Posted by Sade Williams
Stakeholders in the aviation sector have expressed different views over the plan by the Federal government to start the national carrier, Nigeria Air with three wet leased aircraft.
The Federal Executive Council had last week, approved the leasing of three aircraft by the country’s national carrier, called ‘Nigeria Air’ to enable it to commence operations on a date to be announced soon by the government.
Aviation minister, Hadi Sirika, in announcing it had said: “We have said in our outline business case, which was earlier approved, that we are starting with three aircraft for the first instance and then we progress. We will have a mixture of Airbus and Boeings because every airline that will grow big uses the two,” he said.
“We will start with domestic flights and then we grow to become international and then we move to become regional and intercontinental. There are challenges currently in our aviation industry but it is a global phenomenon and it will not last forever because aviation is a very resilient sector. Certainly, we will overcome these problems,” he added.
Speaking on the development last Thursday during the 26th conference of the League of Airports and Aviation Correspondents held in Lagos, Chris Aligbe, a former director of public affairs, Nigeria Airways and Managing director of Belujane Konzult, said there is nothing wrong in leasing aircraft to start the operations, adding that ‘most startups usually start with wet leased aircraft particularly when all the investors have not come in.
He is of the opinion that the period will give government time ‘to recruit and train people’.
‘’There is nothing wrong with leasing aircraft for Nigeria Air. I am happy that it has finally happened even though it would have been excellent if it was done months ago but it is better late than never. Most startups usually start with wet leasing particularly when you are still new and all the investors have not come in. It is when the investors come in and you have all the funds that you need that you begin to look at if you are going to take wet lease or dry lease.
‘’But it will give you some time to recruit and train people, that is why I anticipate that the wet lease is not going to be for long before all the interested groups and investors come in and determine what kind of aircraft that they would need, would it be Boeing or Airbus? It is then that you can determine the people that you are going to train because you would have to train according to the aircraft type.’’, Aligbe said.
Also speaking, Sindy Forster, Principal Managing Partner, Avaero Capital Partners, noted that ‘it is always good for new airlines to start with three aircraft, adding that ‘it gives them the opportunity to travel to different locations.
According to her, ‘no company can operate functional airline with one or two aircraft. You have to build this contingency planning where you got an Aircraft on Ground (AOG) situation, three aircraft is the minimum for starters.
Asked if the whole process leading to the announcement of plan to lease aircraft was shrouded in secrecy, Forster said: ‘’I would say that part of the information was readily available and it was there online for everybody to see. The challenge we have in this environment is that people don’t read. They don’t access the information that is available and then they claim that things are shrouded in secrecy. It encourages people to operate in a more secret and less transparent manner because they know that people are not going to read what they are going to put out there. So, the formula of ownership has always been out there: 5% for the Federal Government, 49% for the strategic foreign partners, 46% for Nigerians. So it was always out there.’’.
She however expressed disappointment over government refusal to make public the majority owners of the airline.
‘’The issue we have at the moment is we don’t know who are the 95% right now. For an airline to be launching and we don’t know who is the majority owners of this airline is an issue, and that should be clarified before any aircraft takes flight anywhere.’’, she added.
Engr. Akin Olateru, Commissioner, Accident Investigation Bureau (AIB) said the plan is a temporary one that would even create job opportunities for Nigerians.
‘’This is aviation. The more aircraft and the more jobs are created because you would need the ground handling companies to manage it. I am also sure that some of the cabin crew members would be Nigerians. Moreover, this is a temporary arrangement, it is not going to be permanent,” he said.
Expressing excitement and displeasure at the time, Dr. Alex Nwuba, another stakeholder said he is excited to hear that something about the airline is happening but thinks ‘it is completely warped’.
First, he likened the Federal Executive Council, which approved the leasing of the three aircraft to a judge that sits in a court and makes his judgement on the basis of the information that is presented to him.
He said: ‘’So an agreement is presented that we need three aircraft of two brands to come into the market to serve the domestic market sounds like a good idea.
‘’But let’s ask some fundamental questions. The market exists. Airlines are operating in this market, they have challenge with the price of fuel, they have challenge of foreign exchange to pay suppliers. You even have the challenge of airlines that are selling tickets, hundreds of millions of dollars that cannot repatriate those funds. How will these three planes operate on the basis of wet lease. What’s a wet lease? Wet lease is an arrangement where the government has engaged an airline outside the country to bring airplanes and crew. So how does that solve our problem as a nation in terms of creating employment as an industry? How does that solve the problem of foreign exchange that we are already facing because we had to pay for that wet lease in foreign exchange.
‘’How does that solve the problem of availability of funds through the Central Bank or will the national carrier get its money through the black market to fund its operation. It is absurd, it’s essentially an absurd proposal made to a group of people that have no knowledge of what’s going on and they are acting like judges receiving information on which they judge without basic facts.’’, he said.
According to him, ‘there is really no benefit from wet lease when we pay for the airplanes in forex, pay for foreign crew, we don’t create any employment. So, this is not what we want as a national carrier. We are not addressing the challenges. This national carrier as noted holds nothing but decimate the existing domestic airline industry and that’s not the job of the Federal Ministry of Aviation’’.
Speaking on a better model, Nwuba said there is the need to go to the market and sell the 51 percent for the Nigerian public through the stock exchange.
‘’That would invigorate the stock exchange. It will get the stakeholders’ buy-in. The average Nigerian will be able to put a few dollars that they put in MTN share and buy into the national carrier. They will have access to the money to actually buy airplanes or enter into a dry lease arrangement which is essentially a finance lease and make payment over a period of time even though in the finance industry which I work in, doing a finance lease in dollars for a domestic operations earning naira makes no sense at this age of the economic cycle that we are in. Maybe we pay cash for the airplanes and bring them in, otherwise you do a lease of an airplane by N700 to a Dollar. By the end of the year, its 1000, you can’t make those lease payments.
‘’So, we need to take this product to the market, get the stakeholders buy-in, create new jobs within the Nigerian economy, create new solutions, bringing in wet lease airplanes from abroad to fly domestic business makes absolutely no business sense’’, he added.