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The issues, the business case, the sabotage: All you need to know about Nigeria Air

Politics

The issues, the business case, the sabotage: All you need to know about Nigeria Air

15 years after the collapse of Nigeria Airways, Minister of State for Aviation Capt. Hadi Sirika has announced Nigeria’s new National Air Carrier. Speaking at the Farnborough International Airshow, he announced: “I am very pleased to tell you that we are finally on track to launch a new national flag carrier for our country: Nigeria Air. We are fully committed to fulfilling the campaign promise made by our President, Muhammadu Buhari in 2015.”

What was revealed:
– The logo and tagline: “Bringing Nigeria closer to the world”
– Airline to launch by the “end of this year (2018)”
– Private sector led with NOT more than 5% equity going to the government. “It is a business, not a social service and investors will have full responsibility – the government will give it’s backing but it will not be involved in running or deciding who runs it.”
– 80 domestic, regional and international routes have been identified (1500 considered) as follows; 40 domestic, 20 regional and 20 international services.
– Plans to concession the Airports in Nigeria are still in place as one of the strategic plans to increase Airports capacity. He said that while the government does not look to sell the assets, it lacks the “funds or ability to run them.”

Potential stakeholders.
Ethiopia Airline has declared interest in having a stake in “Nigeria Air”. ET CEO, Tewolde GebreMariam told Bloomberg that it expects stiff competition from Qatar Airways. But Qatar has denied having any interest in the project.

Some issues: 

The launch of the Airline at the end of the year is not feasible but the government is quite desperate. The ministry has only rolled out the RFQ to select a strategic partner in July. This process is likely to run into the end of the year and technically the Airline shouldn’t launch until this is concluded. The Nigerian government is going to launch however with a fleet of 15 leased aircraft which are urgently being sought as an interim solution, transaction adviser to the FG on the National carrier Tilmann Gabriel revealed.

Business Case is yet to be approved and the fleet plans are undefined:

Per Richard Schuurman, aviation journalist, Nigeria is in advanced talks with the aircraft manufacturers but the “business case still has to be approved.” Government sources are pushing that European aero coy Airbus will deliver the first 5 planes ordered by Nigeria in December but this is quite unlikely. But according to the strategic plan, Nigeria Air would have a mixed fleet of about 30 narrow and wide body Airbus and Boeing aircraft by 2023.”

Government negotiating with the airmakers seems a bit problematic:

Given the claim that it would not be involved in running the Airline and it only holds a 5% equity, the government ordinarily should not be negotiating the purchase of the fleet. Another potential problem is the lack of a valuation of the airline. Nigeria revealed that it is investing $150-300 million initial capital in the venture and it is hard to see how that equates to 5% or less in equity. So many unanswered questions. If we do not have much clarity and this project is rushed through, the country may end up pouring cash down the drain.

Side attraction: The “Nigeria Air” brand was crowdsourced. About 400,000 Nigerians participated in a social media campaign.

Sabotage:

The National Union of Air Transport Employees (NUATE) is opposed to the new carrier and says it may sabotage the efforts.

Aviation union threatens to sabotage FG's Nigeria Air

The new logo

According to NUATE’s General Secretary, Comrade Olayinka Abioye: 

“We are not concerned about this new national carrier even though it is our baby with supposed benefits to the country. We are much more concerned about the families of the defunct national carrier, Nigeria Airways, some of whom have died.

“We are much more concerned about those who are living and managing to live and we are calling on this minister and government to speed up action in whatever capacity they can to ensure that Mrs. Kemi Adeosun, the Minister of Finance, make releases and pay our people. Enough is enough.

“The unions may truncate the process of the new national carrier; you can take that from me. There are so many fundamental issues begging for answers in some of these things.

“The national carrier that we are advocating for is not what they are planning now. We said private sector-driven national carrier, what is the problem with this government?

“The same government that said it didn’t have money to revamp our comatose airports is now spending $308 million as take-off grant for the airline.

“The same government wants to bring in six new aircraft from God-knows-where. Where then is the intervention of the private sector in all these?”

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