Nigeria’s National Carrier Fixation And Lessons From South Africa By Bukola Ogunyemi
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.
