By Daniel Omale
Since his appointment as the minister of state aviation, Hadi Sirika, the Buhari administration’s impetuous head of air transportation, has vigorously canvassed for the re-establishment of a national airline.
While the idea itself seems patriotic and well-placed, the nuances and precepts of floating another failed public enterprise are graver than the honourable minister can palpably discern. On paper, anyone can nurse the idea of a viable national carrier, but the ingredients to crystallize such a complex notion must rest on two variables: (1) funding, and (2) management. It is quite elating to see Ethiopian airlines, Emirate, Qatar, and other national carriers’ invasion of national airspace, carting away billions of dollars year in-year -out, but the financial and management intricacies cannot– and will never be replicated in a country like Nigeria—where indiscipline and share theft have become our national lexicon.
Sources of Funding
While the idea of private equity to support the airline was initially mused, the consultancy fees for the project were paid by the federal government. A total of about N1.5 billion was released to two chosen companies of the minister, without any valid tender. This action, itself, is contrary to the rhetoric that private investors would actualize the rebirth of a new Nigerian airways.
Nigeria’s economy is currently in severe storms, and, there is nothing attractive about the federal government’s investment in an airline that will surely fail. The cost of floating a robust carrier, of international standard, this time, will exceed an initial investment of about $1 billion. This is a conservative figure if any of the major aircraft leasing companies—GECAS, AERCAP, and AVOLON is willing to undermine the negative risk-factors of this country. In this case, fewer than ten modern aircraft, Boeing or Airbus will be leased at very expensive rates to the airline, but with very stringent clauses for operation, maintenance, and repossession.
In Nigeria’s constricted economy, I find it almost impossible for any investor, or a group of investors to risk $1 billion into uncertainty—- an airline for that matter.
The advent of Treasury Single Account (TSA) has rendered Nigeria’s economy in absolute unconsciousness, with no discernible period of recovery. This is no time to languish available resources in an unprofitable venture, while millions of Nigerians scramble for remnants of the affluence—- those fortunate enough to loot the treasury with impunity.
The best option for a national airline, at this point, is for the federal government to support the few surviving airlines with incentives that will foster more years of operation. And, I do not mean financial support, but lowering the -ever exorbitant cost of operation in our national airspace. These days, in addition to payment for landing, parking, and navigational charges, airline operators are constantly being hunted by the Federal Inland Revenue Services (FIRS), with huge unsubstantiated levies/taxes.
The privately- funded carriers operating in Nigeria today, are saddled with unbearable bank loans that will surely drown them. Yet, bills and charges by all government -owned service providers (FAAN, NAMA) flood the airlines’ accounts department with threats to ground their operations. With little or no profit, it won’t be long before more airlines file for bankruptcies— the usual symbol of Nigeria’s air transport industry.
If by chance, the central government dishes out funds to create another national carrier, I can bet my life on it that half of the initial capital will be stolen, through fictitious consultancy and contract fees. This will be the first menace to the carrier’s future and, this is not an anecdote, but the reality of who we are, and why nothing works here.
The greatest factor in airline operation is the management acumen of those at the helm of affairs of the company. Often, we have associated a layman’s prerequisites to this feat: an airline pilot certificate, aircraft mechanic, and other aviation related qualifications. But being a pilot or an aircraft engineer does not necessarily qualify an individual for this sensitive, onerous, and highly technical business model. Having the knowledge of an aircraft system, or how an aircraft flies does not equate to pure financial management/ discipline required to keep an airline vibrantly operational.
While basic aviation knowledge might help in understanding the industry’s epithetical jargons, a strong financial background, with visionary, purposeful management skills always override and outshine other aviation experts in keeping the airline afloat.
The defunct Nigeria airways is a testimony to this assumption. Although various pilots and aircraft engineers, as various times, headed the carrier’s management team, sheer myopia of their managerial skills spurred the national carrier into an uncontrolled spin that led to its demise.
Even the most well- managed carriers have gone into insolvency due to misapplied sensitive factors that pervade commercial airline business. Unnecessarily rigid regulation frameworks, and our penchant for corrupt bureaucratic bottlenecks, will naturally hinder the industry. The pervasive Nigerian factors—corruption and nepotism religiously eat up all positive influences that should spur marginal profitability associated with airline business.
In Africa, Egypt Air (established in1932), South African Airways (1934), and Ethiopian (1945) have weathered the insolvency storms because of the ardent support of their citizens, and a dependably, guaranteed sovereignty. Kenya airways was recently bailed out by Kenyan government, when the government converted its loan to the flag carrier into equity, to write-off the two -year consecutive losses.
These are a few examples of how citizens and governments all over the world support and foster aviation development in their respective countries. Our country is unique because every citizen’s interest is at variance with the national interest. A Nigerian in a position of authority prefers to grab all available resources for his immediate family, rendering the country poorer.
While a national carrier in every sense of it should create jobs and support economic growth, if well -managed, there is no guarantee that in our case, the airline will take off in the first place, if funded by the government. The idea of government equity means, to some people, an avenue to take a piece of national cake. Ultimately, there will be no retribution nor restitution.
Again, while the conceived ideal is noble, realizing it will be another flickering illusion, because it is a Nigerian venture—– the usual delusion.