The Folly of a Government-Run Airline in Nigeria

 

Establishing a national carrier in Nigeria, given its history of chronic mismanagement in public enterprises, is akin to steering a ship into a well-charted storm. Nigeria’s Aviation Minister, Festus Keyamo, must recognize that investing hundreds of millions in establishing a new national airline, amidst Nigeria's staggering N87.38 trillion ($62.41 billion) debt and economic challenges, is not just impractical; it is a fiscal misadventure that the country must wisely avoid.

Festus Keyamo, the Minister of Aviation and Aerospace Development in Nigeria, recently expressed a strong desire to start a new publicly-owned airline. This move, however, raises significant concerns considering Nigeria's long history of mismanaging public corporations, particularly in the aviation sector.

Nigeria's troubled past with government-run enterprises is well-documented. The defunct Nigeria Airways is a stark reminder of this inefficiency. Established in 1958, it had a fleet of 32 aircraft by 1979 but deteriorated to just one by 2000, amassing millions of dollars in debt. The partnership formed in 2003 with Virgin Atlantic under the Olusegun Obasanjo administration to replace Nigeria Airways also ended in failure. The project collapsed by 2009, with Virgin citing Nigeria’s unfavorable business climate. Subsequent efforts to revive a flag carrier, including rebranding as Air Nigeria and Nigerian Eagle Airline, all ended in failure, with a significant lack of accountability for the N35.5 billion ($25.4 million) intervention fund.

During Muhammadu Buhari's presidency, spanning from 2015 to 2023, the troubling pattern of mismanagement within the Nigerian government's handling of aviation projects persisted with notable examples. One such incident was the impulsive decision by Hadi Sirika, the Minister of Aviation at the time, to rebrand an Ethiopian Airline plane as Nigeria Air. This action, taken without a thorough evaluation of the implications or a strategic plan in place, highlighted the haphazard approach often adopted by the Nigerian government in critical decision-making processes. The lack of foresight in this decision was evident, as it did not consider the long-term sustainability or operational logistics of such a rebranding. This move has since attracted scrutiny and is currently under investigation by the Nigeria’s  Economic and Financial Crimes Commission, which is probing into the details of the decision-making process and the financial implications of this rebranding effort. This episode serves as a stark reminder of the continuous oversight and mismanagement issues that have plagued Nigeria's aviation sector, casting doubts on the government's capability to effectively manage such complex industries.

It should be observed here that the issue of government mismanagement in Nigeria is not confined to the aviation sector but permeates various other critical industries, painting a broader picture of systemic inefficiency. A glaring example is the chronic mismanagement of the country's four publicly-owned refineries, which, despite their significant potential, have consistently underperformed due to poor maintenance, corruption, and operational ineptitude. This has led to an ironic situation where Nigeria, one of Africa's largest oil producers, is forced to import refined petroleum products. Similarly, the Nigerian National Shipping Line, once a symbol of national pride, met its demise in 1995. The shipping line's collapse was a result of financial mismanagement and operational inefficiencies, marking a significant setback in Nigeria's maritime aspirations. Additionally, the government's handling of the Nigerian Telecommunications Limited (NITEL) further exemplifies this trend of mismanagement. NITEL struggled with outdated technology, corruption, and poor service delivery until the liberalization of the telecom industry in 2001, which opened the doors for private investment and innovation. These instances collectively highlight a persistent pattern of governmental shortcomings in managing public enterprises, raising serious concerns about the government's capability to oversee and sustain critical national infrastructure and services.

Globally, the aviation sector has moved away from government-owned flag carriers. This shift started in 1987 with the privatization of British Airways by then British Prime Minister Margaret Thatcher. This move was followed by the privatization of Lufthansa (Germany), KLM (the Netherlands), Air France, and Iberia (Spain). In the United States, the government has never owned a commercial airline, and Air Canada was fully privatized in 1989. This global trend highlights the inefficiencies of government-run airlines and the advantages of privatization.

Keyamo's proposal to establish a national carrier comes at a challenging time for the Nigerian economy. The country is grappling with a debt of N87.38 trillion and a significant forex liquidity crisis. The cost of establishing an airline is estimated to be between $200 to $300 million, a substantial financial undertaking in the current economic climate. Additionally, only four of Nigeria's 32 airports are economically viable, with the country spending N1.04 trillion annually on servicing aircraft abroad.

In light of these considerations, the idea of establishing a national carrier under government administration appears to be both impractical and ill-conceived. The track record of failed government interventions in industries such as aviation, oil refining, shipping, and many other corporations suggests that the Nigerian government may not be best equipped to handle the complexities and dynamics of running a national airline. This is especially pertinent in the context of Nigeria’s current economic challenges, including a significant debt burden and a pressing need for fiscal prudence. Establishing a national carrier would likely require substantial financial investment, a risky venture given the nation's already strained financial resources. Moreover, the global trend in the aviation industry leans towards privatization and away from government-owned flag carriers, which further questions the feasibility of a successful government-run airline in today's competitive and rapidly evolving aviation market.

Instead, the focus should be shifted towards enhancing and resolving the critical issues currently plaguing Nigeria's aviation sector. This includes the urgent need for improved infrastructure, which is crucial for ensuring the safety and efficiency of airline operations. Upgrading safety measures and landing equipment is vital to meet international standards and to foster a secure environment for both domestic and international flights. Additionally, developing a comprehensive and strategic master plan for the airports is essential for streamlining operations, enhancing passenger experience, and boosting overall efficiency. Encouraging private sector participation in the aviation industry presents a more viable solution. By leveraging private investment and expertise, Nigeria can better address these issues, leading to improved service quality and operational efficiency. This approach would not only help in avoiding the pitfalls of past government-run endeavors but also bring in much-needed innovation and competitiveness to the sector, ultimately better serving the aviation needs of the nation and its citizens.