The Need For A National Carrier
Nigerians have long yearned for the re-establishment of a national carrier that will fly the nation’s flag around Nigeria, and to other countries of the world.
This aspiration is strategic as it relates to our national pride and identity.
Aviation industry stakeholders estimate that by not having a national carrier, Nigeria may have suffered a huge loss of over $2 billion through capital flight over the years.
This is the money that foreign airlines operating in Nigeria repatriate to their home countries.
It is in Nigeria’s national interest to establish a national carrier. Establishing a national carrier would lead to massive job creation, increase in foreign direct investment, continued development of the aviation sector, increased competition as against monopolistic practices by some operators to the disadvantage of air travellers, foreign exchange earnings by the government, setting up of aircraft maintenance, repair and overhaul (MRO) facilities in Nigeria, training opportunities for local aviation industry staff, effective utilisation of all the airport facilities in Nigeria, and full utilisation of the Bilateral Air Service Agreements (BASA) that Nigeria has signed.
It is as a result of all these and other reasons that sometime in October 2016, the Government approved the Federal Ministry of Aviation’s ‘Aviation Road Map Projects’.
The listed projects included amongst other projects the establishment and operation of a national carrier.
The national carrier was structured to be a joint venture between the Federal Government of Nigeria and the private sector.
The national carrier is to develop and operate flight operations on domestic, regional and international routes, based on commercial viability of the selected routes and will in no way affect the fortunes of the existing airlines.
Following the approval, the following activities were carried out:
(1) Appointment of Transaction Advisers
In 2017, the Federal Ministry of Aviation appointed a consortium comprising the Airline Management Group Limited, United Kingdom, Tianaero FZE and Avia Solutions as Transaction Advisers/Consultants to develop an Outline Business Case (OBC), assist with the procurement of a private partner and subsequently prepare a Full Business Case in line with the Infrastructure Concession and Regulatory Commission (ICRC)’s regulations.
(2) Development and Approval of the Outline Business Case
A detailed Outline Business Case (OBC) demonstrating the economic, technical and financial viability of the project (Nigeria Air) was prepared by the Transaction Advisers/Consultants.
The business case report presented the results of the economic, technical and financial analyses conducted, as well as the suitable structure for the project.
The Outline Business Case (OBC) was submitted to the Infrastructure Concession and Regulatory Commission (ICRC) by the Ministry of Aviation.
Following ICRC’s review, a certificate of compliance was issued. The Federal Executive Council (FEC) approval for the Outline Business Case (OBC) was granted on November 24, 2021. Subsequently, Mr. President approved a One – Stage Procurement Phase (which combines the Pre-qualification and Request for Proposal requirements) to expedite the procurement process.
(3) Request for Proposals (RFP)
The Request for Proposals’ (RFP) advertisement for the establishment of a National Carrier for Nigeria was published in both local and international newspapers/magazines on the 10th of March 2022.
The RFP package and Project Information Memorandum (PIM) inviting potential bidders to submit a Technical and Financial Proposal was made available to prospective bidders on the same day via the website – https://www.nigerianaviationppprojects.com.
The deadline for the submission of the RFP bids was scheduled for 20th April 2022. The deadline was later extended to the 10th of June 2022 on the request of some investors, to allow them enough time to submit a responsive bid. The bid submission closed on the 10th of June 2022.
The bid opening was conducted in the presence of officials from the Federal Ministry of Aviation, Infrastructure Concession Regulatory Commission (ICRC) and the Transaction Adviser.
(4) Evaluation Of Request For Proposal
In accordance with ICRC’s guidelines, an Evaluation Committee was constituted comprising of Representatives from various Ministries, Departments and Agencies (MDAs) namely: Federal Ministry of Aviation (FMA), Federal Airport Authority of Nigeria (FAAN), Infrastructure Concession and Regulatory Commission (ICRC), Federal Ministry of Finance, Budget and National Planning (FMFBNP) and the Transaction Advisers, to evaluate the Technical and Financial proposal received.
The evaluation of the technical proposal was held between 20th to 21st July, 2022, while the financial proposal was opened and evaluated on the 2nd of August 2022. With a total score of 86.7%, the Ethiopian Airlines Group Consortium’s proposal was considered responsive by the Evaluation Team having met all the requirements of the RFP Package.
The bid by Ethiopian Airlines Group Consortium scored 86.7% and was deemed successful having exceeded the pass mark of 70%, therefore, the Evaluation Team declared the Ethiopian Airlines Group Consortium as the Preferred Bidder for the project. This is in line with ICRC’s guidelines for PPP Procurement.
(5) Due Diligence and Negotiations
Following the successful emergence of Ethiopian Airlines Group Consortium as the Preferred Bidder, it was necessary to conduct due diligence on the Preferred Bidder in line with ICRC’s guidelines to ascertain its technical, financial and managerial capacity to undertake the National Carrier project. The Due Diligence was conducted between September 12 – 14, 2022.
The Due Diligence Team concluded that Ethiopian Airlines Group Consortium have the required technical, financial and managerial capacity to successfully deliver the project. Thereafter, negotiations were held on the 28th of October 2022 with representatives from the relevant MDAs, Ethiopian Airlines Group Consortium and Transaction Advisers in attendance.
(6) Development Of Full Business Case and Draft Agreement
The Outline Business Case (OBC) was then updated with the outcomes of the Preferred Bidders Business Plan and the negotiations with the Consortium to develop a Full Business Case.
The draft agreement was thereafter updated with the terms and conditions agreed during the negotiations. Subsequently Mr President granted anticipatory approval to the Ministry of Aviation for the Full Business Case and subsequently approved that the Ministry approach Ministry of Justice for review and approval of the Establishment and Operations Agreement and for Nigeria to conclude all activities required for the grant of an AOC.
(7) Airline Operators Of Nigeria’s (AON) Case Against Ministry Of Aviation
Sometime in November 2022, the Airline Operators of Nigeria (AON) approached a Federal High Court in Lagos to obtain an interim injunction to prevent the Ministry of Aviation from progressing with the launch of the new national carrier.
The AON is of the opinion that the National Carrier will stifle the growth of domestic airlines by taking control of the various domestic, regional and international routes. In addition, AON claimed that Ethiopian Airlines will have undue advantage and that the procurement process was not right.
The aim of establishing a national carrier is to improve service delivery and promote competition that will offer best value to Nigerian air travellers, promote national image and prestige, as well as engender multiplier effects on the economy.
Nigeria Air has been structured based on the results of the various analyses conducted and in line with extant international laws with respect to composition of a flag bearer.
The project was properly advertised in local and international publications and some of the members of AON participated in the RFP process but did not submit a bid. The procurement process was in line with ICRC’s guidelines for Public Private Partnership in Nigeria.
(8) Unveiling Of the National Carrier Aircraft
The Ministry of Aviation unveiled the first aircraft for Nigeria Air, the country’s National Carrier at the Nnamdi Azikiwe International Airport Abuja on Friday, 26th of May 2023.
The unveiling is a fulfilment of the Government’s promise to establish a National Carrier to replace Nigeria Airways, and an important part of the Aviation roadmap that was approved in 2016, which has been diligently pursued by the Ministry of Aviation.
The first aircraft was part of the contribution of the Strategic Equity Partner Ethiopian Airline Group towards establishing Nigeria Air, it is common practice in Aviation for start up airlines to lease aircraft to commence operations and as they achieve financial stability acquire their own aircraft.
To establish the National Carrier, the Ministry of Aviation followed all existing extant laws that guide Public Private Partnerships in Nigeria and international best practices.
At the end of the process, Ethiopian Airlines Consortium was declared the preferred bidder, with Ethiopian Airline Consortium having 49% shareholding in the joint venture, Nigerian Institutional investors have 46% while the Federal Government of Nigeria has 5% shareholding in the new National Carrier with all shareholders contributing cash or its equivalent for their shares except FGN whose equity contribution will be by services already provided and to be provided.
Ethiopian Airlines has 77 years of successful global airline experience. They are by far the largest carrier in Africa and are amongst the 30 largest airlines in the world. They grossed $6 billion in revenue, almost $1 billion in profits in 2022, and have over 140 modern aircrafts in their fleet. Ethiopian Airlines has serviced Nigerian passengers uninterrupted since the country’s independence.
Nigeria Air at commencement of operations will operate both domestic and international routes with modern Boeing 737 Max and 787 aircraft, thus giving Nigerians and other passengers the best in terms of quality service and on-time departures.
Nigeria Air will not only meet international standards, but will provide competitive alternative to international passengers, and also domestic passengers that have had to contend with poor quality service, incessant delays and cancellations of booked flights over the years.
When fully operational, Nigeria Air will have in its fleet over 30 modern aircraft consisting of Boeing 737 MAXs for regional and local flights and 787 Dreamliner wide-bodies for long haul international flights to New York, London, Dubai, China and many other destinations.
An aviation academy will be setup in Abuja, Nigeria, and there will be hundreds of well-paying job opportunities for Nigerians including pilots, cabin crew, engineers, technicians and many other staff. A modern Maintenance, Repair and Overhaul facility will be established in Abuja. Revenue projections for Nigeria Air within 5 years is over US$1.0 billion.
(9) Moving Forward
The Ministry of Aviation and Nigeria Air sought legal advice and the Ministry has been briefed that by unveiling Nigeria Air aircraft, the Ministry is not in contempt of court.
Nigeria Air has existing approvals by the Federal Government to seek leases to commence operations pending when it acquires its own aircraft.
The Nigerian Civil Aviation Authority (NCAA) has followed its regulations and processes diligently in processing both the Nigeria Air Transport Licence and Air Operators Certificate (AOC).
Nigeria Air has met and surpassed all the requirements. The AOC process is ongoing and there is no intention not to comply with any of the requirements for the granting of an AOC.
Nigeria Air is an addition to other airlines operating in Nigeria. It was not established to create a monopoly but to improve the standards in the Nigerian Aviation industry, create jobs for Nigerians and reduce capital flight that currently occurs due to most international routes being operated by foreign carriers.
Nigeria Air is for Nigerians and other passengers. We must all come together and protect it alongside other airlines.
It is a source of national pride for all of us that we can now do what other countries such as Ethiopia, South Africa, Kenya, Rwanda etc have done over the years, which is to fly their country’s flag to major international destinations, offering Nigerians and other passengers cheaper and reliable flights.
Nigeria Air presents opportunities for Nigeria to further improve Nigerian passengers air travel experience, promote our national image and prestige, grow the aviation industry’s contribution to national gross domestic product (GDP), as well as improve the attractiveness of the country as an aviation hub, amongst others.
The project is the cornerstone of the aviation roadmap projects because it will provide markets for aircraft leasing, aircraft maintenance, repair and overhaul (MRO), facility and other aviation – related businesses. It will also provide employment opportunities for Nigerians in line with the mandate by the federal government of Nigeria (FGN).
Having successfully conducted Nigeria Air unveiling on Friday, 26th May, 2023, these are the planned next steps by Nigeria Air:
1.Continuation of the AOC process in line with extant laws.
2.Announcement in key national newspapers of job openings for pilots, engineers, cabin crew and other positions. The vacancy advertisements will also be posted on Nigeria Air website and social media platforms.
3.Projected first commercial passenger flight by Nigeria Air is planned for 3rd Quarter of 2023
Email: email@example.com | Website: www.flynigeriaair.world
Phone Numbers| +2349155878155 | +2347031019197
Corporate Office| Nigeria Air, Operational Control Centre, Nnamdi Azikiwe International Airport, Abuja.