The unveiling of Ethiopian Airlines as the core investor for Nigeria’s national carrier, Nigeria Air, is generating misgivings in the aviation industry.
Experts and stakeholders in the industry say the process has raised more questions than answers and it is shrouded in secrecy.
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Minister of Aviation, Senator Hadi Sirika had while giving an update on the process of establishing Nigeria Air unveiled Ethiopian Airlines, the largest airline in Africa, as the core investor for the airline.
He gave the equity ownership structure of Nigeria Air as Ethiopian Airlines 49%, Nigerian private investors (SAHCO, MRS and other institutional investors) 46% and the federal government 5%.
While giving the update, he said the ministry on 10th June 2022 received a closed bid by the Ethiopian Airline Consortium.
He added, “Few others attempted to submit, but unfortunately could not meet the deadline. Since we did not collect the bids, we are not in a position to say who they are.”
According to him, the Ethiopian Airline Consortium was declared the preferred bidder and the evaluation team will proceed with contract negotiation and other processes, which he hopes to complete by mid-November.
The selection of Ethiopian Airlines came after initial denials by the minister as far back as 2018 when the project had missed several targets.
A source who spoke to our correspondent said ET became the preferred bidders due to “apathy” from other foreign investors amidst the commitment of the minister to deliver the project before the end of the administration.
In August 2018, the former Group CEO of Ethiopian Airlines, Tewolde Gebremariam had hinted that Africa’s largest airline had entered into a discussion with the Nigerian government to run the national carrier.
At the time, the minister debunked the claim and said discussions were ongoing with prospective partners and investors ranging from development finance institutions, airlines and original equipment manufacturers (OEMs).
“I don’t know about ET or any other prospective investors being favourites or frontrunners to establish and manage Nigeria Air,” Sirika had said at the time.
With ET being selected, the minister said, “It is the overall share capital of around $300m provided by the preferred bidder that will launch Nigeria Air to its full size of 30 aircraft and international operation within the next two years.”
Daily Trust reports that Ethiopian Airlines owned 100 per cent by the Ethiopian government commands the lion’s share of the Pan African passenger and cargo network operating the youngest and most modern fleet to more than 130 international passenger and cargo destinations across five continents.
Ethiopian’s fleet of over 120 planes includes Airbus A350, Boeing 787-8, Boeing 787-9, Boeing 777-300ER, Boeing 777-200LR, Boeing 777-200, Boeing 737-800, Boeing 737-8, Freighter, Bombardier Dash 8-400 double cabin.
Currently, the airline owns 45% of Zambia Airways, 49% of Guinea Airways, 100% of Ethiopia-Mozambique Airlines, 49% of Chad Airlines and 49% of Air Malawi.
If the ET’s contract works, the airline would further control 49 percent of Nigeria Air, making Nigeria the sixth airline under ET’s management.
Findings by Daily Trust revealed that ET is expected to provide technical support with equipment and personnel and not any kind of funding.
“With over 120 planes in its fleet, the ET can easily provide the number of aircraft required to start but I can tell you ET is not committing any money into the project. The aircraft to be provided would be in a form of a wet lease as the aircraft would come with its crew,” a source said.
While querying the wisdom behind the selection of Ethiopian Airlines, other stakeholders demanded the identities of other institutional investors that make up the 46 per cent alongside SAHCO and MRS.
An aviation analyst, Prof. Anthony Kila asked if Ethiopian Airlines is a technical partner or investor, adding, “We are wondering about things we should not be wondering about because the contour, the promoters of the venture should have been upfront in releasing information. At this moment, there are more questions than answers.”
A former CEO of one of the aviation agencies who spoke on the condition of anonymity said, “Everything is shrouded in a lot of secrecy and a lot of enigma. So it makes it very difficult to comment.”
Former President of the National Association of Aircraft Pilots and Employees (NAAPE), Engr. Isaac Balami in a chat with our correspondent said the planned national carrier would have been more beneficial if Nigeria had owned over 80 per cent of the airline.
He said, “I would have wanted this thing to be at least 80 per cent Nigeria-owned. As it is, the largest chunk of the stake is going to a country and an airline that ordinarily should be under us or we should be ahead of them.
“I just pray that one day we would correct the wrongs and get Nigerian businessmen that would look inward and invest and not allow foreign airlines to come and take everything out of this country.
“I don’t know the nitty-gritty, I have not gone through the contract but anything that is not going to empower Nigerians is not good enough.”
Also speaking, Group Capt. John Ojikutu, (rtd), expressed reservation with the choice of ET as a core investor.
He said, “First and foremost, I am not in support of having any of the foreign airlines and a competitor with us on the BASA routes as our technical partners; the foreign airline’s interest in the partnership comes before ours.
“Secondly, similar partnerships with the KLM and the SAA in the early 90s did not benefit us. We should therefore look for partnerships outside the competitors in the BASA routes in countries like Canada, Australia, etc.”
President of Aviation Roundtable and Safety Initiative, Dr. Gbenga Olowo has said the selection of Ethiopian Airlines as the core investor for Nigeria’s national carrier, Nigeria Air, was the right decision, saying ET is a partner of good choice.
Olowo who had earlier kicked against the establishment of the national carrier said the government is determined to establish it, his endorsement “is based on the need for the success of any new start-up Airline in NG.”
He however noted that failures still abound in the market and some airlines still remain very weak hence the challenge for the discerning and concerned citizens remains in coming up with useful advice.
He said, “It is especially advantageous for Nigeria Air to partner with ET (as a competitor on the NG BASA,) for simple purposes of Code Share Agreement (CSA) and Blocked Seat Agreements (BSA) outside the airline’s intended Direct Services.
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