Tuesday, 3 November 2015

THE PROPOSED NEW NATIONAL AIRLINE WILL END UP IN FIASCO

More than a decade after liquidation of the Nigeria Airways, the healthy discourse on the possibility of a new national carrier has only underscored the significance of the quest and the need to balance best business practices with national interest.

President Muhammadu Buhari’s directive to the ministry to get a committee to review modalities for floating a viable, competitive carrier is a good statement of intent in the national interest that should be followed by a sound business management plan.

Therefore, the submission of a report on the matter the other day is a step towards the realisation of a dream but the renewed quest should not prevent all from looking back at past mistakes and charting a new path for the proposed airline with unhindered input from the private sector. Ordinarily, given the experience of Nigeria over the extinct Nigeria Airways, any so-called ‘national’ enterprise is another avenue for waste, looting and sundry brigandage. And with previous attempts at revamping Nigeria Airways Limited (NAL) collapsing the way such did, what would be the assurance that the new carrier would fly?

The fear, indeed, is that no evidence exists that greed, corruption and decadence which attended most of the nation’s government-owned enterprises have been adequately addressed.

Mismanagement has undoubtedly been the lot of public companies and government business which either never flourished or are looted to the bones by their managers even when they did. Many became bottomless pits for public funds, prompting their eventual commercialisation or outright privatisation.

However, the president’s signals suggest a new faith in a new national airline with all its attendant benefits, hence his directive to the committee to proffer suggestions on the proposed enterprise. The panel was charged to consult with the international community and private sector on carrier based on public-private partnership. Moreover, the Assets Management Corporation of Nigeria (AMCON) was to determine the debt profile of domestic airlines which would guide the panel in its recommendations while determining the best model for the new airline.


The panels’ invitation to 74 stakeholders from airline operators to aviation agencies, service providers, financial consultants, institutional investors, aircraft and parts’ suppliers and staff members of the defunct NAL at least showed some effort at seriousness and the “far-reaching recommendations” made according to the team leader raise hope of a positive development. Yet, history tugs at the heart-strings. After the unfortunate liquidation in 2003 of the 32-year-old national airline, the nation has tried but found it extremely difficult getting back on track with another carrier, even with attempts at partnership with other successful brands.

With a depleted fleet from 32 aircraft in 1984 to a low of three in year 2000, one option opened to the Nigerian government was partnering with a big European airline for which Air France, Lufthansa and Swissair were considered. All fell through. The International Finance Corporation which was commissioned to assist in the process of restructuring and privatising withdrew its advisory role in 2001, citing the unwillingness of NAL and the government to carry out necessary measures capable of making NAL attractive to potential investors. Various other allegations of looting and mismanagement flew alongside IFC’s complaints.

By 2001, safety concerns had grown to force UK authorities to bar Nigeria Airways from operating into its territory. Long before then, the carrier had accumulated significant debts that outstripped revenues from mid-1980s. By late 1986, 1000 jobs had been cut with pressure from government to further reduce the 8500 staff strength in an operating environment of staff-aircraft ratio of 500:1. By April 2000, employment was 4516 just as aircraft numbers shrank amid routes’ rationalisation. The Nigerian predilection for abuse of anything that belongs in the commonwealth played a role too. Free tickets to staff and family members and privileged government officials combined to ruin the company’s fortunes and there was no doubt that NAL was destined for extinction. It went into that spectacularly.

Certainly, Nigeria has not had an enviable history of any public enterprise and this seems to support the contention of anti-new carrier proponents. In setting about floating the carrier, if it must, government still needs to listen to opposing stakeholders and address their fears. The government may even have to enunciate policies and create an environment that promotes a private sector-driven national carrier.

Also, based on the high-flying performance credentials of exemplars like Kenya Airways and Ethiopia Airlines, there may be need to study and adapt their business models and in the course of time operate to surpass their achievements. Fixing the sector also calls for the involvement of technocrats, aviation professionals of integrity at home and in the Diaspora. World-class facilities for Maintenance, Repair and Overhaul (MRO), competently manned, must be on the priority list. Above all, if the committee’s report is accepted, the whole process must be devoid of legal encumbrances capable of aborting the new venture. (guardian)