By Prof. Tilmann Gabriel

For the last 70 years, Nigeria is aiming to develop a healthy airline industry, originally as a one national airline construct, as so many other nations, then leaning towards a minority share with reputable airlines, now focusing on a primarily private airline industry, as customary in most economies around the world.

The only successful airlines in Africa are currently all owned by the respective Governments: Ethiopian Airlines, Royal Air Maroc, Egypt Air. Most other national carriers owned by their Governments like Kenya Airlines, South African Airways, Air Mauritius etc are struggling to survive, only possible by significant annual subsidies from the Government. What is the truth then, looking at this airline business, specifically in Africa?

Business is an infinite game, never ending, with new rules and new players all the time, frustrating for executives and employees to remain the number one, never sure if this is sustainable for the years to come. ‘Too big to fail’ is a book that describes the dilemma of executives who have to innovate a huge company to stay abreast with changing rules and aggressive new players. IBM, General Motors, Sears and others are such examples, and airlines like PanAm, TWA, Alitalia were considered too big to fail.

In Nigeria, the largest African nation by people (220 million, going towards 400 million in the next 30 years), all initiatives to launch a sustainable National Carrier were doomed to fail. Nigeria Airways, founded in 1958, was the longest symbol of Nigerian national pride. The author counted some 130 AOC (Air Operator’s Certificate) holders in Nigeria, which went under in those 70 years of Nigerian airline industry, assuming this is a world record. Many of these 130 airlines were only flying for a few years, after spending lots of money (an airline launch costs at least 150M USD today), energy and disappointed hopes. Nigeria Airways was the longest existing airline so far, shut down in 2003, after 45 years in the domestic, regional and international skies.

Key reason for the demise of Nigerian Airways was the involvement of the Nigerian Government, dictating fares, rules, and free tickets for many. No airline can survive such intervention in the revenue creation. Sucking the lifeblood out of an airline, which has critical costs in the US dollar (aircraft leases, fuel, foreign fees), is a sure recipe for failure. Eventually, the then Government was no longer able to substitute such failure. What happened with the next hope of a successful Nigerian airline project, Virgin Nigeria? An agreement for Virgin Nigeria, to use the same terminal for domestic and international operation in Lagos, was no longer honoured by the new Government elected in 2007. Eventually, the 51% Government majority share in Virgin Nigeria was left with the pull-out of Virgin’s 49%, and with it the loss of the international relations and the Virgin supplied aircraft. Successor Air Nigeria was not able to survive without the Virgin assets and expertise.

Why is Ethiopian Airlines successful then as a 100% Government owned airline. Not a short story. Over 70 years it grew mainly organically, slowly and with realistic budgets and expectations. The main difference was that the Management, still led today by the highly regarded Girma Wake as Chairman, was never directed by the Government and by the inevitable changes of Governments in a democracy. Today, Ethiopian is the leading African Airline, with a 20% profit margin and a strategic plan to double its fleet of 130 aircraft by 2035. Vision, strategy, and a highly competent management governed by a Board of experts is the key for success. Disruptive innovations, adjusting to the fast changes in aviation (for example ET’s new cargo focus during the years of Covid), lean cost structures and as a reliable contractual partner with its lenders and aircraft lease companies, have made Ethiopian a valuable African airline, winning awards, and global recognition.

Is this possible in Nigeria as well? The Buhari Government, early on in its 8 years of ruling, agreed on an aviation roadmap with a National Airline, a leasing company, a maintenance company, and an Aviation University as its key components. Under the Minister of Aviation Hadi Sirika, all these roadmap projects are well under way, proof of a successful strategic political direction of this Government of the last eight years. It is important that the next elected Government continues this direction and present a stable aviation industry in Nigeria to the world, based on international aviation laws and supportive political governance.

The Private Public Partnership (PPP) concept which governs all these aviation projects, ensure that it is not the Government and taxpayers’ money, which the success of these aviation companies is based on, but a consortium of industrial investors, carefully selected by the independent Infrastructure Concession Regulatory Commission (ICRC) governed privatisation process. This way the Government has initiated its political strategy to create a profitable aviation industry in Nigeria but sustain from political influence and the reliance on taxpayers’ money.

The African continent is looking into a brighter future, the aviation industry is going to grow rapidly, far behind the rest of the world. Airlines will be a key infrastructure development for the continent, driven by the African Union agenda 2063. African free trade, combined with an open sky for African based airlines is the prerequisite for this development, which shall improve the infrastructure of the continent and contribute well above 5% to the country’s Gross Domestic Product, but also create tenths of thousands of jobs. The Single African Air Transport Market (SAATM) will be the frame for the success of those African airlines which get it right. Serving not only their own country but many of the 54 African nations, as flying between those nations will be enabled by SAATM. It is high time that Nigeria therefore has a strong domestic airline to cope with the SAATM challenges of an Africa wide competition.

The existing airlines in Nigeria are organised in the Airlines of Nigeria (AON), and Nigeria Air, the new National Carrier, has meanwhile applied for its membership as well, becoming a respected party of the common interests of the Nigerian airline industry. Some member airlines objected recently against the Ethiopian shareholding (49%) in Nigeria Air, starting a court case, which will be heard on 16 January at a Lagos court. The Aviation Union called this recently an unpatriotic attack on the interests of Nigerian aviation. At the end, Nigeria Air will be launched, the AOC application is in ‘phase three’ at Nigerian Civil Aviation Authority (NCAA), the launch is very near. The PPP process governed by ICRC is also about to close, with the Federal Executive Council’s approval of the contracts with the investor consortium to be signed shortly. The decision process of selecting the preferred bidder consortium of respectable Nigerian owners and Ethiopian Airlines was completely transparent and managed by the ICRC governed PPP procedures.

Nigeria Air is ready to launch with a fleet of Boeing 737 on domestic services, is currently recruiting many Nigerian aviation professionals to help start the airline operation. The Operations Control Centre at the Abuja Airport is ready to be opened with most modern IT systems. The booking engines on the airline website and App will be available shortly with loyalty credit cards and other innovative pay systems. The immediate goal is to introduce all up-to-date customer service systems to make flying a pleasurable and easy-to-use enjoyment.

Nigeria Air will be a new competitor in the Nigerian market, adding to the existing airlines. As Michael Porter taught us many years ago, the five factors of competition are for all businesses to recognise, amongst them that all competition creates new business for all, as the customer has added choices. In short, the new year 2023 will have added choices for domestic flights for all customers, soon also on the regional and international markets. Nigeria Air has the strategic direction, with a solid business plan for the next ten years and a start-up budget of 250 million US dollars. The Nigerian Government only invests 5% into this start-up funding (12.5 million US dollars), in line with its 5% share in Nigeria Air. By the transparent and structured PPP process the Government has ensured a clear ownership structure, including the leading African airline, with a secured start-up budget which gives Nigeria Air a solid financial foundation. The Buhari Government had promised a new aviation industry which the future of Nigeria can rely on. It took hard work by the many involved, driven by a Minister of Aviation never tired of pushing this Buhari strategy in the last seven years.

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Prof. Tilmann Gabriel lives in Abuja and researches and works on African aviation projects.

By Daniel Young

The concept of a flag carrier or national airline, gained currency in 1944 at the Chicago Convention, following an agreement by representatives from 54 countries present at that event.

From the agreements reached at the convention, and by the generally acceptable definition of national carrier as espoused by the house, two key factors stood out in bold relief: “substantially owned and effectively controlled by citizens and nationals of the country.” For many years this definition held sway until new interpretations of “substantially owned and control” began to emerge on the horizon and those phrases have now acquired new meanings and interpretations; countries and various aviation communities of interest have now begun to interpret this rule to match their various economic realities.

I shall attempt as time permits, to clear our doubts on Nigeria Air’ business ownership model and how it is an amalgam of both the Chicago agreement on national airline ownership rule and the new global airline ownership trends across continents. I must reiterate
at once that, the action of the Nigerian government in accepting a paltry 5% ownership, is a very legitimate one and it is in tandem with global best practice which I shall attempt to justify using case studies and parallels. I must emphatically state here that, there is nothing wrong with the choice of an Ethiopian Airline as partners- as there are easily discernible reasons to justify them as worthy partners in this venture. Their record as the most successful Africa national airline is a fact that cannot be challenged.

Friends, I have studied deeply the 14 misconceptions and fallacies about Nigerian Air by AON and others, which I have addressed in this document …but first, I would like to ask for your patience and understanding. Know this: the most powerful forces in the universe they say, are silent forces and becomes beneficent when rightly directed and destructive when wrongly employed. To ignore the silent forces being carefully marshalled by the most rabid critics of the Nigeria Air project is to deny their effectiveness in helping build a strong determination in those tasked with the delivery of the project to do –the right thing.

‘Substantially owned’ in all its varieties means: ownership of more than 50% interest and that means that Nigeria has passed the ownership test by Chicago agreement standard because, Nigeria and Nigerians own 51% of Nigeria Air -citizens and the government of Nigeria.

AIRLINE OWNERSHIP AND CONTROL-.

Europe has been in the forefront of this battle against ownership and control imposed on airlines by the Chicago convention and believes that where nations are able to ensure that all complimentary national safeguards have been be adhered to and, such relationships portend great benefits, the bars should be lowered to accommodate honorable interests.

Significant reduction of government interest in airline ownership as in the case of
Nigeria air is such a good example of where the world is going now because:

The reduction of government interests in the airline would allow for increased access by airline to capital because the airlines would be playing in a highly competitive and expansive market where constant capital injection would be required to gain substantial market shares.

WHY Ethiopian?

1. 70 years of highly successful operation in air transport
2. Instant Connectivity with Africa and the rest of the world: South, East, West, North and Central Africa.
3. Leadership in aviation technology
4. MRO
5. Over 240 flights per day across Africa, Europe, Middle East, Asia and north America
6. Aircrafts of various types in their numbers
7. 10 years and counting, as the most profitable airline in Africa.

This is an impeccable pedigree in Africa where airlines die with the first 5 years. We must learn to also fix attention on peoples strength. The glass that is always half empty to some people, is always half full to others

To be continued…

(This is part of a contribution by Dr Young, an aviation trainer and Public Affairs commentator, to an ongoing discourse on Nigeria’s national carrier)

*By Sonala Olumhense*

As a Nigerian with considerable interest in public affairs, the Grand Ballroom of New York City’s Hilton Midtown Hotel, the venue of “Afro-Economics & Government Policy: A Conversation with Governor Peter Obi,” was my destination last Sunday.

The engagement followed others in the United States, some of which had been mismanaged by local organisers who chose to charge a gate fee. Not New York, which was free to every registered attendee, thanks to the Columbia University’s Africa Business Club and Black Law Students Association.

The Hilton Grand Ballroom is a cavernous facility capable of accommodating 3,000 persons. For a city with nearly 700 hotels pre-COVID, Hilton bills the facility as the city’s largest ballroom. At the height of the event, it was about two-thirds full.

On arrival, I was exactly half an hour ahead of schedule. I was therefore even more impressed to find over 100 other Nigerians ahead of me at the door, some of them from faraway states.

On the evidence of the New York event, I report that Labour Party presidential candidate Obi is not a myth or a hoax, contrary to what some snake-oil merchants suggest.

He is no product merely of social media, or merely an Igbo man seeking an Igbo presidency. The Nigerians I saw, heard, and interacted with were from various parts of Nigeria.

Who is Obi? He may be a Nigerian who wants the leadership of Nigeria to alter her story, history and trajectory, but he is the candidate of time and chance.

That makes him a formidable candidate, and on the evidence of last Sunday, I now fully understand those videos of widespread excitement each time he is identified in public, which offend the Nigeria political establishment (structure, if you like).

I have previously written in this column that Peter Obi, the metaphor, is the rephrasing of the question for the APC and PDP conglomerate.

Most Nigerians admit: Nigeria is a pathetic failure. Obi’s advocacy is a commonsense proposal to re-engineer the country beginning from its leadership recruitment.

The background here is no mystery: Nigeria is at its lowest ebb of morale and coherence since her independence in October 1960. Since then, she has suffered relentlessly at the hands of ruthless politicians and a mostly-rotten military machine which dresses up some of its most brutal, greedy and pretentious in civilian attire and dumps them on the nation.

The danger is that Nigeria is now rotting at a precipitous pace, the nation hurtling towards disintegration with nothing working for most people except those who wield power, their cronies and their families. What this means is what the rest of the world can see: a nation of tremendous potential that is running out of time.

It is the popular outrage against this mess that is fueling Mr Obi and his message: to reset Nigeria.

At The Conversation, he took questions from a panel of two, and then from a pile that had been written by the audience at the beginning of the programme. Throughout, it is significant that not once did he read from a prepared text. He did not have an army of aides whispering clarifications of questions or explaining elementary concepts. He avoided no questions.

Was I satisfied with every answer he provided? No. There were a couple in which I felt he was under-prepared.But was I satisfied with him? Absolutely. It was the first time since 1983 when, as a young journalist, I joined a panel to interview the late Chief Obafemi Awolowo, that I encountered a Nigerian politician at a very high level who spoke with confidence, control, and conviction. He was on the floor for a couple of hours, pausing only to drink water. He did not go to the bathroom or pause for a doctor to monitor his vitals.

You could tell not simply that Obi is literate, but that he is educated and that should you seek his certificates, he will give them. You could tell that he is not intimidated by books or facts, and that should he see a library, he would walk in not as a tourist but as a reader.

You could tell not simply that he is educated, but that he wants to extend that privilege to Nigerians in their own country. He explained his philosophy, including why it is outrageous that in a country in which there is supposedly a government, the ASUU strike has been permitted to keep students at home for over half of 2022.

He addressed the correlation between education and poverty, advocating the first as the antidote to the second. He pointed out how, by merely implementing the United Nations Millennium Development Goals, such nations as India and China lowered their poverty rates.

Who should be the next Nigerian leader? He warned that the forthcoming election “will be about character we can trust, competence, capacity, commitment to do the right thing,” dismissing the absurdity about the presidency being conceivably someone’s “turn.” The election, he affirmed, is a political contest and “not a chieftaincy title,” and “will not be about connection.”

On corruption, Mr Obi drew attention to the importance of leadership by example. “Corruption kills entrepreneurship, professionalism, and hard work,” he said, stressing that it must be fought through the personal example of the leader, his family and those around them.

He called on Nigerians not to vote based on sentiments of religion or ethnicity because the same challenges confront Nigerians everywhere. “Don’t vote for me because I am from the South-East,” he said. “If you go to the North, it is not safer than the South. It will not be about religion (either); Muslims don’t buy bread cheaper than the Christians.”

Members of the PDP and APC have often dismissed Obi’s popularity on the grounds that his party lacks a structure. Responding, Mr Obi said, “The structure they talk about is the structure of criminality and that is what I’m coming to dismantle.”

Predictably, the crowd roared because everyone knows how APC and the PDP have rigged their way into those offices over the years with arrogance, using money, the security agencies, thugs, and even the electoral commission.

*What is Obi, then? If you think of him merely as a contestant for public office, you miss the point. Obi is a conversation, a confession, and an opportunity to rethink. He is the epochal conversation Nigeria has not had with itself since the rails fell off following the civil war in 1970. He is a confession that this conversation—demanded far more by the #EndSARS generation than the Grand Ballroom demographic—is not optional.*

I recommend this template,as a non-campaign engagement at home or abroad to hear and be heard. Office-seekers who are comfortable with ideas, or whose power is not in buying support with money or aides who love unearned riches more than they do their families, should try it.

*Let us talk about what constitutes hope for Nigeria. Let us hear your ideas. That is what Peter Obi is doing. And he is not renting his crowds.*

(Sonala Olumhense is a Veteran Journalist, syndicated Colunmist and Author)
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