Since 2001 and up to early part of 2004, several attempts had been made to have a flying national carrier. The names that came under those attempts are Airwing Aerospace/ Air Nigeria, Nigeria Global and Nigeria Eagle Airline. Despite optimism expressed at the onset whenever each of them surfaced, the reality is none of them succeeded in flying the national carrier by whatever any name.
On September 28 last year, with much fanfare and media glitz the Federal Government signed a Memorandum of Mutual Understanding with Virgin Atlantic Airways to float a new national carrier to be known as Virgin Nigeria. It was indeed a relief that a credible partner was at last found to run the moribund Nigeria Airways which had suffered years of gross financial mismanagement, resulting in debts of more than $60million.
Under the current deal, Virgin Atlantic would acquire 49 % equity interest in the new airline while the remaining 51 % is reserved for Nigerian institutional investors. The deal would also attract an initial $50 million investment. The most heart-warming aspect of the deal is Virgin Nigeria, when becomes operational, will fly directly from Lagos to New York. Ultimately this will ease the agony of many travelers who aside from queuing for transit visas would have to spend several hours in European cities airports before continuing their journey to their final destinations.
Just as Nigerians, travelers and business community in Nigeria are sipping wine and shaking hands over the impending commencement of the new national carrier, the US government, through its mission in Nigeria, said it would not “permit the airlines of an anti-competitive regime such as the UK to benefit from the unrestricted opportunity available under the US-Nigeria Open Skies Agreement.” The US government said the UK has repeatedly failed to open the London market to additional US airlines and that Virgin has been the leading figure who keeps urging the its government to keep US airlines out.
Authorities in Nigeria and the United States concluded an Open Skies Agreement on August 26, 2000. Principally the agreement was aimed at expanding and enhancing the overall aviation partnership between the two countries. The agreement allows unencumbered international air service by airlines of the two countries “between any city in one country with any city in the other.”
The hallmark of the agreement is that it would foster competition, encourage price flexibility for passengers and shippers, and improve and expand service to existing and new markets. Under the Open Skies Agreement, Nigeria Airways firstly utilized it for an aircraft and crew "wet leased" from South African Airways while World Airways became the first American airline to touch down in Nigeria under the same agreement.
Due to several reasons, South Africa Airways opted out the agreement with the Nigeria Airways. The World Airways also ceased flying to Nigeria. Of course, increased air-linkages between Nigeria and the United States would spur competition. Airline ticket prices would drop dramatically. There would be increased in business activities between the two countries and tourism industry would flourish. Other economic cluster would also accrue.
The questions to really ask are; before the conclusion of the deal, were the Nigerian authorities not aware that there is no open skies agreement between the US and the UK? If they were aware, could it be that in their desperation to ensure that there is a national carrier, they close their eyes to such an important detail so that Virgin Nigeria could commence operation? Why was South African Airways was given only 30 % equity in the proposed Nigerian Eagle Airlines and Virgin Atlantic 49 %?
These are principal issues that need explanation and verification before the conclusion of the agreement. In this respect, a simple due diligence exercise would be enough. To have trivialized and ignored such strategic issues make mockery of whole agreement. Statements from the US Mission in Nigeria indicated that following the “conversations which took place between representatives of Virgin Atlantic and the US Government in July it was made unmistakably clear that if Virgin Nigeria would request for authorization to fly from Lagos to say New York, Virgin Nigeria would probably face serious obstacles to having that request granted.”
The Mission went on further to stress that information coming from representatives of Virgin Atlantic and the Nigerian Embassy in Washington informed the US Government in July that Virgin Nigeria would be a company controlled by Virgin Atlantic.
Reports have said Nigeria losses over $2 billion capital flight occasioned by lack of national carrier. Clearly there is the need to have a national carrier and direct flight from Nigeria to the US ranks high. With Continental Airline coming on board, there is the need to make the route more competitive both in terms of tickets price, safety and other services. The usual problems that once plagued Lagos-London might ensue if Continental Airline should be the only airline plying the route. In this regard, since there is still a knotty issue, a fundamental one of course, over the deal between Virgin Atlantic and Nigeria government, it must be resolved in the long term interest of Nigerians and not the short term interests of the officials.
The simple truth is no country would ever close its eyes to an agreement whereby one of the parties is going the other way round to exploit the existence of other agreement of which that same party has consistently opposed. We need beyond doubt that Virgin Nigeria is indeed a wholly owned Nigerian company. More so the deal, as it currently stands could not solve the problems faced by many travelers.
The Federal Government should realize that it would need to go over its deal with Virgin Atlantic Airways. To avoid any further delay in the national airline takeoff, it can go into partnership with any of the other reputable airlines in countries where the US has Open Skies Agreement with. This is what Nigerians want and will be in their long term interest.
It will also be more beneficial to the nation’s economic growth and not the interests of officials who helped to midwife the deal. In fact the best thing is for officials to take themselves or their cronies out of the pictures and think of the interests of millions of Nigerians who pay for more airfare and spend longer hours in several airports in other countries.
*Ayodele (thompson@ippanigeria.org) is the Coordinator of the Institute of Public Policy Analysis based in Lagos, Nigeria.