The federal government also plans to concession the major airport facilities before the end of next year. Chinedu Eze examines the prospects of the national airline operating under concessioned major airport terminals.
There is something nostalgic about national carrier in Nigeria. This is because the Nigeria Airways Limited, which was established on 23 August, 1958 and was liquidated in 2004 remains the most successful airline in Nigeria.
Under the defunct airline, Nigeria developed enviable manpower in
aviation, attained the height of conducting C-check on certain aircraft types
and developed the aviation infrastructure that is being rehabilitated and
expanded after its demise.
So most aviators who are seasoned professionals benefitted
directly and indirectly from the airline and the crops of professionals who are
still manning the sector today are inexorably linked to the national carrier.
This is one of the reasons why the industry was aroused when the Minister of Aviation, Hadi Sirika in 2016 declared that one of the programmes of President Muhammadu Buhari administration was the berthing of a new national carrier. Not a few were expectant. Today, that expectation is beginning to fade, considering the responses of industry observers who spoke to THISDAY.
The Minister also said that before the end of the current
administration, the four major airports terminals in Lagos, Abuja, Kano and
Port Harcourt would be given out in concession to private investors in a
public, private partnership arrangement. These are the two key programmes of
the Buhari administration. Others are the establishment of a leasing company
and the establishment of Maintenance, Repair and Overhaul (MRO) hangar. These
projects are aimed to support the national carrier that was supposed to have
taken off, at least by end of this year, if not for the economic devastation of
the Coronavirus pandemic.
National Carriers
According to the International Air Transport Association
(IATA), a national of flag carrier is an airline, which is subsidised or owned
by the country in which they are registered. The airline often seeks
preferential rights or privileges by the government for international
operations.
In the past, the term national airline or national carrier
was known to be airlines, which were owned by the government, and therefore
associated with the national identity of the country. However, these days, it
can refer to any airline with a strong connection to its home country,
regardless of if it is government-owned. Therefore, not all flag carriers are
owned by the government, as many have become private companies. Examples are
British Airways, Air France, KLM, Lufthansa; but it has to be noted, however,
that due to the devastating impact of Covid-19, some countries are injecting
funds into the hitherto national airlines through equity holding in order to
give then a lifeline. One example is Lufthansa.
IATA also noted that flag carriers hold a certain amount of significance in the aviation industry, in terms of both financially and symbolically. Previously, the airlines that were owned by the government were considered great for international trade and national defence. The global body rightly observed that some passengers would still opt to fly with their national flag carrier for the sense of pride that it gives them when they see the familiar tail of the aircraft on the runway.
Also, some passengers will
sometimes choose to fly with flag carriers over other airlines, due to the
image that they are safer and less likely to encounter financial difficulties.
This is one of the reasons why many Nigerians still long for a national carrier
and why they expect that the federal government fulfill its promise of
establishing a nation carrier.
Sirika assured the realisation of the project while
addressing state house correspondents after the weekly federal executive
council meeting in Abuja recently and reiterated that the national carrier
would be realised with huge stakes of the company owned by the private investors.
In 2018, the Minister had unveiled the name and logo of the new national
carrier, Nigeria Air, at the Farnborough International Airshow in London. The
project was later suspended indefinitely
"I regret to announce that the Federal Executive Council
has taken the tough decision to suspend the National Carrier Project in the
interim. All commitments due will be honoured. We thank the public for the
support as always," he had tweeted.
But recently Sirika said the new national carrier was long
overdue and the private sector-run airline would be in operation by early 2022,
noting that the new national carrier was expected to be a viable airline and is
potentially poised to cater to millions of travellers in Nigeria and Africa.
Sirika said the COVID-19 pandemic forced the postponement of the planned date
for the establishment of the national carrier initially planned for the end of
2021.
Conflict
But many industry pundits are of the view that for a
national carrier to be successful it ought to have the control of the major
airport terminals in that country. In fact, successful airlines in Africa own
or control the major airport terminals where they operate. Industry experts are
of the view that if the terminals of major airports are given out in concession,
the national carrier might not be given a head start. Besides, if a national
carrier owns and earns revenue from the terminal of its operational hub, it
would help the airline's sustainability. This is because airports largely earn
more revenues than airlines. So airline revenue would support an airline that
owns it and helps it to become profitable.
Airlines generate revenues through aeronautical and
non-aeronautical and the later is elastic because airports could be home to a
range of revenue sources including special product areas (Duty-Free, Souvenir
shops, bookstores and banks), food and beverage areas (restaurants,
cafeterias), travel services (car rental, insurance services), personal service
areas (showers, hairdressers, beauty centres but airlines generate revenue
mainly from ticket sales and charter services.
Travel expert and organiser of Akwaaba African Travel
Market, Ambassador Ikechi Uko told THISDAY that it might be difficult for the
planned national carrier to be profitable if it does not have control of the
terminals at its operational base. He cited examples with airlines that have
control of the airport facilities, which revenues are at their behest and
others that their airport facilities are managed by a different entity, which
also control their revenues.
"Personally, I support the establishment of a national
carrier, but I listened to a presentation from an official of African Airlines
Association (AFRAA), which indicated that airports make more money than
airlines and that airlines that make profits are those that control their
airport facilities.
"Now, I wonder why Nigeria wants to have a national
carrier and at the same time wants to concession major airport terminals. Kenya
is at the verge of merging the Jomo Kenyata International Airport and Kenya
Airways. Ethiopia Airlines, which is the most profitable airline in Africa,
merged the airport facilities to the airline.
"So in that paper delivered by Aaron Monetsi of AFRAA,
who was a guest speaker at Akwaaba African Travel Market, he noted that African
airlines that do not have control and the revenues of their operations hub may
not be able to be profitable. Emirates is in charge of its operational hub in
Dubai, South Africa Airways (SAA) is floundering largely because its major
airport facilities are managed independently. So the question is, which model
is the Nigeria copying? How does it want to concession its airports and at the
same time have a national carrier? This is where I have misgivings about the
planned national carrier.
"Our model is different. I don't know where it has
survived in Africa. Airlines that survived in Africa worked with their
airports. SAA failed because their airports are independent. Kenya Airways is
merging with the airport because Kenya Airways generate about 60 per cent of
the traffic and 83 per cent of the revenue of the Jomo Kenyata International
Airport," he said.
He also noted that in the last 10 years many airlines have
collapsed in Africa, but no airport has collapsed during the given period. The
national carrier must have to partner with the airport because that has been
the most successful model so far," he said.
Airport Terminals
The Chief Operating Officer of Ibom Air who is also former
Managing Director of the Federal Airports Authority of Nigeria (FAAN), George
Uriesi, told THISDAY that airlines could manage their operational terminals but
not the airports. He noted that US mega carriers, Delta Air Lines, United
Airlines have their terminals, adding that each airline can design its own
terminals to suit its vision.
"But airport is expensive infrastructure, so no airline
can go into it; if they do they will be stretched. Ethiopian Airlines has to
design what it wants. But if the national carrier operates in airport terminals
that are managed by concessionaire it may not affect its profitability. This is
because the concessionaire will not charge itself out of the market. If the
concessionaire introduces outrageous charges the airline can leave the airport
and move over to others. There must be a balance in the pricing. Any airline
that will have a terminal dedicated to it must have to be a big airline,"
he said.
Speaking in the same vein, the industry consultant and CEO
of Belujane Konsult, Chris Aligbe said the national carrier that would be
floated by the federal government would be private sector driven and therefore
should be given a level playing field with other airlines. In that case, no
airport terminal will be dedicated to it but would utilise the same facilities
as other carriers.
"As people talk about level playing field, the planned
national carrier will not be publicly owned. It will be private sector driven.
If the major airport terminals are concessioned, the operators should be
willing to give the national carrier a position in the terminals. Except if
such agreement are excluded, the national carrier can be given its own space.
The airline and the concessionaire can agree on terms. But if you assign a
terminal to the national carrier, there wont be equal playing field anymore.so
the airlines should be given equal opportunities and should be left at the
mercy of the concessionaires," Aligbe said.
Many Nigerians are waiting and hoping that a national
carrier will come before the end of this administration. But that hope is
ebbing.
original article on This Day.
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