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National Carrier: Should a regulator also be an operator?

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By Lawani Mikairu

The return of Senator Hadi Sirika as Minister of Aviation has given a new impetus to the desire of the Federal Government to establish a national airline.

Hadi Sirika
Hadi Sirika

Giving Nigeria a national carrier was one of the focal missions of Sirika in his first coming as Minister of State, Aviation. However, the question on the lips of many aviation stakeholders and watchers has been: Should the Federal Government who is the regulator of the aviation industry also be an operator?

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Recall that the Federal Government in July 2018 unveiled the branding and livery for the new national carrier, Nigeria Air, and said that the airline would be inaugurated before the end of last year.

Sirika, while unveiling the carrier at that time during the Farnborough Air Show in London, UK, was quoted as saying, “I am very pleased to tell you that we are finally on track to launching a new national flag carrier for our country, Nigeria Air. We are all fully committed to fulfilling the campaign promise made by our President, Muhammadu Buhari, in 2015. We are aiming to launch Nigeria Air by the end of this year (2018)

Sirika also said the Federal Government had learnt a lot of lessons from the experience of the defunct Nigeria Airways, and was now determined not to repeat the mistakes that led to its demise. He also said that his ministry was running an aviation road map that includes airport concession, aerotropolis, an aircraft Maintenance, Repair and Overhaul centre, agro allied terminals, the national carrier and an aircraft leasing company.

He further said: “This airline is a business and not a social service. It is not intended to kill any airline in Nigeria but complement it and promote it. It must be done in the right way so that it will be here to stay. Government will not hold shares beyond five per cent at the topmost. This airline has the backing of the government. Government will come up with funding according to the business case that has been delivered to the government. We will engage the youth of Nigeria because we do believe in the ‘Not Too Young to Run’.

“We engaged them in the campaign to name this airline. We engaged 400,000 Nigerian youths to arrive at the name of the airline. All of their ideas were taken and digested and we came up with what is an average. The airline will take into cognizance the multicultural nature of the nation through its diversity. We want to use this airline to make a statement that yes, we can do it.”

But the existing private airline operators are worried about the fate of their businesses and aviation stakeholders are asking: Should government become both regulator and operator? Can the private airlines exist and flourish side- by- side with the Federal Government owned national airline?

Will National Carrier kill private airlines?

Some stakeholders believe that the proposed national airline can co-exist with private domestic airlines. They, however, cautioned the Federal Government against committing too much of public funds into the venture.

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They also asked how the five percent equity share will be funded and the source of the $8m and $300million dollars initial funding.

Speaking on the issue, a former Director General of the Nigerian Civil Aviation Authority, NCAA, and current Rector of International Aviation College, Ilorin, Kwara State, Engineer Benedict Adeyileka, said the national carrier and private airlines can exist mutually and run as business entities. He added that the proposed national will not be a threat.

“UK has two flag carriers, British Airways, BA, and Virgin Atlantic, both of them making a fortune in Nigeria. So we could also have Air Peace, for instance, and the government national carrier operating as flag carrier”.

When the former NCAA DG was asked if the national carrier will not be a threat to private airlines and if it will be a win-win situation, he said, “I think the FG (national carrier) should face regional, international (operations) while the domestic routes will be operated by private airlines”.

Also speaking, a former Airport Commandant, Murtala Muhammed Airport, Lagos, Group Captain John Ojikutu (ret.), said the Federal Government can invest in an airline and have minimal shareholding.

According to him, though government is the regulator of the aviation industry through NCAA, it should not deny itself ownership of shareholding in the national carrier owned by Nigerians.

Ojikutu said: “I have never canvassed for a government carrier but a national carrier. Air Peace, a private carrier and single ownership, is already designated a flag carrier. To designate it a national carrier needs the participation of more than one Nigerian credible investor including the Nigerian public.

“Government as the statutory regulator of the industry should not deny itself ownership of shares in the national carrier owned by Nigerians where government will not have controlling shares but minimal shares that should not be more than 10%.”

When also asked if it will still be a win –win situation for the private airlines and will they not be stifled and run out of business by the “mighty” national airline, Ojikutu said, “Provided they have good business plans and good knowledge of commercial aviation which, generally, most of them lack.”

Sunday Vanguard investigation revealed that domestic airline operators are not really worried about the entrance of the proposed national carrier to the Nigeria aviation market.

All they are asking for is a “level play field” for all airlines.

The Chairman of Air Peace, Allen Onyema, for instance, expressed excitement on the introduction of a national carrier.

But he cautioned that government should provide a level playing field for domestic investors who have put their monies in the airline business without any form of support and protection from government.

Speaking recently on the issue, Onyema said, “If you say it is a national carrier and it is private investors’ driven, are you not saying it is just investors like me, Alhaji Bankole (of MedView Airline) and other investors? So you are simply saying government is just supporting another private airline? I do not have a problem with the national carrier per se; it is welcome.

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“But it must not be given any undue advantage over other airlines as the owners are investors too. Now, as this airline is coming on stream, are they going to take routes already allocated to other airlines and give it to this carrier? These are the things government has not told us.”

Also the Managing Director /Chief Executive Officer of Medview Airlines, Alhaji Muneer Bankole, has also be quoted as saying that   it is important for Nigerians to give government the opportunity to come out and be able to tell everybody the template under which the national carrier will operate.

According to him, stakeholders would have to sit down with government and ask questions about the airline project.

He warned government against deploying public funds into the project.

On his part, Chief Executive Officer of African Aviation Services Limited, Mr Nick Fadugba, said there are many questions that need to be answered in terms of the management, funding and the fleet.

Fadugba said, “I believe government now needs to brief the Nigerian people on the national carrier. Rather than doing it abroad, we need to come home and explain to the whole nation what the concept of the new national carrier entails.

“More importantly, I am interested in how does the national carrier interface with all the other airlines in Nigeria?

“Because remember that government is the de facto owner of two other airlines: Arik and Aero. So this is the first time I have seen one government owning three airlines. So, government needs to coordinate its airlines strategy in terms of moving forward.”

Fadugba called on the minister, as a matter of urgency when he returns, to meet with Nigerian airline operators and iron out the grey areas as there is a looming challenge if that is not done.

President, Aviation Round Table Safety Initiative, ARTSI, Elder Gbenga Olowo, while applauding government’s effort in fulfilling its promise to restart a national carrier, said government must not be too forward in doing certain things that the transaction adviser is expected to do.

Olowo said, “The logo looks good, I can see the flame go into the air and I hope it doesn’t flame out. I am expecting to hear from the transaction adviser the modus operandi of that airline; that is the most important thing to me. The transaction adviser should tell us the board and the management of the airline, these are people who should take decisions because I heard the minister is already talking with the aircraft manufacturer, lessors and things like that.

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“The decision about aircraft funds, whether to lease or purchase, if you are going to do a private airline, this should rest with the board and management and I don’t think that is the role of the minister.

“I believe it is a private carrier and it is coming to compete with the rest of the carriers on ground because we do not want a government monopoly, we want a competitive operator that is going to be very formidable, not only against Nigerian partners but also against all the partners that fly into Nigeria. That is what I expect”.

Vanguard

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