Headwinds From Trapped Funds, Litigation May Hinder Nigeria Air's Takeoff

The plan by the federal government to commence the operation of Nigeria Air before the end of the President Muhammadu Buhari's administration has received condemnations from stakeholders in the nation's aviation industry who said the airline may not fly before May 29, 2023, unless certain things are put in place.

According to the stakeholders, things to be put in place include the repatriation of trapped funds belonging to the international airlines operating in the country and Bilateral Air Service Agreement (BASA), among others.

LEADERSHIP reports that at the National Aviation Stakeholders Forum 2023 in Abuja on Thursday, the minister of aviation, Senator Hadi Sirika, disclosed that the controversial national carrier, Nigeria Air, will commence operation before the swearing-in of a new administration on May 29.

The minister emphasised that the benefits Nigeria stands to derive from the establishment of the national carrier include reduced capital flight from Nigeria, maximisation of the benefit of Bilateral Aviation Safety Agreement (BASA), Single African Air Transport Market (SAATM) and development of an aviation hub.

"The national carrier will contribute to the country's GDP, facilitate hospitality and tourism, facilitate growth and development of the Nigerian agricultural sector, and create jobs around the Agro-Cargo Terminals," he said.

However, stakeholders in the aviation sector have said the national carrier project may not begin operation before May until the federal government put the right things in place.

They argued that going ahead with the project, the minister is creating landmines for the incoming Asiwaju Bola Tinubu administration.

The chief executive officer, Centurion Security and Safety Consults, Capt. John Ojikutu, told LEADERSHIP yesterday that until Nigeria resolves the payment of foreign airlines trapped in the country, the project may be impossible.

Apart from the issue of trapped funds, he asked if Nigeria had submitted operational plans for acceptance from other countries, asking how many intercontinental routes would be available.

He said, "I have my serious doubts that Nigeria Air will fly and that has been my position since the minister's move in 2018. If ever it does, not many intercontinental routes will be available if we are still keeping the foreign airlines monies.

"Even if we pay this money, how many countries have we normalised the plans to operate with or submitted our operational plans with for acceptance? Maybe with only the Ethiopia airline. The airline would die the same way Virgin Nigeria did immediately when a new administration came in.

"This is what I see on the government airline owned by those in the administration of government and not a national carrier owned by Nigerians. By the way, why is it that the minister representing only 5% ownership is the only one doing the show? Where are the representatives of the remaining 46%?"

"That is why I said that I have my doubts except it begins domestic operations and until we settle the foreign airlines' trapped monies before we can begin any operations or flights on any of the Bilateral Air Service Agreement (BASA) routes and supports from International Air Transport Association (IATA)."

Also speaking, the director of Research and Corporate Travel, Zenith Travel Consult, Olumide Ohunayo, said unless the minister of aviation forced his way, the project won't fly before May 29.

He, however, warned that forcing his way to make the airline fly would mean disobeying valid court orders that ordered status quo by all parties.

Ohunayo said, "He might force his way to fly. He might force it down our throat. Does he have the right to say anything when the case is still in court? Does he want to breach the legal processes in the country? With this statement, he's asking Ethiopian Airline not to obey any of Nigeria's court order or any other investor in Nigeria that are part of the Air Nigeria project.

"Also, there is a court order asking status quo to remain and the minister is pushing and encouraging other investors to disobey a valid court order. What he's trying to do now is that no court order in Nigeria those people should respect. We must be careful with what we wish and what we want. The minister can push them to operate, but he's only kicking the can down the road because there will be consequences and actions from June 4 concerning that airline."

Ohunayo, a member of the Aviation Round Table Initiative (ARTI), said the minister was supposed to hand over the supposed project to the next administration instead of forcing it down the throat of Nigerians even at a time the country is in a transition period.

"When you juxtapose his statement on Nigeria Air and the demolition of Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency's (NAMA's) building, he's only trying to give the new administration problems when they resume their administration. This is a transition period; they should halt anything they haven't done and hand over the document to the incoming government but if you say you want to forcefully implement them before you depart on May 29, 2023, then they want to give the incoming government a lot of problems to start with, and that's not good."

"What I believe he should do is to seize the agencies instead of the Nigeria Air. This is because he has overpopulated the agencies with staff from a particular state and region. He should adjust the recruitment because that has stopped the aviation agencies from operating optimally, and suffocating their finances by the employment."

However, the minister of Aviation, Senator Hadi Sirika, has assured Nigerians that every necessary operation had been put in place for the takeoff of Nigeria Air, on or before May 29, 2023.

Sirika, who spoke to LEADERSHIP on the sidelines of the Aviation stakeholders' forum in Abuja, said the aircraft was ready, the offices were in place, the stand at the airport was ready and everything was ready for the takeoff.

He further stated that what is left is to finalise discussion with the Ethiopian Airlines and get the Federal Executive Council's (FEC) approval for the business case.

Sirika, who said the operation of the new airline had been hindered by the court cases, also stated that all the Nigerian-owned airlines were invited to invest in Nigeria Air but they declined because they did not believe in the project.

He explained that Ethiopian Airlines came with a better proposal and was chosen as the preferred bidder because of the expertise it had shown, and how it had survived for a long time now.

The minister said, "Negotiation meeting with the Ethiopian Airlines Group Consortium and the Federal Government of Nigeria is ongoing, next step is for FEC's approval of the Full Business Case. Operation of local and international flights will commence soon. Before the end of this administration, before May 29, we will fly."

Sirika further stated, "When we were setting up Nigeria Air limited, my feeling was to partner with airlines that I think will add value, with financial experience and high profile, such as Emirate, Qatar, Lufthansa, and the rest of them. Those who worked closely with me know that this is my forecast and what I wanted, because I believe if you partner with Lufthansa for example, automatically you will have a licence to fly.

"I thought we would do that and I made attempts to reach them and invite them as I did with all airline owners in Nigeria, except Overland. I reached out to them personally to come and partner to create a strong airline, but fast forward, we had a bidder, Ethiopian Airline. I was very happy that we got them (Ethiopian) to come. It was not my choice but I am happy now knowing what I know.

"They are a household name, strong and they have been in business for 70 years unbroken and they have over 200 aircraft. So, I am very glad we are partnering with them and it is a reality. Some airlines are in court and their grouse is that it can be any airline in the world but not Ethiopian because, in their own way, they think Ethiopian is a competitor."

The minister also said the benefits Nigeria stands to derive from the establishment of the national carrier include reduced capital flight from Nigeria; gain the optimal benefit of BASA and SAATM and develop an aviation hub.

He also said the national carrier will contribute to the GDP, facilitate hospitality and tourism, facilitate growth and development of the Nigerian Agricultural Sector and create jobs around the Agro-Cargo Terminals.

This article originally appeared on Leadership.

Image via Premium Times Nigeria.