The current call for a new National carrier is highly misplaced

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It is evidently clear that the Nigerian government,  politicians and bureaucrats do not have the discipline, public confidence and integrity to initiate and successfully run a national carrier. A cursory reminder of the activities in the last 10 years of the defunct national carrier Nigeria Airways ltd. (NAL) shows how dysfunctional things can get. Already the sector is suffering gross inefficiencies as a result of federal government involvement in the federal airport authority of Nigeria (FAAN), the Nigerian airspace management authority (NAMA), the Nigerian meteorological agency( NIMET) and the Nigeria college of aviation technology (NCAT). The bureaucratic bottlenecks and lack of transparency existing in most of these organisations creates perpetual breeding grounds for misappropriation of public funds, abuse of office and gross mismanagement. Thereby making these service providers very inefficient, unreliable and a bedrock of corrupt practices.

Government involvement has always left the taxpayers, the travelling public and the aviation professionals worse off:

•           Nigeria Airways was liquidated with liabilities of over $320 million. However its high value assets and expansive landed properties in Nigeria and its outstations including London were auctioned for next to nothing.  The hangar, workshops, huge stocks of aircraft spares were simple handed over to for pittance. The gullible Nigerian taxpayer was made to bear the brunt of these frivolous debts. 

•           We still remember the horrific experiences of the travelling public that precedes the inglorious exit of international operators like Bellview, world Airways, and recently Air Nigeria. These range from passengers being stranded in foreign countries without a shred of consumer protection, to those being forced to pay for fuel in a bid to obtain a service they have already paid for. We don’t need to look far to prove that the consumers of aviation services are badly treated and disappointed. On the local scene operators do not even bother to explain causes or durations of flight delays or consider it's consequences on passengers with international connection. The poor on-time performance and unreliable service provided by the nations airlines adversely affects the business environment and productivity. This has now compelled serious organisations to procure private jets. Guess whose money was used to re-finance the unsustainable accumulated by Air Nigeria, Arik Air, Aero contractors, et al to the tune of over N106B? The travelling and non- travelling Nigerian public. And who suffered the most with the bankrupting of Air Nigeria and the disruption of Arik's operations over the last few days? The same unprotected travelling and non-travelling Nigerian public. So much for the NCAA and consumer protection.

•           The abhorrent working conditions and the short life expectancy of Nigeria's airlines leaves aviation professionals frustrated and vulnerable. The constant gaps in employment lead to erosion of skills and self-confidence. Such instability places many professionals in a quandary not knowing whether to go for retraining or to change careers altogether. Staff of Nigeria Airways, Bellview, Air Nigeria and a host of other extinct airlines are still waiting for their salaries and remuneration. 

 Considering these and other factors it would be retrogressive and disastrous for the industry and the national economy as whole if the idea of a national carrier funded by the government is revisited. For example, starting a new National carrier require huge investments in the region of $300 million. Some say, the private and public sector should jointly own it. We know that the industry is capital intensive to start and sustain with margins between 3 to 5%. Nigeria’s average rate of inflation in the last five years has been in the region of 10%. So hypothetically speaking, if the public invests $300 million in the new carrier and after a short gestation period of three years starts making profits of 10%. When corrected for inflation the net ROI is zero; showing the idea does not even make business sense. The problem will expectedly, be further compounded by the prebendal nature of Governments' involvement in business. Some affluent kleptomaniacs amongst us will subsequently hijack the National carrier and arm-twist the government into giving it unsustainable and unrealistic privileges/concessions as in the case of the erstwhile Virgin Nigeria. The amount of money required to start a new National carrier is nearly enough to render all our current airlines debt-free.  Of course it'll be preposterous for the federal government albeit the taxpayer to continuously tolerate the misdemeanours of the current airlines. I’m not advocating for the federal government to write off the debts of the airlines currently in operation. Rather they should be restructured to run efficiently with sound business models and financial discipline. This will give them a fighting chance of surviving in this very competitive industry.

Nigeria's aviation industry in freefall.

Events in the last three months have shown that the Nigerian aviation industry has already crossed its Rubicon without knowing it. Unfortunately, it is on a slippery slope and heading for a free fall. It appears the financial circumstances of all schedule operators is still unsustainable despite the governments last re-financing intervention. For a start, the Dana Air accident of 3rd June 2012, seems to have triggered a series of confusing and conflicting reactions from both the administrator and the regulator. Nigeria's weak and retarded 30 year old deregulated airline industry,  desperately needs direction, instruction and support. Unfortunately, most of the actions taken seem to be reactive rather than proactive and lack any planned logic; Air Nigeria was grounded because it was insolvent could not pay it's employees and creditors but the airline did not have any structured recovery plan, neither did the regulator provide clear directions on how to recover the situation. The two months backlog of salaries easily cascaded into four months and a mounting debt profile as a result of fixed non-operational costs and compounding interest repayments. Unfortunately, just as I predicted and warned in the last week of June, Jimoh Ibrahim was given the opportunity to syphoned the remaining funds from the airline, rendered it insolvent and decided to close it down; giving the phoney excuse that operations will recommence in 12 months. The recent decision of the apex bank to blacklist a number of airlines from receiving further credit in a bid to mitigate their rising debts will only hasten their extinction and sadly translate the money used to re-finance their loans into a direct loss of taxpayers money. Due to the strategic nature of aviation the industry should not be left purely to unfettered theories of privatisation, deregulation and whims and caprices of charlatans/adventurous entrepreneurs. National interest does not necessarily mean a government funded or owned National carrier. 

Nigerian airlines should be compelled to open their balance sheets to the regulator to prove financial sustainability. What they really need is the managerial expertise backed by a vigilant regulator to facilitate safe guidance into a sustainable and profitable operating zone.
The current structure that churns out operators without clearly defined models and target market segments creates a foray that results in a battle of attrition. A quarterly analysis by the economic regulatory team of the available seat kilometre (ASK), the revenue passenger kilometre (RPK), the break even load factors (BELF) for the various routes and the overall yield versus the total operating cost will give a good indication of the how sustainable the business models are. Sometimes there's need to re-evaluate strategies based on the volatility of the operating environment. Other factors that are outside the purview of the operators which can be addressed by policy are effects of inflation and fluctuating values of foreign exchange. Healthy competition could drive down prices but that can translate into safety risk where unbridled cost cutting is allowed to take place. Internal and external synergies is what truly translates into efficiency that creates both profits and sustainability. We need to see responsible airlines before more pressure is made to bear on the Federal government to provide incentives that'll facilitate profitability.

Indecisiveness on the part of related industry administrators has resulted in missed opportunities for stemming the current regression. It is not too late for the relevant authorities to effect the following initiatives and strategies.
1. AMCON should have all airlines that benefited from the BASA funds re-financing of their sustainable loans under administrative scrutiny With the right to veto their financial decisions.
2. The Regulatory agency NCAA should compel the airline operators to consider mutually beneficial commercial agreements and mergers in order obtain synergies and benefit from the economies of scale. The aim is to produce not more than five carriers from the entire stock of 16 struggling airline operators.
3. Of course the idea of a new National carrier starting from scratch is completely absurd. The Senate should wait for the consolidation exercise to be completed before designating two of the best carriers as national or flag carriers. This should reflect the national character of the country.
4. The federal government should implement measures that will alleviate the difficult economic operating environment in which the industry stakeholders have to contend with.
A. Pending the Establishment off a full flight stimulator facility and a compatible type rating training organisation (TRTO) in the country, all airline training cost should be tax deductible.
B. The airline operators of Nigeria (AON) should be granted the license to import the annual supply of Jet A1 required for operational use. This is to be sold to all operators at it's landing cost in order to reduce operational cost.
C. A zero import duty and VAT regime should be effected for all aircraft imports, spares and consumables.
5. Without any prejudice to national security, It is imperative that real transparency and accountability should be entrenched in the activities of all aviation agencies and service providers. This was suggested in NASI's brief to the industry in early 2005 to help stem the corruption and colossal of fraud currently experienced within the systems  agencies.
Most assuredly, if these are diligently and immediately implemented there is a strong chance of sanity and recovery.

Air Nigeria Staff facing perilous times: Their protest was overdue.

  

Desparation has a strange way of creating courage in the hearts of men.  After, suffering the humiliation of:

• Their 3 years taxes deducted from source and not remitted to the Federal inland revenue service (FIRS), 

• Their three years pension contributions vanishing into thin air,

•  N57 million naira of their cooperative contributory savings  unlawfully withheld by management,

•  Going for four months (approximately 120 days) without their due salaries and remuneration.

• An audacious and unceremonious announcement that they have lost their livelihood.

Employees of Air Nigeria have finally decided to say 'no' to insolent charlatans and haughty adventurers. They have resolved to no longer to accept insults from madmen and specialists. A peaceful protest is expected this morning of 7th September 2012.

It is designed to show the World that injustice has been perpetrated and redress is being sought in the ability of the regulatory agency NCAA where the sacked employees intend to end their march with a brief presentation of their petitions. 

This peaceful protest is the beginning of wisdom for Air Nigeria staff and other hapless Nigerian employees. We have to admit that cronism and a pre-bendal culture of that breeds charlatan rent-seekers is leading us to self destruction. Is there no iota of respect for law in Nigeria? Who will account for our N35B that was used by AMCON to refinance Air Nigeria's unsustainable debts?
Is there no protection for the over 700 Air Nigeria Staff? We need legal aid to stop this relentless undertaker. I'm hoping to arrange some volunteer/ free legal representation to seek redress in the law courts over these human rights and labour violations that are being condoned by NCAA and Federal ministry of Aviation due to legislative failure to enable fair labour laws to safeguard the integrity safety critical sectors such as aviation.
The antecedents have been with us for a while. Nigeria Airways staff are yet to receive  their severance pay 11 years after the company was liquidated. Bellview employees are still waiting for their last six months salary nearly two years after the airline stopped operating. And now Air Nigeria is setting a similarly insane precedence.
 It is not an over statement to say " we have had enough!" Shenanigans of ruthless entrepreneurs like Jimoh Ibrahim causes serious damage to the reputation of Nigeria's burgeoning aviation industry.
To every thing there is a season, and a time to every purpose under the Sun. Hopefully, soon it'll be time for the wicked to run and hide
Enough is enough, it is time for new beginning.