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Business News of Thursday, 19 January 2023


FG’s Nigeria Air venture could kill local operators - Aviation expert

Air Nigeria Air Nigeria

The Chairman of United Nigeria Airlines, Prof. Obiora Okonkwo, has alleged that the Federal Government’s plans to establish a new national carrier called Nigeria Air with Ethiopian Airlines would ultimately collapse existing indigenous airlines in the country.

Speaking to Nairametrics in Lagos earlier this week, Okonkwo also clarified that the domestic airlines under the auspices of Airline Operators of Nigeria (AON) are not against the reestablishment of a new national carrier for the country. Instead, they are against the process leading to the establishment of the national carrier.

Okonkwo, who is also the Public Relations Officer (PRO) of AON, assured that if the process leading to the formation of Nigeria Air was transparent, the operators would be among the first to patronise the new airline and give their support to it.

AON’s bone of contention: Okonkwo pointed out that the granting of a 15 years tax moratorium to Nigeria Air was absurd and insisted that it lacked patriotism of any type by the Ministry of Aviation.

He also explained that despite the 15 years of tax moratorium granted to the airline through Ethiopian Airlines, the government also agreed to indemnify the carrier for its loans abroad and in the country.

Okonkwo vowed that the operators would continue to kick against the position of the national carrier through the court, maintaining that the essence of the court was to interpret the action of the government and its agreement with the airline. He said:

“It would have been great for any patriotic person to see a national carrier fly all over the world. We would be glad and be the best patrons, but as the operators, we know how the game is played all over the world and the implication of certain actions. We only felt some actions were unpatriotic. Unpatriotic because you granted a commercial company with a foreign interest 15 years tax break and it is supposed to be a private business.

“But, the government is indemnifying all their debts home and abroad. And these people presented a business plan that is written in black and white that their market penetration approach is predatory pricing to send packing to the local operators. It is there in black and white. So, for us, it is only a tree that will see someone with an axe and remain there.

“We felt that they don’t mean well for the industry and besides, the sole beneficiary of all this is going to be one of your competitors, which has a mission to dominate the entire African market to themselves for the benefit of their economy because Ethiopian Airlines is the biggest revenue source for the government of Ethiopia.”

Too disruptive for local airlines: Okonkwo wondered why the Ministry of Aviation, which has an aviation professional as its minister, would accept all the clauses embedded in the agreement with Ethiopian Airlines.

He also expressed worry that the action of the government would disrupt the recent growth in the sector, which was rated the second fastest-growing industry in the world in the last year after Colombia.

He, however, lauded the government for approving free customs duties to airline operators on the acquisition of aircraft and importation of aircraft, saying that this gesture had gone a long way to giving succour to the operators.

“This is one sector that we will appreciate this administration that has given us a tax-free on imported spares and aircraft. Without that this industry would have died because the cost of operation is huge. So, we have always been cautious of this and we have always done what we needed to do to support this government with our operations.

“We have seen a lot of reciprocity from our members too. We believe that the issue we have here is not about capacity, but the effort of the government to support the players in the industry,” he said.