- Airline to cost over $3bn, $500m subsidy annually to keep it afloat
AIRLINE Operators of Nigeria (AON) has said the Federal Government for taking the bold step to suspend the planned National Carrier Project in the interest of the nation stating that the initial set up will cost the nation at least $3bn which the nation does not have.
Speaking on yesterday’s indefinite suspension of the proposed national carrier, the AON posited that in light of the tough economic situation in the country and the fact that it is a moribund idea and done without transparency, the recent step was welcome.
Chairman of AON, Capt. Nogie Meggison said: “We thank President Muhammadu Buhari and the Federal Executive Council (FEC) for listening to our many calls for the idea to be suspended. In our opinion we believe the process was neither transparent nor did it clearly define the role of Private investors in the entire process.”
At this time of our national limited resources and struggle to recover from recession, AON would like to state that there are private Nigerian Airline Investors ready to invest and already investing heavily on the sector and only asking for a more friendly operational environment and infrastructure support.
Putting the issue into perspective, Capt. Meggison said: “Setting up of National Carrier will cost Nigeria at least $3bn (a single B777 as of today costs about $320m.)” He therefore asked: “Is it wise and our priority as a nation to take $3bn from the Nigerian coffers today and put into a venture that will for sure go down the drain within a maximum of 5 years to establish a “National Carrier”?
Bearing also in mind that the National Carrier will need an additional cash injection of $500m subsidy per year on average for the next 10 years to keep the airline afloat while about 97% of the 200 million Nigerian masses today are grappling for the basic necessities of life; food, shelter, electricity, water, education and good roads. This is corroborated by a recent CNN report stated that Nigeria has overtaken India as the country with the largest number of people living in extreme poverty, with an estimated 100 million Nigerians, or around half of the country’s population, thought to be living on less than $1.00 a day.
“May I quote Vice President (VP) Yemi Osinbajo who said recently that: “The $3 billion strategic alliance contracts with the Nigerian Petroleum Development Company (NDPC) alone stolen under former President Goodluck Jonathan, which the promoters of the companies later made away with during the last administration, could have built seven (7) major roads across the country as well as the 2nd Niger Bridge.” The funds put into projects like these, no doubt, would have created jobs for our teeming youths than the few 2% of Nigerians that can afford to fly by air,” the AON Chairman argued.
Speaking further, he remarked that “National Carrier is an obsolete just for ‘“EGO/PRIDE” idea. Business and pride don’t go together. All over Europe South America, USA today, 90% of them have been made private including Lufthansa, British Airways etc. Also, they are all flag carriers which are completely private entities.”
Just about 10 days ago on September 12, 2018 was a clear indication of what obtains in the true world. Boeing financed a private Nigerian airline, Air Peace for purchase of 10 Boeing 737-8MAX airplanes in a deal valued at $1.5billion. This is much more than the Nigeria National Carrier and a clear indication of the future and where the world is today!!
South African Airways has been termed as being in insolvency in the last 10 years and has been receiving from the government bailout yearly ($400 million) in order for it to stay in business. Kenya Airways has equally been struggling. The airline is facing tough financial crisis that is threatening its very existence. The airline recently got a $750million bailout in the past year. It’s a known fact in the industry that Ethiopian airlines with over $35bn exposure, is rushing to go public (Plc.) or may start to default in payments soon.
During these tough economic times, why do we want to rush and spend $3bn on an airline that we know will not make profit? We know how many Nigeria roads can be tarred with the funds. The truth is that the whole National Carrier concept is totally unsustainable and will be a drain pipe that will lead to wastage of our scarce resources.
A quote Industry personalities worldwide keep saying is: “Nigeria does not need a National Carrier. Like what operates in advanced countries of the world, what Nigeria needs are strong private airlines that are allowed to operate in a friendly operational environment with a level playing field and policies that ensure their survival.”
Nigeria is a natural Hub for Africa. However, airlines don’t make a hub; but it is world-class infrastructure that makes a hub. Then the airlines and airplanes will come in.
Today, Air Peace is Nigeria’s largest airline operator with 30 aircraft. The Airline has acquired four (4) B777 with ten (10) B737Max on order. Medview has gotten B777 and B767, while Azman Air just received an Airbus 340. These are huge positive steps and the biggest growth in Africa this quarter that needs government support, better infrastructure, low-interest rates , double,taxes fewer levies, better runway landing aids among others as well as encouragement.
AON believes government should focus on governing and let the businessmen do the business!! Or, as I always say; “government has no business in business.”
Once again we thank the President and the FEC for this indefinite suspension of the national carrier. However, government should go back to the drawing board and engage with the private sector with transparency on how to position Nigeria as the Hub for Africa to take advantage of our God-given gift of geographical location the same like we did with oil in the Niger Delta to create jobs for our alien youths and make aviation a major economic contributor to our GDP and a serious replacement of our dependence on oil alone.