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Nigeria Airways Resurrects, Observers Anticipate Value Addition to GDP

By - - [ Economy ]

Nigeria Airways Resurrects, Observers Anticipate Value Addition to GDP—Labiran, A.A.

In the bid to make good his campaign promises, President Mohammadu Buhari directed Senator Hadi Sirika, Minister of State for Aviation to begin the process of restarting a National Airline which will now be known as Nigerian Air

With this new development, the Nigerian Pride is now being restored on many fronts. The new National Carrier will contribute to the GDP, Nigerians would eventually have an Airline with whom they can identify any where they go, there would be job opportunities primarily for Nigerians and a recovery of routes lost by the defunct Nigeria Airways and now currently being filled British Airways and many other foreign airlines.

It was against this background that Hadi Sirika unveiled the airline to investors at the Farnborough International Air Show in UK. The colour is green white green, while the logo is Eagle.

In a statement by Mr. James Odaudu, Deputy Director, Media and Public Affairs, indicated that Sirika, announced that the country was finally on track to inaugurating the national flag carrier to commence operations before the end of 2018.

The minister expressed confidence that Nigeria would have a well-run national flag carrier that would be a global player, compliant to international safety standards and customers’ oriented.

According to him, the government hopes to establish an airline that communicates the essence of our beautiful country, an airline we can all be proud of.

“Following the extensive market research, the branding of our new airline, Nigeria Air, demonstrates a true flag carrier of our nation, soaring through the skies in the shape of our nation’s eagle.

“The Nigerian Government will support the launch of the new flag carrier with viability gap funding, in a Public Private Partnership (PPP) arrangement to deliver a national flag carrier.

“It will be guided by the international ICAO standards, which will stand the IOSA audit from the start, and lead to a fast IATA membership for international operation.”

Sirika assured Nigerians and the international community that government had learnt a lot of lessons from the experience of the defunct Nigeria Airways, and now determined not to repeat the mistakes that led to its demise.

This, he said, informed the decision to take the Public Private Partnership (PPP) approach.

He explained that the unveiling of the airline at the Farnborough International Air show was due to the fact that it was the largest congregation of global aviation industry players.

The minister said the event gave the best opportunity to market the airline to prospective investors and registers it in the minds of all stakeholders ahead of its formal launch billed to take place in Abuja soon.

In order to appreciate the beauty of owning a new National Carrier, it is expedient to travel a little down the memory lane and examine Nigeria Airways in the context of the routes plied, aircrafts in its fleet, stake holding, issues that led to its demise, agitations that remain unresolved and suggestions that could guide the new National Airline to achieving maximum results.

Nigeria Airways Ltd., more commonly known as Nigeria Airways, was a Nigerian airline. The company was founded in 1958 after the dissolution of West African Airline Corporation. It held the name WAAC Nigeria until 1971, when it was rebranded to the name it had until it ceased operations in 2003. The government of Nigeria owned a majority of the airline (51%) until 1961, when it boosted its participation in the company to 100% and made it the country's flag carrier. At the time of dissolution, the airline's headquarters were at Airways House in Abuja. Operations were concentrated at Murtala Muhammad International Airport and served both domestic and international destinations mainly concentrated in West Africa; the network also had points in Europe, North America and Saudi Arabia. The airline was managed by a number of foreign companies, including British Airways, the Dutch company KLM and South African Airways.

Nigeria Airways had its heyday in the early 1980s, just before the departure of a KLM team that had been hired to make the airline efficient and profitable. At that time, its fleet consisted of about 30 aircrafts, but the carrier was two years behind with its accounts to the extent that aircraft were acquired for cash.

 Owned or leased, the carrier operated a variety of aircrafts during its history, including the Airbus A310, the Boeing 737, and the Douglas DC-10, of which it flew the last one ever built. Plagued by mis-management, corruption, and overstaffing, at the time of closure the airline had debts totalling US$528,000,000 (equivalent to $702,408,104 in 2017), a poor safety record, and its operative fleet comprised a single aircraft flying domestic routes as well as two leased aircraft operating the international network.

Nigeria Airways was succeeded by Virgin Nigeria, and the ground facilities were taken over by Arik Air.

The introduction of International Monetary Fund policies, along with corruption, mismanagement and overstaffing, led to a steady decline of Nigeria Airways from the 1980s.

The carrier had accumulated significant debts that outstripped its revenues from the mid-1980s, to the extent that aircraft were detained or impounded for unpaid debts. The International Air Transport Association (IATA) suspended Nigeria Airways in early 1987 from the clearing house (which meant the airline could not issue tickets to fly on other IATA member airlines and the converse) for accumulated debts of US$1,100,000. In late 1987 the airline had debts for approximately US$250,000,000, with revenue of US$5,000,000 per month and expenditure of approximately US$5,175,000 a month. This situation prompted the airline to increase its domestic and international fares by 100% and 20%, respectively, in order to raise funds to alleviate the deficit, but this measure reduced the passenger traffic.

Even though 1,000 jobs had been cut by late 1986 and 1,700 in the course of the previous year, Nigeria ordered the airline to further downsize (the number of employees was 8,500 at the time or 500 for each aircraft in the fleet, twice the international average) and to reduce or discontinue unprofitable routes. In 1988, cost-cutting measures led to the discontinuance of flights to a number of African destinations, including Cotonou, Dakar, Douala, Kinshasa, Monrovia and Nairobi, and to the transfer of some routes to the privately owned airline Okada Air; some of these routes were resumed a year later.

 In December 1988 the airline dismissed 3,000 employees, a third of the workforce, in an effort to keep operations afloat. In the late 1980s the airline lost a deposit worth US$350,000 for not firming up an order for six ATR-42s.Financed by a Japanese leasing company, the carrier phased in the last DC-10 ever built; the aircraft was delivered in 1989, and replaced an aircraft of the same type that was lost in an accident two years earlier.

At April 2000, the number of employees was 4,516. At this time, an Airbus A310-200, three Boeing 737-200 Advanced, one Boeing 747-200B Combi and one McDonnell Douglas DC-10-30 served a route network that included Abuja, Calabar, Douala, Dubai, Jeddah, Jos, Kaduna, Kano, Kinshasa, Lagos, Libreville, London, Maiduguri, Malabo, Port Harcourt, Sokoto and Yola.

A fleet that had numbered 32 aircraft in 1984 had gradually reduced to just three aircraft in October 2000. The United Kingdom cited safety concerns again in 2001 when it refused to allow Nigeria Airways to operate the Lagos–London route, this time regarding the Boeing 747 that was leased from Air Djibouti to fly the route. That year, the IFC withdrew from its advisory position citing the unwillingness of both the company and the government to carry out the necessary measures that would make the airline attractive to potential investors.

Later on, there were various allegations claiming the airline's failure was accelerated by former Nigerian rulers who looted and mismanaged the company, to the extent that the government started an investigation into the disappearance of more than US$400 million between 1983 and 1999.

 Launched in February 2001, a joint venture between Nigeria Airways and South African Airways that mostly relied upon the Johannesburg–Lagos–New York route was unilaterally terminated by the South African carrier in March 2002 citing a decline in passenger numbers and a deficit of US$4,900,000.

In May 2003, when Nigeria Airways had a Boeing 737-200 as its sole serviceable aircraft, the government decided not to pump more money into the overstaffed carrier but to liquidate it. The decision was based on the declining performance of the airline's last 15 years of operations and on the carrier's debts.

The number of carried passengers had fallen from 2, 1 million in 1985 to just 10,000 in the first quarter of 2003, and it controlled just 6% and 1% of the domestic and the international markets, respectively. The carrier owed over US$528 million, despite the government having injected US$200 million into the company in its last decade of operations.

The airline ceased operations in 2003 and was liquidated a year later. The Nigerian government later came to an agreement with Virgin Atlantic Airways to found Virgin Nigeria Airways, intended as a replacement. Even though Virgin Nigeria succeeded Nigeria Airways, the ground facilities of the folded Nigeria Airways were eventually taken over by the then-startup carrier Arik Air.

Some questions are still begging for answers. Expectedly, the Aviation Ministry will stand up to answering some of them.

Firstly, there are legal battles ( still pending before Nigerian and foreign courts) in respect of the old dispensation, observers are of the opinion that these legal battles should be tackled in a way that court cases would not stand in the way of an effective take off of the Nigerian Air.

Secondly, entitlements in form of arrears of salaries, allowances and pensions should be addressed.

Thirdly, stake holding, though, a Public Private Partnership arrangement, should tilt heavily in favour of the Private sector while a top priority consideration is accorded Nigerian before foreign investors.(Nigerian capital market could be approached in this regard)

Fourthly, Ministry of Aviation should bear in mind there is competition on routes Nigeria Air will operate hence management of the new National Carrier should prepare for battle on all fronts. Some would wish Nigeria Air does not take off in their bid to maintain the monopoly of some lucrative routes.

Fifthly, how convenient would it be for Nigeria Air to ask Arik Air to vacate the location for its former ground operations or are you considering a new location at the M.M.I.A in Lagos and Nnamdi Azikwe in Abuja.

Sixthly, what is the status of the Debt Profile of the defunct Nigerian Airways and how does the Ministry on behalf of the Federal Government hope to repay what is presently outstanding? (Would the new arrangement include conversion of Debt to Equity?)

Has EFCC and ICPC been involved in any way with cases of the defunct Nigerian Airways? If yes, how have they dispensed with some of these cases?. Nigerians are curious in knowing who took advantage of the Nigerian Airways financially?

With the resurrection of the Nigeria Airways in Nigeria Air, expectations are high. Many look up to the new carrier for job opportunities, while observers anticipate value addition of Nigeria Air to GDP.



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