Nigeria Airways: The missed opportunities

on   /   in Viewpoint 11:11 am   /   Comments

THE need for Nigeria to have highly functional and globally competitive national airline(s) has for so many years occupied minds within and outside the industry.   The discourse and arguments are laced with facts, half-truths, blurred perception and, more often than not, highly emotional on the sides of protagonists and antagonists alike.

The unfortunate outcome is that some people had gone to the extreme of declaring Nigeria incapable of floating and running a world-class airline. It is quite true that our history in the airline subsector is not just chequered, but only very few Nigerians know, even in the industry, that there were three great chances created between 1992 and 2001, any one of which would have put us on a sound footing for competitive airline business operation.

These three chances were Capt Mohammed Joji’s “Air Nigeria” – 1992/1993; Ibrahim Jani’s   “Turn Around” – 1997/1999 and the International Finance Corporation, IFC’s, “New Co” – 2000/2001.

Capt. Joji’s “Air Nigeria”

In January, 1992, Capt Mohammed Joji,  a professional who had worked with British Airways and had returned to Nigeria to set up Skypower Express Airways Charter operation was appointed MD/CEO of Nigeria Airways by Gen. Ibrahim Babangida.   On arrival, Joji   set up a management team to float a new airline – Air Nigeria, not as a replacement but to exist together in a symbiotic relationship that would see the ailing mother, Nigeria Airways, fully back on its feet.   Air Nigeria was to operate international routes – London, New York, Rome, Jeddah and Johannesburg, while Nigeria Airways would remain a domestic and regional operator. To drive this, Capt. Joji engaged a British Consultant, Mr. Keith Bolshaw, who helped to put together a start-up technical team from Swiss Air and Sabena.  The foreign technical partner would take 40% equity, Federal Government 40% and 20% would be sold to the public and staff.   Nigeria Airways would still remain 100% government.

At the African Airline Association, AFRAA, annual conference in Victoria Falls, Zimbabwe in 1992, both airlines were requested to present their proposals.   Kenya Airways was led by its Consultant, Brian Davis, a former British Airways staff, while Capt Joji and Keith Bolshaw led the Nigeria Airways presentation.  At the end, AFRAA adjudged the Nigeria Airways/Air Nigeria model well ahead of the Kenya Airways model.

Back from Zimbabwe, Joji proceeded to transfer the BASA rights on New York, London, Jeddah, Rome and J’bourg from Nigeria Airways to Air Nigeria.  Air Nigeria was programmed to lease from Nigeria Airways its four wide-body aircraft: two DC10 and two A310 and pay a monthly rental of US$1million, which will be used to revive and revamp the ailing ‘mother-airline.   As at this time, 100 graduates have, for the first time, been engaged as cabin executives for Air Nigeria and were undergoing training.

The aircraft were being checked and refurbished at both Sabena for A310 and at Varig Brazil for DC10 and B737. One great impediment was the mammoth debt of Nigeria Airways which stood at about US$100million. The then CBN Governor,  Alhaji Ahmed, got approval from Gen. Babangida to personally supervise the repayment to all verified and certified creditors.

All seemed at this time to be clear for a take-off but surprisingly challenges cropped up from the Unions – NAAPE, ATSSAN, NUATE and even pensioners opposed the project on some unimaginable and outright selfish reasons. The final blow to the novel project was when in the wake of IBB’s political quagmire, he replaced Joji with Andrew Agom, also an engineer, who dismantled the Air Nigeria/Nigeria Airways programme, reversed everything Joji did and ran back into the waiting hands of a Ministry that was bemoaning the loss of its first-class parastatal, Nigeria Airways.

Interestingly, Arap Moi continued with Kenya Airways programme despite protest from the airline’s unions and vested interests. Today, Kenya Airways, “The Pride of Africa”, bears out this wisdom of national interest being put over personal interest.   No doubt, had Joji been left, Air Nigeria would have been “The Star of Africa”,and the over US$1.5 billion being lost annually to foreign airlines would have been curtailed.

The Jani Ibrahim “Turnaround Project” of 1997/1999:

The second great opportunity thrown away was in 1997/1999 when Alhaji Jani Ibrahim, an oil and gas industry professional with experience in property management was appointed the MD/CEO of Nigeria Airways. When he took over from Group Captain Peter Gana, a serving Air Force officer nobody had the foggiest idea about Jani’s vast business experience, nor his superior intellect.

At the onset of his tenure Jani inherited an airline whose debt profile, both domestic and external, had risen; over-flight charges to ASECNA and ENESA had mounted, insurance premium unpaid and operational aircraft grounded or seized.   Delays in staff salaries set in and pensioners were in the cold. Nigeria Airways was no longer operating to London due to government policies and the airline’s debts.   Added to this was the withdrawal of airline insurance cover by Alexander Howden, the airline’s insurance broker.   To set the route towards a potential recovery, Jani invested the airline pension funds which had been left sitting with no accruing benefits, cut down travels, expanded cargo operations through leases and began debt negotiations to achieve debt restructuring and reduction.   As at this time, Nigeria Airways was not flying to London due to debt issues and to New York, primarily due to the US ban on Murtala Mohammed Airport, citing safety issues.   So, unlike his predecessors, Jani had only Jeddah, a religious pilgrimage route and Dubai, a new route, rather than high traffic UK and USA commercial routes.

Gen. Abubakar lifted the ban on British Airways.  Jani opened up contact with BA authorities led by Allan Burnet, and secured the first ever assistance when BA offered Nigeria Airways two of its B737 to lift players round the country during the FIFA U-21 world cup hosted by Nigeria.   The BA gesture was at no significant cost to Nigeria Airways despite the revenue which accrued, though NFA did not pay substantial part of the bill till the airline’s demise.

GEN. Abubakar lifted the ban on British Airways.  Jani opened up contact with BA authorities led by Allan Burnet, and secured the first ever assistance when BA offered Nigeria Airways two of its B737 to lift players round the country during the FIFA U-21 World Cup hosted by Nigeria. The BA gesture was at no significant cost to Nigeria Airways despite the revenue which accrued, though NFA did not pay substantial part of the bill till the airline’s demise.

He went into a JV (Joint venture) with British Airways to deploy one of its B747 jumbo to fly Nigeria Airways seven (weekly) frequency on the Lagos/London route     since all Nigeria Airways wide-body aircraft – DC10s and A310s were either grounded or seized by creditors.

This JV was approved by the late Dr. Olusegun Agagu who was then the Minister of Aviation and Jani team invented, for the first time ever in the global aviation industry, the two-piece -baggage concept which allowed passengers to check-in two baggages of 23kg each. Its market success alarmed not only BA but all European airlines at inception and today, the two-piece baggage concept is now a global practice. More importantly, the British Airways JV earned Nigeria Airways N100 million monthly. This improved liquidity, made timely salary payment easier and regular; same for pension and freed revenue from other sources for debt repayment, administration, retraining and maintenance.

Towards the close of 1999,   Agagu replaced Jani with Yomi Jones.   This signaled the end of a great pathway to recovery and pride. If Joji lived ahead of his time, Jani proved that ideas, not money, make most remarkable changes in life.   If Jani had been left, we would have been a member of the global airline alliance called “One World” which includes BA and American Airlines.

The IFC “New Co”:

For most Nigerians, May 1999 heralded a great new hope not just because of the dawn of democracy after over 16 years of painful military regimes, but because of the newly elected President – Chief Olusegun Obasanjo, who Nigerians believed had integrity and held so much promise.

Before even assumption of office, OBJ had made statements that gave indication of his mindset. One of these included the decision to privatize the ailing National Carrier – Nigeria Airways.   True to his promise, the then President, on assumption of office, created the National Council on Privatization, NCP, headed by the Vice President, Atiku Abubakar and a Secretariat for NCP, the Bureau of Public Enterprise – BPE.   And on October 7, 1999, the agreement for Nigeria Airways privatization was signed between Nigeria and the World Bank.   Atiku initialed for Nigeria while James D. Wolfensohn, President of World Bank and IFC, initialed for the World Bank. The World Bank appointed its investment arm – International Finance Corporation – IFC to handle the assignment.   IFC as the lead Consultant worked with six other Consultants: Nathan Associates, Ashurst Aviation and AW Consultants Ltd for technical matters, Northon Rose (UK) and Olaniwun Ajayi and Co (Nig) for legal matters and Arthur Anderson Nigeria for accounting matters. The mandate was: Restructure and privatize Nigeria Airways.   It is very noteworthy that the entire process was transparent to the absolute.

About a year later, IFC had produced its Report in a 147-page compendium.   The Report was accepted by the NCP, the Aviation Steering Committee – ASTRIC, chaired by the Minister of Aviation as well as the Federal Executive Council.   The stage was then set for Phases 2 and 3 of the project which were respectively – Sale Preparation and Sale Implementation.   Nigerians had high hopes, but the incubus again showed up. The political fight between OBJ and Atiku hammered a death knoll on the project.

The IFC, on March 15, 2001, in frustration, informed the Minister of its decision to withdraw in a two-page letter signed by its manager, Mr. M.D. Leonard.   Thus ended a highly redemptive dream and we went back to our ignoble squalor.   Once again, an excellent venture that would have put us on the platform of global elite airline operation was shot down at the altar of personal political emotions and intrigues by same man who originated it.

Our nation was the loser.

Mr  Chris Aligbe , former PRO of the defunct Nigeria Airways , wrote from Lagos.

 

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