President Buhari’s administration has pledged to look into the re-establishment of a new national carrier for Nigeria. The subject has been one that conjures up memories of costly, previously failed attempts at national airlines. With this in mind, I also recall the famous quote by George Santayana: “those who fail to learn from history are doomed to repeat it”.
That’s the last thing we want, in terms of us ending up with another failed national carrier. To be clear, the establishment of a national airline in the country is something I believe with my whole heart we should do. But, it’s also important this time around to examine the fundaments and rational reasons why we need to establish an international airline in the first place.
To truly understand what it takes to successfully develop and launch a world class airline, let’s think back to what a national airline carrier should be all about in the first place, and then identify a viable business strategy that will lead us towards a sustainable and very profitable national airline.
I researched a dozen airlines currently operating profitably all over the world. This included international airlines originating or operating successfully in Africa at the moment. They all have one thing in common; they are first and foremost, a business. Everything else, tied to the notion of a national airline was secondary and purely emotional. From British Airways, to Lufthansa to Ethiopian Airlines, to Emirates and many more; they all (as stated in their shareholders earnings reports), focus on establishing a safe, profitable business that carries passengers, goods and freight around the world for a fee; a fee that after operating expenses, makes the company a decent profit. This important criterion – making money for the shareholders, either private or public, is the one thing that our previous national carriers failed to consistently deliver on.
The cost of operating these loss making airlines in Nigeria eventually killed off all international airline ventures in the country. If profits and dividends to shareholders are not going to be at the core of any new airline we establish, then we are doomed to make the same mistakes of the past.
So, what to do? We agree emotionally that we need to establish a national airline to safely ferry Nigerian passengers (primarily) and others, including their goods and services around the world, for official business, corporate and vacation purposes. From a revenue generation standpoint for the country, think about the significant amount of foreign exchange reserves we presently loose from the country paying foreign airlines to ferry us to international destinations. All the international airlines currently operating in Nigeria get to convert the Naira to dollars and remit these funds abroad. As we don’t have a national air carrier; we don’t have an opportunity to earn or keep any foreign currency equivalent abroad.
If we cannot present a solid business case whereby the proposed new national carrier can ferry passengers and goods from Nigeria safely to and from their global destinations for a competitive fee then we have no business offering such a service in the first place.
On the other hand, if the aviation industry professionals in the country can develop a clear business objective, including identifying the optimal cost structures, revenue margins; as well as, identify viable new air routes around the world that will give this new airline a competitive advantage to the business shareholders and then, assemble the right private sector management team to run the airline efficiently and profitably, then and only then do we have a case for the establishment of a new national air carrier.
Nigel Sonariwo
