Nigeria Air: The return of a national carrier

Nigeria air

I wrote a piece on July 20, 2018 where I expressed my thought on the then proposed return of the national carrier which I will re-echo now. President Muhammadu Buhari has had a vision of having a national carrier for “national image” and “pride” just as obtainable in most countries including some African countries which are by far less endowed than Nigeria. The “key” point of my “argument” then was about the “management” of the “carrier” in view of our “very sad” experience with the Nigeria Airways. The airline was brought to its knees due to poor management.

The government, on its part on the new national carrier, has halfway allayed the “fear” of “some” Nigerians even though some are still very “sceptical” about the new national carrier which the government says is a “joint venture” between the Nigerian government and a consortium led by the Ethiopian Airlines (ET, Addis Ababa). Many Nigerians who have not been following the development have been mocking President Buhari over his failure to setup the national carrier which he earlier announced.

In my observation, there are several factors responsible for the delay, apart from other factors, a “Court” case was instituted by the Nigeria’s airline operators. The domestic airlines operators are upset over the joint venture agreement with the Ethiopian Airline on their perceived competitive disadvantage which led to litigation between local airline operators and the government. A Federal High Court sitting in Lagos had on November 15, 2022, ordered the Nigerian government and the domestic airlines to maintain the status quo on the establishment of Nigeria Air pending the determination of the suit.

The suit was instituted by the registered trustees of the Airlines Operators of Nigeria (AON) which include: Azman Air Services Limited, Air Peace Limited, Max Air Limited, United Nigeria Airline Company Limited, and Topbrass Aviation Limited. After the said judgement, the Federal Ministry of Aviation declared that it would deploy every necessary step to vacate the order that had stopped the ongoing work towards the establishment of the national airline. The case has been adjourned several times to which some people alleged a delay tactics in order to outlive the present government. The case was said to be later transferred to Abuja on the request of Nigeria Air, the aviation minister, and the attorney general. 

The ups and downs began in 2018 when the Nigerian government announced plans to establish the airline. The government stated that it would not own more than 5% stake in the airline. It further revealed that it would be controlled by private investors who are expected to invest $300 million in the new airline at inception. The name and logo of Nigeria Air were unveiled at the Farnborough Air Show in the United Kingdom in July 2018. But shortly after its proposal, in September 2018, the government changed its mind and announced the suspension of the proposed airline. Meanwhile, the group chief executive officer of Ethiopian Airlines, in July 2019, revealed that the airline was discussing and exploring possibilities to establish or support Nigeria Air.

However, President Buhari as an old soldier turned democrat has succeeded in ambushing many of his detractors on this with the unvelling of the new national carrier. Senator Hadi Sirika, the Minister of Aviation, has right from the inception of the plan revealed that:” The new national carrier is private sector-led and driven; a business, not a social service.The government will not be involved in running it or deciding who runs it.The investors will have full responsibility for this and the Nigerian government will not own more than 5% (maximum) of the new national carrier.”

The only reason that makes me happy with the return of a new national carrier is that the management and its business decisions would be 100% determined by the private sector managers. It is now obvious to everyone that public corporations management in Nigeria is practically inefficient. I belong to the school of thought that strongly believes that, the government cannot run public corporations successfully due to many reasons. There are issues of our low level of patriotism, high sense of self-centeredness and greed in the management of government business. 

The defunct Nigeria Airways operated for 45 years (1958-2003) as public owned business before its liquidation. The airline at its peak of operation had 30 aircraft on its fleet before it finally got liquidated in 2003 with only three aircraft that were largely malfunctioned with huge indebtedness in billions of dollars. Corruption and mismanagement were largely responsible for its failure.

It is a good decision to opt for the private sector approach. Public corporations in Nigeria where our levels of patriotism needed much to be desired will hardly take us to the promised land. Public corporations have not lived up to our expectations. As far as I know, there is no single functional and profitable public corporation in Nigeria, although one may argue that the objective of public corporations are not profit making. For sustainability, public corporations should at least be at “Break-even” position (which means no-profit-no-loss).

Virtually all public corporations in Nigeria are operating at a loss perhaps due to poor public sector management. As profitable as the oil and gas business, before the recent changes in NNPC to NNPC Ltd, the defunct NNPC has been making losses for many years. Many countries including even the welfare state of Saudi Arabia have since understood that, the best way to manage government investments and attract huge private capital into the economy is by joint venture agreements with the private sector, and, or concessioning model, not public corporation.

Nigeria’s  best success story so far is the Nigerian Liquefied Natural Gas Company (NLNG) in Bonny, Rivers state which is not operated as a public corporation. NLNG is a private joint venture company established in 1989. The company is owned by four shareholders, namely, the federal government 49%, Shell 25.6%, Total LNG Nigeria Ltd 15% and Eni 10.4%. The company from its inception has generated over $90 billion in dividend to the government. In the last 12 years, the company has contributed $15 billion to the federal government in dividends and has also paid over $5.5 billion in taxes.

In Nigeria there is the very bad culture of  mismanagement of public businesses which is occasioned by little or lack of patriotism in public sector management. It is in line with this very sad reality that, I believe government cannot run business successfully. Government should pursue joint venture businesses with private sector management and await dividends as a way of diversifying its revenue base. It should also pursue concession agreements on its assets for better management. It should further pay more attention to other public private partneship, PPP, agreements as well as models, for us to get it right.

God bless Nigeria!

Dauda writes from Kaduna, Kaduna state via [email protected]