From all indications, the Nigerian government is determined in its
decision to float a new national airline and have it operational by the end of
this year. This milestone appears to have been inspired during the election
campaign that ushered in the administration of President Muhammadu Buhari, who
came into office in May 2015 after an unprecedented victory. This zeal to
fulfil a major campaign promise and commit scarce funds to a rather capital
intensive infrastructural project is in itself admirable, but the energy should
undoubtedly be channelled differently.
It’s simple. Nigeria does not need a national airline and cannot
afford one. Out of all the points on its historic 2015 manifesto, Nigeria’s
ruling party is well aware the National Airline promise ranks least in swinging
any of the over 14 million votes that won it the presidency. There is hardly
any guarantee the fulfilment of that promise will matter much to the electorates
in the 2019 elections.
Floating a national airline should rank least on the economic
priorities of a nation that just sneaked out of a recession that spanned five
quarters. Nigeria boasts of housing Africa’s largest economy, taking that crown
from South Africa after rebasing its GDP four years ago. That status is
currently undisputed, but it is from that same South Africa that Nigeria needs
to pick lessons on how not to lose the crown.
This 2017 revival won’t be Nigeria’s first fling with a national
airline project. Like most relationships, the previous one blossomed in parts
and after a painful breakup died a tragic death. Nigeria Airways was founded
two years before Nigeria’s independence. It became the country’s national
carrier in 1961 after the Nigerian government increased its shares in the
company from 51 percent to 100. By 1987 the airline, as a result of corruption
and mismanagement had accumulated debts of over $250 million and was suspended
by the International Air Transport Association for poor safety compliance.
Nigeria Airways at this time had 500 employees per aircraft in the
fleet, twice the international average. 1700 people were laid off in 1985 and
another 1000 the following year. In a desperate attempt to keep the airline
afloat, 3000 more employees were laid off in December 1988, domestic and
international fares raised and flights to a number of destinations
discontinued. None of these measures proved effective in turning the fortunes
of the airline around.
It, however, took the international embarrassment of having a
Nigeria Airways aircraft impounded at Heathrow Airport and an eventual ban by
the UK Civil Aviation Authority to convince the Nigerian government to
privatise the debt-ridden venture. By the time Nigeria Airways folded up in
2003, it had received a cash injection of $200 million from the Nigeria
government and was $528 million in debt.
Still not convinced by the misfortunes of the defunct Nigeria
Airways, the government in 2004 staged a revival of the national airline in the
form of Virgin Nigeria Airways, as a joint venture with the Virgin Group. This
quickly morphed into Air Nigeria after the Virgin Group pulled out of the
arrangement. By 2012 Air Nigeria had met its demise. Fast forward to 2017 and
the Nigerian government had appointed Lufthansa and five other firms as
transaction advisers to kickstart the process of establishing yet another
national carrier.
So why is the Buhari administration fixated on an idea that has
twice been tested, has twice failed, accumulating humongous debts while costing
taxpayers millions of dollars? According to statements issued at different
times over the last one year, the government is convinced this new venture,
touted as a public-private partnership, has the potential to be Nigeria’s
answer to the largest African airline – state-owned Ethiopia Airlines which
clocked $175 million in profits in 2015. If records, however, are anything to
go by, it could very well be the Siamese twin to the loss-making South African
Airways.
Despite running one of Africa’s biggest fleets, state-owned South
Africa Airways is yet to post profits for seven consecutive years, managing to
stay afloat on bailout funds by the South African government. State-owned
regional airline, South African Express, and low-cost carrier, Mango, are not
faring any better. These three airlines have recorded a combined R35 billion in
operational losses over the last 10 years. Indeed, the fate of South Africa
Airways currently hangs on a R10 billion bailout to be able to honour debt
obligations by the end of this month.
Thus, South African government’s national carrier business has
proved to be nothing but a sinkhole for public funds. Nigeria appears set to
thread the same path even while the debts left in the wake of the previous
attempts are still hanging on the government’s neck. The unpaid pensions and
entitlements of the workers laid off when the Air Nigeria closed shop in 2012
stand at N78 billion today.
Aviation experts and economic analysts are united in the opinion
that Nigeria does not need a national airline. Rather this fixation on floating
a national carrier just because there used to be one and other countries have
theirs, a more productive venture for Mr Buhari’s government would be to institute
key reforms in Nigeria’s aviation industry to improve the operational
efficiency of the existing players and attract new investments into the sector.
Bukola Ogunyemi, a media executive writes from Lagos.
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