A few days ago, the Minister of State Aviation, Senator Hadi Sirika, unveiled a new national carrier for Nigeria at the Farnborough show in the Uk. The airline is supposed to commence operations in December 2018.
Sirika expressed that the national carrier will be fully private sector led and driven. This means that there will be no government intervention in how it is managed; the investors will be fully responsible for this. Also, the Nigerian government will not own more than 5% of the new national carrier. Although investors have not been confirmed, there have been reports suggesting that Nigeria intends to partner with Ethiopian Airways to oversee its operations.
A “national carrier” is locally registered, flies the country’s flag and gets preferential rights in international operations.
Now, this is not Nigeria’s first attempt at establishing a national carrier. The aviation industry has had a turbulent history. For instance, Nigeria Airways collapsed in 2003 due to corrupt practices. Then Virgin Nigeria was established as a joint venture with Sir Richard Branson in 2000. However, Branson pulled out in 2010 due to poor management issues and constant political interference. The airline was rebranded as Air Nigeria, but officially ceased operations in 2012.
In the long run, there are a few benefits of a national carrier. The aviation industry has a direct and indirect impact on jobs and GDP. It could potentially generate employment and catalyze economic activity across several areas.
The establishment of a national carrier could give domestic businesses greater access to foreign markets. Air transport facilitates connectivity, encourages exports and increases domestic competition. It allows the theory of comparative advantage to prevail and encourages firms to reap the benefits of economies of scale; which lowers their production costs and prices for consumers.
It could also make Nigeria a tourist hotspot. The aviation industry is critical for the tourism sector. A national carrier could improve the convenience, speed, and affordability of air transport, making it easier for business and leisure travellers to access the nation.
But, in order to fully reap the benefits of a national carrier, Nigeria first needs to deal with other pressing challenges such as airport infrastructure, stable electricity, aviation fuel shortages and the cost of getting a visa.
Too costly to fail
The sunk cost required to successfully start-up an airline is high. Sirika indicated that $8.8 million would be spent as the preliminary cost and another $300 million as the take-off cost. It is an expensive project, and if it does not succeed, it could be yet another financial sinkhole in the Nigerian economy.
Uncertainty in the Air
While some Nigerians are receiving the news of the national carrier with joy and enthusiasm, others think it’s a waste of time and resources. The mixed reaction is understandable when you consider the several failed attempts in the past.
The tagline of the airline is “Bringing Nigeria closer to the world”, but what exactly are we bringing as a nation? Poverty, unemployment, bad roads, security issues, food insecurity, deteriorating infrastructure and a substandard health sector? With the myriad of economic and social problems that Nigeria has to tackle, there are emerging concerns as to whether a national carrier should be at the top of the government’s priority list.
Remember, national elections are around the corner and politicians are getting desperate. Unveiling a national carrier may be a well thought out plan, to delude Nigerians that the government has been working. Or maybe not. We shall find out in coming months.
Thanks for Reading,