Federal Government has placed indefinite suspension on the takeoff of the proposed national carrier scheduled for December 24. Though the Minister of State for Aviation, Hadi Sirika, who announced the decision yesterday did not give reasons, it was learnt that the development was not unconnected with investors’ apathy, ownership structure and funding issues.
The government had in July unveiled the name and logo of the proposed national carrier, Nigeria Air, at the Farnborough International Public Airshow in London, ahead of takeoff in December 24. As contained in the Outline Business Case (OBC) approved by the Infrastructure Concession Regulatory Commission (ICRC), the airline is a Public Private Partnership (PPP) project, with 95 per cent share pushed to investors while the government will own the rest.
To get the new national carrier start off, the government will be injecting N3.168 billion ($8.8 million) as the startup capital. It was learnt that the N3.2 billion is part-payment for the government’s five per cent equity in the investment, whose takeoff fund in the next three years of operation has been put at N108 billion ($300 million).
Shortly after the London launch, the airline, however, became a hard sell to quality foreign investors and technical partners. Although several bids were received across the board, they were from carriers that are either struggling to earn profit or those that the Nigeria Air was designed to compete with.
Other investors, who saw prospect in the proposal and Nigerian market, were, however, wary of the government’s credibility and ability to honour agreements, given some antecedents such as the yet to be resolved Murtala Muhammed Airport terminal two (MMA) concession faceoff.
The terminal, which is the first of such PPP projects in the aviation sector, has been a subject of serious legal tussle between Bi-Courtney Aviation Services Limited (BASL) and Federal Airports Authority of Nigeria (FAAN)/FG almost since inception. Other red flags are the yet to be settled severance and pension packages of Nigeria Airways’ 6000 ex-workers and harsh operating environment that has made it nearly impossible for airlines to survive.
Sirika, on his Twitter handle yesterday said: “I regret to announce that the Federal Executive Council (FEC) 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.”
