Air Transport and the Clamour for a National Carrier

04 May 2012

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While many Nigerians, especially those familiar with air transport, are canvassing and supporting government’s decision to establish another national carrier,   there are      industry  stakeholders who insist that it is not necessary. Chinedu Eze reports.

Over the years,  since the demise of Nigeria Airways Limited (NAL), there has been ceaseless clamour for another Nigerian carrier. This clamour gained vibrancy among those who worked in the defunct national airline, which was liquidated in 2004.

The strident calls for the rebirth of national carrier have always left operators and captains in the industry divided. While some say that the time of national carrier is gone; others posit that it is a nation’s pride and that so much has gone wrong without a national carrier.

It is a verifiable fact that Nigeria’s aviation industry declined after the demise of NAL. It declined in manpower development and growth; it declined as there is influx of expatriates who come to take over the technical jobs in the industry; it declined as the country does not have any airline that can hold its own in international operations.

It also declined because the industry has lost capacity; it has lost the capacity for aircraft maintenance, which Nigeria Airways was doing before its demise and many industry players believe that if Nigeria Airways had existed,  it would have been carrying out D check and it would have established a maintenance facility from its repair hangars. Maintenance facility is what the industry sorely needs now.

The industry has also lost huge resources in terms of finance to expatriates. Nigerian airlines cough out over N10 billion annually to pay expatriate pilots and engineers that operate and maintain modern aircraft which have taken over the nation’s airspace.
This is because there are no enough Nigerian pilots to operate the new generation aircraft which are advanced in technology and sophistication and must have pilots type rated on such aircraft to operate them.

Lack of Indigenous Manpower
Since NAL was liquidated,  manpower training stopped as Nigerian airlines cannot muscle enough funds to train pilots, engineers and others, so they resorted to employing foreigners at huge expense.

THISDAY investigations revealed that a foreign captain earns salary that is twice the amount a Nigerian captain earns.
For example, if a Nigerian earns N1.2 million a month, his foreign counterpart earns twice as much and expatriate pilot will have a rotation more than that of the Nigerian pilot.

On average, expatriate captain spends average of six weeks in Nigeria and four weeks overseas.  Some spend as low as six months in Nigeria and the rest of the year overseas, while others spend about eight months in a year,  so at any point in time an airline will have half number of its foreign pilots on vacation.

To augment for those that are on vacation, an airline that may need about 25 pilots should have about 50 so that when one half is on holiday the other half will be on duty.
This saps all the revenue an airline in Nigeria makes and a huge chunk of the airline’s current expenditure is spent on pilots’ salaries.

So,  this means that 20 expatriate pilots are equal to 40 Nigerian pilots, because while the Nigerian pilots work throughout the year, the foreign pilot works half the year, so if an airline is budgeting N1 billion for pilots’ salary it has to double that amount if it is going to employ expatriates.

Also it is the responsibility of the airline to keep the foreign licence of the expatriate pilot current and this takes a lot of money because the training for the foreign pilot is highly expensive.

These foreign pilots are accommodated in hotels, the least which should be N20,000 per night for as long as the pilot stays in Nigeria and it is the airline that also pays for his ticket whenever he travels out of Nigeria and such ticketing is expensive because it is business class, at least.

The Nigerian airline also has to pay for feeding and visa processes, as THISDAY gathered that a major airline pays up to N2 million a month for feeding  and visa services, summing up to N24 million annually.
Hotel accommodation on the average is N15 million a month.

Rip Off
Also Nigerian passengers on international destinations are ripped off every day by foreign airlines who now fix fares at whim because they are not competing with any strong local airlines. For example, when NAL was flying to London,  it was determining the benchmark fares on that route. Everybody looked up to the national carrier, but the situation had since changed.

There were ancillary services and businesses which folded when Nigeria Airways died, throwing those hitherto employed into the job market. And now  that those who worked in Nigeria Airways are old; there is not enough indigenous skilled manpower to take over from them.

When one visits Ethiopia, Kenya, Egypt, Morocco and other African countries with strong national carriers, one would become jealous with the success these countries have made in their air transport sector. And Nigeria has more viable market; and Nigeria has hard working youths eager to go; and Nigeria has the funds that could be deployed whether from the public or private sector,  and Nigeria has strong domestic market that could effectively feed international operations.

But many Nigerians in the aviation sector said that having a national carrier has become old fashioned. There is a whole lot of question on how it could be funded, how it could be operated profitably and how the Federal Government could be insulated from its operation, although government would have significant stakes in it. A whole lot of questions keep popping up about the plan to have a national carrier. And when some industry observers cite British Airways, Lufthansa, Air France and others,  they hastily add that private investors are the major stakeholders of these airlines. Why can’t Nigeria do the same?

Floating Another Carrier
A group of aviation professionals recently called on the Federal Government to establish the national carrier, saying that besides helping to grow air transport in Nigeria and boosting the image of the country in international circles, it would also create 19, 500 jobs.
The group which was led by the Managing Director of AirGold Aviation, Ifeanyi Okocha, estimated that floating a national carrier would cost about N985 billion.

Okocha, an aeronautic engineer, said that his team of aviation professionals had carried out a feasibility study which would soon be submitted to the government, adding that the study carried out showed that the aforementioned cost would kick start the project.
Okocha remarked that the civil service mentality was one of the reasons why the defunct Nigeria Airways Limited (NAL) was liquidated.

“If Nigeria Airways Limited was managed professionally the national carrier would still be operating till today. But it was run in a civil service manner” he said

He disclosed that as at the time NAL was liquidated, the national carrier had four large maintenance departments, which according to him,  should have been converted to Maintenance Overhaul and Repair (MRO) facility.

The Engineer regretted that the facility was closed down instead of upgrading the maintenance departments to MRO facility, adding that by doing that the Federal Government was denied the opportunity of generating revenue from maintenance and repair services.

He said that if the upgrade was done, it would have benefitted both local and international airlines that operate into the country and facility would have been able to carry out major checks like C and D checks in the country.

There are two major factors that gulp Nigeria airlines’ funds besides fuel. He identified them as   overseas maintenance and employment of expatriates. If Nigeria Airways were not liquidated,  it would have continued to train pilots and engineers so the country would not have employed expatriates. The national carrier would have built its own maintenance hangar so that  majority of aircraft operating in Nigeria would have been carrying out its maintenance locally.

Effective Management

Industry experts Nick Fadugba cannot stop wondering why Nigeria Airways was liquidated. He knows that it would be difficult for Nigeria to establish another national carrier, but he admits that with commitment and playing by the rules, Nigeria can have another national carrier, effectively managed by experts without government interferences.

As international industry player, Fadugba knows what Nigeria is losing not having a national carrier. Not just in terms of capacity, human development and employment, he knows that Nigeria is a huge market and it is foreign carriers that are benefiting from this ever growing market.

CEO of Belujane Konsult and former public affairs manager of the defunct Nigeria Airways Limited (NAL), Chris Aligbe looked at the gains of having a national carrier and said that first, Nigeria has to understand the concept of a national carrier; that it must deviate from what a national carrier like NAL used to be.

“It must be run as a private sector concern where government for emergency and grandfather rights must be a stakeholder, but does not own more than 10 per cent equity so that the airline can be called to provide emergency services whenever possible and so that it will also enjoy government protection.”

Aligbe said that it must be private sector driven, but an international airline of repute must hold equity as core investor. This core investor and partner must nurse the airline until it becomes strong and would then be handed to Nigerians to manage; even at that, the core investor airline must retain certain stake holding.

President of Sabre Travels Network Mr. Gbenga Olowo, recently told THISDAY that the agitation for national carrier was not necessary because it would kill the existing domestic airlines, after the investors had worked hard to establish the airlines.

“And whose interest is this new national airline coming to serve outside the services already being rendered by the existing 13 flag carriers? We must be wary of any future attempt to favor the new national airline to the detriment of the existing flag carriers similar to the discriminatory treatment doled out by government to the defunct Virgin Nigeria which threw the airline into early crisis that made its principal promoter Richard Branson to eventually divest his interest .The airline metamorphosed to Air Nigeria and we continue to erode investor confidence in the economy.”

Minister of Aviation, Princes Stella Oduah was once quoted to have explained how government wished to establish a national carrier, saying, "We’re working on a national carrier that will be publicly owned with limited financial contribution by the government. Government will act as a regulator and provide an enabling environment for this objective to be achieved.”

But there are fears in many quarters that although this style may have worked in different parts of the world, but it may not work in Nigeria.

An industry insider who expressed his doubts to THISDAY on Tuesday in Lagos queried, “Suppose a certain Minister of Aviation establishes a national carrier, cedes controlling stakes to the private sector and when he or she leaves another Minister comes, nullifies the arrangement on the excuse that it was not transparently done and then gives government dominating share. We have to face the truth. Those in government are highly corrupt. You cannot be sure of anything; that is why it is difficult to reach agreement with government agencies; there is no continuity in government actions and policies.”

Tags: Business, Nigeria, Featured, Air, Transport, National Carrier

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