Several moves have been made to midwife a new national carrier after the liquidation of the national carrier- Nigeria Airways. From Airwing Aerospace/ Air Nigeria, Nigeria Global to Nigeria Eagle Airlines, if it is not the problem of finding appropriate investors, it would be former staff of Nigeria Airways doing all they can to thwart any new airline from taking off unless their entitlements are paid.
The Nigeria Airways is saddled with debts of more than $60 million. It is a sheer waste of time to go into why Nigeria Airways is out of business. Every investor knows the outcome of business enterprise that is grossly mismanaged and where is constant change of those at the helms in favour of certain interest groups or lackeys.
On September 28 last year with much publicity and wine sipping the Nigerian Government sealed a Memorandum of Mutual Understanding with Virgin Atlantic Airways to commence a new national carrier to be dubbed “Virgin Nigeria.” The MOU, it is hope, would generate over $50 million investment. The deal, when it finally takes off, would enable Virgin Nigeria to fly directly from Lagos to New York under the Open Skies Agreement.
Criticism over the deal has been more and more strident. Nigeria aviation officials say the current deal gives Virgin Atlantic 49 % equity interest in the new airline while the remaining 51 % is reserved for Nigerian institutional investors. This has been a contentious issue particularly with respect to the class of the shares and power to be exercised by both Virgin Atlantic and Nigerian investors. Local stakeholders maintain that aside from having incongruous management composition, Virgin Atlantic 49% shares belong to Class A while Nigerian Equity investors own Class B shares. Under this classification, though in minority, Class A shares have more powers with regard to decision making process than Class B which is for Nigerian institutional investors.
Till now aviation officials have not offered a convincing rebuttal to the public. This equity structure and other pertinent issues might explain the reasons the US government early this year informed the Nigerian public that information from representatives of Virgin Atlantic and the Nigerian Embassy in Washington indicated that Virgin Nigeria would be a company controlled by Virgin Atlantic and stressed that if Virgin Nigeria would request for authorization to fly from Lagos to New York, Virgin Nigeria request would be denied.
The reason for this denial is hinged on the fact that Virgin Atlantic has been vocal in not allowing competition in the UK particularly from US Airlines. The deal therefore is seen as indirect way by Virgin Atlantic to benefit from the unrestricted opportunity available under the US-Nigeria Open Skies Agreement.
In international relations one is constantly informed that there is no permanent friend or enemy but permanent interest. The interest of officials, and of course Nigerians, is to have a new national carrier that flies between Nigeria and United States and other countries. If this is reason for striking the deal in the first place with Virgin Atlantic, the situation now is that Virgin Nigeria would not be permitted to fly over US airspace. The current deadlock can be settled if officials can retrace their steps and go into partnership with any of the other reputable airlines in countries where the US has Open Skies Agreement.
The opportunities offered by Open Skies Agreement are that it would increase business activities between Nigeria and the United States. Tourism industry would also flourish and it would encourage price flexibility for passengers and shippers, and service to existing and new markets would also improve and expand. However rather than having the issue resolved the Nigerian aviation authorities reached for its sledge hammer and subsequently deny Continental Airline of USA the permit to operate between Lagos and New York apparently based on US position on Virgin Nigeria.
Frequent travelers would notice the huge market available in Nigeria. Intending travelers from Nigeria daily thronged various embassies for transit visas whose costs sometimes are more than the real visas in addition to paying several taxes. The few available airlines, most of the time, cannot cope with the number of passengers especially during peak period. Nigeria is estimated to have lost over $2 billion yearly in capital flight due to lack ! of a national carrier. Injecting this into the economy would go a long way in creating more jobs and alleviating poverty.
Air transportation is crucial to economic growth for a country like Nigeria. However, when it comes to protecting the interest of Virgin Atlantic and that of Nigerians, one expects officials to be on the side of Nigerians because they have sworn to serve meritoriously. It has been widely alleged that aviation officials deliberately refused to seal agreement with any of the reputable airlines which the US government would allow to touch land in US and deny permit to Continental Airline of USA to protect a certain interest group.
The interests and well-being of Nigerians supercede whatever might be the interests of aviation officials. This is what they always say they are to protect and advance. What the officials need to do is to consider ways in which the current deadlock between Nigeria and the United States over Virgin Nigeria can resolve in favour and in the interests of millions of Nigeria.
The US government did not at any time say it would deny Air Nigeria, Nigeria Global and Nigeria Eagle permit to operate from Lagos to any city in the United States because the structure clearly indicated Nigeria had tremendous ownership. The denial of permit to Continental Airlines and unwillingness to opt for other reputable airlines that will be allowed to fly over US airspace ultimately will led to more capital flight, reduce job creation and above all enable Nigerians to pay more for airfare and spend longer hours in several airports before connecting their flights. Obviously, this is not the intention of the aviation officials but it would surely be the outcome.
Ayodele (thompson@ippanigeria.org) is the Coordinator Institute of Public Policy Analysis based in Lagos