbe, agreed that the process had to be rigorous to ensure that there are no hitches in the operations of the airline.

Aligbe said he was not unaware of the expression of interest by some technical partners but “there are some we should just not be doing business with for obvious reasons.”

“We should be able to have a formidable airline of European standard or the gulf carriers, at the minimum. If that is the goal, then you will understand why they must be careful with the processes.

“Certainly, the choice of technical partners will not be under the table, but bids advertised and as directed by the Infrastructure Concession Regulatory Commission (ICRC). It must be open and transparent. Again, the budget has just been signed. It must go through all the procedures. The fund, about N22 billion, must be released to back the project.

“So, it is a whole gamut of processes. My optimism is not waning at all. By the middle of second quarter, we expect a lot of things to have been on ground,” Aligbe said.

Already on ground in neigbouring Ghana is Boeing’s support for the country’s plan to re-launch its national carrier. Ghana has been without a state airline since the collapse of the Ghana International Airways in 2010, and now planning a new national carrier in partnership with the Ethiopian Airlines.

Boeing and Ghana are re-launching with the 787-9 Dreamliner. The parties signed a memorandum of understanding at the just-concluded Dubai Air Show for three airplanes with a list price value of $877.5 million.

“There is a growing demand for air travel to and from Ghana and we believe the advanced 787-9 Dreamliner gives us an efficient and flexible machine to launch a regional network and eventually serve international destinations in the future,” the Ghanaian Minister of Aviation, Joseph Adda, said.

According to him, the carrier, to be based in Accra, would establish the capital city as a strategic hub that serves cities across West Africa. Future routes would include destinations in Europe, North America and Asia. The long-term plan is to open the airline to private investment and operation.

An estimate revealed that a private airline that currently operates from Ghana derived 60 per cent of its 2019 passenger traffic from Nigeria.
If Ghana is starting big, Uganda has shown how to start small and make progress with it. The airline recently re-launched its national carrier with flights to destinations in south and central Africa.

Uganda Airlines, founded by the country’s former dictator, Idi Amin, in 1976, was liquidated in 2001 during a push to privatise state firms. Its revival will reduce the cost of air transport and ease connectivity to and from Uganda, Prime Minister Ruhakana Rugunda, said at the ceremony. Ugandans spend about $450 million yearly on foreign travel, and the state-owned airline would help keep some of this cash within the national economy, Rugunda said.

The airline received its first two CRJ900 planes from the Canadian aircraft manufacturer, Bombardier, in April 2019. Two more of those planes were received last month. It expects to receive one Airbus A330neo in late 2020, then a second one in early 2021. Each Bombardier cost around $27 million, while the carrier will pay about $110 million for each of the Airbus aircraft. The airline is wholly funded by the Ugandan government, with the hope that it would be self-financing after two years.

Senegal commenced domestic flights with its newly revived national carrier, Air Senegal, in 2018 while Tanzania has announced plans to buy new Airbus jets in order to increase the routes of its state-owned national carrier.

The Secretary-General of the Aviation Safety Round Table Initiative (ASRTI), a think-tank group of the local industry, Group Captain John Ojikutu (rtd.), said Nigeria could not afford to be a bystander, hence the plan to establish its national carrier must continue.

He advised that the Nigeria Air must be done with foreign technical investors holdings not more than 40 per cent stake, credible Nigerian investors 20 per cent, Nigerian IPOs 25 per cent, Federal Government five per cent and state governments 10 per cent.

To him, the government’s plans on national carrier, concession of airports, maintenance facility, and aircraft leasing programmes are laudable, “but the government cannot do them all alone without involving the private investors.

“We must not fall again into the traps in which we found ourselves with the Nigeria Airways, which was run more like a government airline than a national carrier.

“Without the participation of foreign technical partners and investors, Nigerian investors and the public, and with the government having some shares but not controlling shares, the dreams of a credible national carrier and airport concession may end up being just dreams or another disaster in government-owned enterprises,” Ojikutu said.

By Wole Oyebade
Source: guardian.ng

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