Revelations from court proceedings indicate that airline operators and other stakeholders want a national carrier where more Nigerians are allowed to own shares in the company so that it will be fully representative of the country, writes Chinedu Eze
Many Nigerians are calling for a broader ownership of the shares of Nigeria’s national carrier, Nigeria Air. Many of the doubts hovering around the planned airline stem from the belief that the shareholding was not transparent and this was the disposition of the Airline Operators of Nigeria (AON), which went to court to stop the airline from proceeding as presently constituted.
Industry stakeholders call for a proper review of the shareholding to ensure that Nigeria, beyond the federal government, has greater stakes than the airline’s foreign partners.
AON and others, however, made it clear that they are not against the establishment of a national carrier, but there should be adjustments in the ownership, and its establishment should be done in a clear, transparent manner.
Industry expert and Executive Secretary of Aviation Round Table (ART), Group Capt John Ojikutu has called for proper scrutiny of the share ownership, insisting that foreign companies should not owe more shares in a national carrier than Nigerians.
“We need to seriously oppose not only the Ethiopian Airlines investment of 49 per cent shares in Nigeria Air but also the MRS where a foreign individual shareholder has 60 per cent shareholdings in the company.
“Similarly, in the SAHCOL investment, just three individuals of the Afolabi family owe 78 per cent (1.06billion) of the total 1.3billion shares of the company. Whatever the reasons made the authorities consider these investors as the appropriate for the national carrier; Nigeria Air needs a serious rethinking now before it gets too late. Are we really establishing a national carrier with government equity or a private airline with government equity?
“What is being called the national carrier is really not one but a private airline. We could call what we are being offered as a flag carrier when private individuals are having 46 per cent of the 51 per cent in commonwealth belonging to us nationally and in partnership with a foreign airline with 49 per cent. That is no more a national carrier but a flag carrier which Air Peace, Arik or Aero could have become if we do a thorough job on the audits of these airlines,” Ojikutu remarked.
He said that with the kind of spread in the shares of Nigeria Air and the federal government alone having just five per cent on behalf of the nation “do we envisage that the planned airline is truly a national carrier?”
Strategic Investor
But industry stakeholders also agree that there is a need for the national carrier to have a strategic investor and technical partner, as represented by Ethiopian Airlines in Nigeria Air, to propel the airline to success and also sustain its operation to an agreed time. This is because it is obvious that for the airline to succeed it must be insulated from the vagaries and whims of top government officials who could intervene in such concerns even if the government owns a one per cent stake.
The Director of Research, Zenith Travels and Publicity Secretary of ART, Olu Ohunayo, in an interview with THISDAY, urged that the establishment of the airline has to be transparent and follow due process so that it would have a long lifespan when established.
“Well, I think getting certification for the new airline is not a problem; you can easily get certification for Nigerian Air carriers. What has been difficult is having commercial linkages and partnerships that would be respected and acknowledged by other competitors in the industry and by the international community. And in doing this, the easiest way, the easiest route to such deals is having a foreign core investor. And that played out with Virgin Nigeria. If you noticed up to this moment none of the airlines has been able to match the number of commercial agreements they had within the two to three years they operated in Nigeria.
“So I think it is that area that makes people push for the core investor. Also, the core investor gives access to spares, helps with a credit facility, and also gets good ratings and credit based on their experience, based on their credit facility which helps reduce costs. It is on that basis that they push for a technical core investor who can support and also help us to market what we cannot access,” he said.
Ohunayo also opined that the stakes of the core investor could be lowered to 30 per cent but could start with 40 per cent, “but we must have it at the back of our mind that, that percentage should be trimmed down to have more Nigerians and more Nigerian operators.”
“It is important to involve the Nigerian operators in the business and also build a second or third airline. It is not just to recommend that these airlines are operators, we need to give them that flag-carrier status and support them on international routes rather than abandon them. And again, the airlines too, they also need to look at the ownership. They need to spread ownership so that people will have that feeling that this is a national airline and also entitled to the national commonwealth,” Ohunayo stated.
All-inclusive Treatment
The Airline Operators of Nigeria said that it is the lopsided treatment in favour of Nigeria Air that prompted it to go to court and urged the federal government to follow the laid down process and also extend the privileges given to Nigeria Air to other domestic airlines.
This was contained in the suit filed by AON at the Federal High Court in Lagos against Nigeria Air Limited, Ethiopian Airlines (second defendant), Senator Hadi Sirika (Minister of Aviation) and the Attorney General of the Federation.
The court document obtained by THISDAY with suit number FHC/L/CS/2159/2022 indicated that AON (the plaintiffs) sought orders against the defendants, which include an order directing the immediate, fresh and transparent bidding processes (es) involving the Plaintiffs being the indigenous Airline Operators in Nigeria rightly entitled to participate in the process; an order directing the immediate revocation and cancellation of the Air Transport License (ATL) issued by the Nigerian Civil Aviation Authority (NCAA) to the first defendant (Nigeria Air) and an order of N2 billion as damages for the injury suffered by the plaintiffs and still suffering because of the “wrongful exclusion of the Plaintiffs, wrongful action; unlawful bidding and selection processes and their wrongful projection of the Plaintiffs as not having properly, rightly, and timely bid the Nigeria Air project.”
AON alleged that the Minister of Aviation did not follow due process in the Private Public Partnership (PPP) arrangement in Nigeria, but circumvented the process through abridgement that was signed by the President of Nigeria and insisted that the President does not have the powers to sign such arrangement without recourse to the National Assembly.
So the Nigerian airlines also sought an order for the declaration “that the action, conduct and or decisions in the sale of the shares and operations of the 1st defendant (Nigeria Air) violates the Companies and Allied Matters Act (CAMA) 2020, SEC Nigeria Consolidated Rules and Regulations (NIPC) Act, International Civil Aviation Organisation (ICAO) Convention, Civil Aviation Act, Public Procurement Act, Concession Regulatory Commission (Est.) Act, 2005, Federal Competition and Consumer Protection Act, Procurement Processes for Public Partnership in the Federal Government under the National Policy on Public Private Partnership (N4P) and Nigeria Civil Aviation Regulation, 2015 and other regulatory statutes on aviation, companies and investment laws in Nigeria.”
In its counter-affidavit, the 2nd defendant (Ethiopian Airlines) said as far as it was aware, the sale of Nigeria Air’s shares was absolute and therefore was not under a Public Private Partnership as alleged.
“The Federal Government of Nigeria agreed to sell 95 per cent of its shares in the 1st defendant (Nigeria Air), retain five per cent, invite 46 per cent of Nigerian investors, and 49 per cent to an international airline. By the arrangement, the majority stake of 51 per cent in the 1st defendant is retained by Nigerians so that effective control of the airline shall remain with Nigerians.”
Ethiopian Airlines also in its defence admitted asking the Federal Government of Nigeria for 15 years tax moratorium, among other incentives, for it to partner with the national carrier, arguing that its request was a normal practice in international investment negotiations, insisting that it had not violated any known law in the country or elsewhere.
Industry observer told THISDAY that Ethiopian Airlines also has enviable reputation for its professionalism and always negotiate to benefit fully from its partnerships, while it ensures that the entity thrives “because it is when the company is doing well that you will also earn profit from the engagement.”
So Nigerians are calling for more openness and involvement in the Nigeria national carrier and this could be made possible if the federal government reviews the ownership shareholding of the new airline.
