Imminent fraud in Nigeria?

[flareout BC]

The Aviation Minister is reported to be sounding off about a new national carrier for Nigeria, as if the current ones are not rendering a national service when they fly our people and their goods within and outside Nigeria. If past experience is any indication, the 'companies and individuals' who have shown interest in her project are all cronies of the Minister or President Jonathan. I think I can hear savvy Nigerians exclaim 'here we go again'.

[porridge]

Agreed, not long in the post she already has an awesome reputation for creating unnecessary wahala! National flag carriers have always ended up as enormous money pits, so there won't be much going around to siphon off! I guess they will do what Grace M does and use it the airline take the faithful to Dubai etc. for shopping trips!:ugh:

[Zebiak]

I try to follow aviation in Nigeria, especially the activities of Arik and AN. Could someone (maybe a "savvy Nigerian") please summarize the state of affairs of the Nigerian carriers?

[Farting Sloth]

"Imminent fraud in Nigeria?"

That is the understatement of the year. There is no such thing as "Imminent fraud" in Nigeria. There has always been fraud in Nigeria, and probably always will be. Seems to be a national sport there!:ok:

[SalesConsult]

Flareout I dont get your thinking! How does fraud come into the issue you are trying to raise?
If the minister feels having a national airline is way to go, is that fraud?
If the minister further thinks that such a carrier should be established on PPP model arrangement, how can that be bad let alone fraudulent?
Let us hear her first before making conclusion of fraud that also stokes up the thinking that everything in Nigeria is fraud.

[flareout BC]

SalesConsult, perhaps I'm a little jaded, and sometimes forget to give these people a chance. But if I'm not mistaking, you reside in the UK. Try my neighborhood in Benin City, where there's no power supply, and occasionally, very occasionally, they remember us, and then bring ridiculous bills at the end of the month, and throw in the gutters the local government calls roads (in OFFICIAL records they are tarred; macadamized) and you won't be in a hurry to give them a chance at all. One of the reasons why the Police ignores frantic calls spurred by armed attacks by robbers is the bad roads (we almost believe them now).

Zebiak, info comes to me late and my residence is far from Lagos (there's no electricity supply, although the house is wired, there is a meter and the power company NEVER fails to bring laughable bills every month), so I'm always behind on the news, but try nigerianaviation.wordpress.com. Their updates are delayed these days but altogether, they're doing a nice job.

Zebiak, new developments seem to be the flood of European operators cashing in on the booming charter market. Our zillionaires can't stand the awful roads they created, and new entrants are meeting the need for charters to them and private and executive customers. South Africa's NAC, which administers Hawkers in Africa for its US makers, has sold/and/or is maintaining at least 17 Hawker 800/900s in our country. Insiders insist some of the Hawker outfits are fronts for air taxi ops, by the way. There is a Prime Air Service with fancy equipment, a certain Barbedos Group, another one whose machines spot the Cirrus Airline logo (Cirrus is either German or Austrian; VistaJet's Challengers come here and spend weeks on end), and numerous new players. You'll find EMB 600s, Lear 45s, Challenger 600 and 300 galore, Dornier 328 prop and Jets, the works, they are here. Private equipment is even more exotic (all heavy iron except BBJ and ACJ present). And make no mistake, the registration, technical and flight crews of these machines are South African or European.

Local operators: Chanchangi operates a wet leased B373-300, down from 5 B727-200s and 3 737-200s four years ago. IRS has grown to6 destinations and 5 Fokker F100s, some of which have LED lighting in the cabins with electronic flight bags for the cockpits soon. Chanchangi's undoing is said to be disagreements between the sons of the founder, who held management positions but were born by different mothers. The IRS family is polygamous too, but they didn't let that stand in the way of business. Taraba State set up an airline; their sole EMB 145 should be delivered about now. Undisputed leader in terms of pax flown, destinations, fleet or any index is Arik. Its fleet is far and away the most diverse and modern, although the widebodies are wet-leased, flown by Europeans. Aero is still perceived to be the safest operation. Air Nigeria has potential, if they can activate their London licence/route. Air Nigeria's B733/734 fleet is about a dozen now. A niche player run on common sense and vision is Overland, whose CEO is an active pilot. Fleet is 3 Beech 1900D and 3 ATR 42-320s. Scheduled routes are Lag-Asaba-Abuja. They once tried Katsina, but pulled out due to mounting losses. Kwara's ex Governor Saraki conceptualized and birthed a flying school; it's functional, at Ilorin. Dana is owned by the Indian importers of Kia vehicles, and flies 4 MD 82/83s. It's accused of racism, and you can guess who the victims are. Take care, God bless.

[porridge]

flareout BC - you are correct in every sense. I disagree with you on one thing tho' for road to be bad it at least must have some semblance of being one! Where I am we have the governors "Operation - No Potholes", when they get so bad they close the road. Simple and effective you must agree?
May you have as a wahala free week-end as is Nigerianly possible :ok:

[Zebiak]

flarehout, I deeply appreciate your time and the analysis provided. What are your thoughts of Sir Joseph and the outlook for Arik?

[flareout BC]

I think Sir Joseph's a poor manager, besides bullying his staff and paying salaries late. For instance, the London:= route is an ego trip, let's face it. BA and Virgin are giving Arik a hiding, which may explain why Air Nigeria and even First Nation (formerly Bellview), havent joined the fray:\ .

By contrast, Arik's outlook is bright. You've got to hear the other Deep Pockets mentioned as shareholders and you'll know what I mean. It's huge local debts won't cause the local banks any trouble either: it is said that if the Federal Government allowed its debts to cripple Arik or anything like that, we'd have a major crisis across several banks and this government is not about to accept that, read, it would step in. Its equipment, routes and government patronage also, mean, overall, that its outlook is good.

[DRPAM007]

The Nigerian aviation industry is underestimating the nature of the competition it will face from foreign carriers determined to carve a niche in the 4.4% average gdp growth estimated for the country in the next 40 years. Already the country presents the second highest rpk ( revenue passenger Kilometre) in the continent. Traffic between Africa and the EU has consistently accounted for over 60% of all aviation activity on the African continent. Foreign carriers currently dominate the international traffic arena, this now confines the local industry to the national and regional traffic, but that is also about to change unless both African regulators and the airlines recognise the impending threat. At the moment only Arik services any international routes outside Africa and consistently at a horrible loss even the Lagos-London route; one of the most profitable routes on earth.
On the continental level, there are certain affiliations that at best weakens any chance of a multilateral action by African airlines and governments to guard against losing strategic control of their aviation sectors.

Firstly, North African carriers have a stronger bond and a greater sense of loyalty with the Middle East (MENA) than with Sub-Saharan Africa. Emirates is one of the strongest competitors to the African carriers.
Secondly, most of the strong carriers in Africa are government owned who also enjoy the benefits of being IATA members. However, within IATA itself African carriers are small potatoes; accounting for less than 3 percent of it's activities and earnings.
Thirdly, though both camps above (MENA, and government owned carriers) are also members of AFRAA ( African Airlines association), it serves only as a backup plan for them, as AFRAA has only 40 members out of the over 190 registered airlines in Africa.
Fourthly, the ideal platform for a renaissance of African aviation; AFCAC (African civil aviation commission) an arm of the African Union (AU) has not been able to provide the leadership and assert it's legitimacy in recent events.
Finally, ICAO the ever present enduring arm of the UN (United Nations) lacks both the funding and the legitimacy to engender the high level political co-ordination needed to harness the synergy within the 54 African member states.

Unless, the African Ministers of Transport/ Aviation are able to get a grip on reality and move swiftly, I predict a more vindictive blacklist from the EU will soon emerge. Followed by increased co-operation among the foreign carriers (based on their IATA alliance memberships); a sort of re-partitioning of African aviation market, which will leave Africa's strong carriers most of which are IATA members ( SAA, Ethiopian, Kenya, Egytair, Royal air Maroc, Tunisair) in a quandary.

On the Nigerian scene, the local airlines are under the illusion that if they can undermine each other, they'll eliminate the competition, increase market share and control the (local) market. Not knowing that this will only weaken the entire group and make it easier for the real competition (coming soon) to waltz in without encountering any real resistance. The regulator (NCAA) has been deluded in thinking that by providing weak economic regulation, it is giving the airlines some flexibility, respite and maybe a lifeline, but it is actually delivering them hang-man's noose. News of their poor credit history and financial insolvency(tolerated by the NCAA) spreads beyond national borders and jeopardises the reputation of the whole group (Country)international circles. This becomes a real hindrance to taking advantage of the Cape Town convention and securing favourable lease and insurance conditions. It breeds complacency among the operators and leaves them operating without robust business plans or financial discipline. The end result is the obvious low life expectancy and high failure rates of airlines in the Country.
The major threat will present itself in the guise of a private-public-partnership where the funds and technical partner will originate from foreign entities ( with the view that it is required to secure favourable insurance premiums, maintenance contracts and unquestionable training standards), if the management control and MOU are not scrupulously checked against violating bi-laterals, cabotage or both, these new regional entrants will consummate strong commercial agreements with European and/or Middle East carriers (who currently have 70% share of the international traffic) to provide feeder- traffic. The local populace will be lured with new improved loyalty programmes. The regional market that is currently in the hands of the local industry will become dominated by external majors through this new unguarded regional PPP.

If the NCAA and the Nigerian government ( Aviation Ministry) have any inkling of perception they should:

1.Immediately commence the required level of economic regulation and shut any operators that are not able to operate within the financial guidelines.

2. Give the local industry 90 days to come up with sensible strategic consolidation options that will see the Nigerian aviation industry emerg with not more than 3 to 5 organised airlines.

3. Revisit and assess the need for the numerous private jets lurking around the country, their benefits or otherwise to the local industry.

Sometimes, it is easily forgotten that Kenya Airways is still 26% owned by KLM and Comair in South Africa is a Franchise of British airways. Then you will not wonder why the profits are repatriated outside the African continent rather than invested in the much needed infrastructure. A word of caution about our dear Chinese investors; they know how to play hard-ball even when they are smiling.
In the current economic environment, monopoly of the Africa's international traffic is not enough. this time, it'll start "Easy", but it's going to be regional and local, with a slight of hand. Watch this space.