AMCON, Arik Air and Quest for National Carrier

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Chinedu Eze

It was mixed reaction on Tuesday when reports confirmed that the Managing Director/Chief Executive Officer, Asset Management Corporation of Nigeria (AMCON), Mr. Ahmed Lawan Kuru has called on the 9th Senate to work towards making Arik Air a national carrier.

Kuru said this was necessary because the country needs major airlines that could effectively compete with international carriers and Arik has the capacity to become the fulcrum to a new national airline.

He said the time is now for the National Assembly to ensure that the government leverages Arik Air as a stepping stone towards setting up a national carrier rather than trying to set up a brand new airline from the scratch, which would cost the federal government a fortune, especially in the face of the nation’s tight budget.

But the federal government has already set out a process to establish a new national carrier and has reached advanced stage in the process.

For instance, the federal government has proposed to expend N4,694,131,965 in the 2020 budget as working capital on the national carrier. Minister of Aviation, Senator Hadi Sirika, said the national carrier project was ongoing.

So, many stakeholders have argued that government has gone far in the process to begin to retrace its step to consider Arik Air as a national carrier.

They also talked about debts the airline owes, which some alleged was exaggerated by AMCON as well as the litigation that may follow if the owner of the airline did not agree on terms of negotiation with government over the adoption of the airline into a national carrier.

According to Kuru, having retrieved Arik from the brink of collapse, the airline has been restructured and placed on a path of growth and profitability.

He explained that with the right support and investment, Arik, has all that it takes to become a massive airline given the volume of “reformative and transformational work AMCON did upon intervention in 2017.”

But some industry insiders are not disposed to AMCON’s request, noting that it is giving itself too much credit for the sustenance of the airline. They noted that the debts the airline owed before it was taken over are still unpaid and only a few number of aircraft from its fleet of about 16 are airborne currently.

However, some stakeholders commended AMCON and acknowledged that without it stepping in at the time it did the airline might have gone under.

Industry stakeholder, Aliu Usman who said that he is a dedicated Arik Air customer, stated that the airline changed the air travel industry in Nigeria when it started operation in 2006.

“Indeed to some of us that had and are still using Arik Air services especially since 2006, Nigeria witnessed a revolution in air travel, we can all attest to modern and new generation aircraft deployed by this business, even to rather underdeveloped airport infrastructure. Arik was a pride of Nigeria to Nigeria, Africa and the rest of the world at that time.

“Through the same airline, the newspapers reported a category One certification for Nigeria with Dr Harold Demuren as Director General of the CAA (the Nigerian Civil Aviation Authority) proudly showing off.

“No sooner the 10 years of consistent operations the airline flew into dark clouds caused by surge fuel prices, currency devaluation, difficult access to foreign exchange, increasing burden of multiple taxations, unmanageable lease rental payments among others. Not sure if the economic policy masters of the government knew or helped the airline. Arik promoters kept mute and suffer in silence; the rest is history today.

“However, the above notwithstanding, we must thank AMCON for rescuing the business and repositioning it from collapsing. Its worthy of note therefore, that there is a need to clarify what state AMCON took over the business in number of aircraft and route serviced vis-a-vis what it is today.

“Equally is the need to know that since that time how much of the debts they have paid and under what terms and conditions they are running the business. Were they running with the might of government (with easy access to aircraft leases, spares, FX, Federal Airports Authority of Nigeria, NCAA, NAMA (Nigerian Airspace Management Agency) or faced the same challenges as Allen Onyema of Air Peace who had to go on mountain top to scream and call for help. All of these we need to put in perspective,” Usman said.

“So in the call to adopt Arik Air as national carrier, there are salient issues that must be brought to the fore and one of them is the thinking of the original owners of the airline.

But Sirika has since dismissed the call by AMCON to transform Arik Airline into a national carrier.

Answering questions from State House correspondents after the weekly Federal Executive Council (FEC) meeting presided over by Vice-President Yemi Osinbajo, he said the airline lacked the capacity to function as a national carrier.

According to him, the best the airline could do was to buy shares in the new national carrier when it eventually makes a debut or invest in the business wherever it deems fit. The minister who said those advocating the transformation of Arik into a national carrier did not understand his ministry’s agenda for a national carrier, explained that the would-be national carrier must be an airline that can support the national economy with $450 million to boost the country’s Gross Domestic Product (GDP) and effectively serve 200 million people.