With no signature project to his name and ignorant of the cost and technical implications, Gov Udom Emmanuel is setting up an airline that may not fly
By Mfon James
Gov Udom Emmanuel is on the home stretch of his four-year tenure. The reality has suddenly hit him that, save for a handful of barely visible cottage factories, he has virtually nothing to present to Akwaibomites. Time flies; and elections are approaching rapidly.
But Gov Emmanuel and his team were too focused on inanities and undermining the previous government to realise this. While they slumbered, the disappointment and frustrations of Akwaibomites reached a crescendo. But the frustrations were matched only by those of Akwa Ibom PDP chieftains and Gov Emmanuel’s camp. They have confided that Gov Emmanuel was at sea, confused about what to sell to Akwaibomites, having frittered away four precious years.
So it was imperative to come up with something — a project that would secure the governor’s legacy, skywrite his name for the state, nay the world, to see. Of all the ideas his team could come up with, it is an airline. Yes, an airline.
The Land of Promise is launching an airline. Already, three aircraft, the Bombrdier CRJ900, have been ordered. Two of them were spotted at the facilities of aircraft maintenance specialists Avmax of Calgary, Canada, in December 2018. Apparently in the process of being delivered, they bore the titles “Ibom Air”, in bold lettering. The third machine is expected in February 2019.
It had been registered as a limited liability company, and will link Uyo, the state capital, with Lagos and Abuja, initially.
The State Commissioner for Special Duties and Aviation Development, Akan Okon, certainly did much to stir the people around the idea of an airline owned by their state. He has given all assurances of a successful venture.
While a few Akwaibomites have beamed with pride, industry experts are shaking their heads with alarm.
For some very good reasons.
As the CEO of Akwa Ibom State, Udom Emmanuel has made many costly errors on many fronts but “Ibom Air” must rank as by far his gravest mistake so far. The central reason is that the airline is not a product of genuine and contemplative economic decision to improve revenue, create jobs, boost tourism to the state and drive traffic to the Victor Attah International Airport in Uyo.
The airline venture is by no means a sincere choice; it is just an election gambit. Otherwise, it would have been easy to point at pitfalls in the crass ignorance of airline economics, choice of equipment and timing of the launch. Gov Udom and his advisers are wrong in all respects.
To start with, even though it has been announced with fanfare, Ibom Air is still a paper project. It is meeting a brick regulatory wall: Its handlers have merely expressed interest to operate to the Nigerian Civil Aviation Authority (NCAA). The apex regulator has also received a formal application. But it is stuck at the third phase of document evaluation. It involves: accommodation, personnel, insurance, fees, capitalisation and feasibility study. This would culminate in route proving flight and the issuance of the all-important Air Operators Certificate (AOC).
But is Akwa Ibom really ready to run an airline? Given the realities of air travel in Nigeria just now, should the airline business be a priority of the state government?
The airline industry worldwide is notorious for wafer thin profit margins, prohibitive costs, and huge risks. In Nigeria, these conditions are made worse by the fact that earnings are in Naira, a weak currency, whereas spending far and away is in US dollars. Aircraft, spare parts, training and retraining of air and even some ground crews, are paid for in hard currency. Insurance premiums are driven by the dollar, and jet fuel and oil have to be imported, in dollars too.
But even inputs which are local in character are expensive as well, and are the source of endless bickering between the airlines and government. They include charges for aircraft navigating the nation’s air corridors, landing them at our airports, and parking them on the tarmac. Then, there’s the back and forth between airline operators and government over import duties on aircraft spare parts, a perennial contest in which government’s policy is not clearly defined. The airlines say it’s abominable and not done in other countries, but Customs hangs on to them anyway.
Experts have openly cast doubts on the viability of Ibom Air. A retired pilot who pleaded anonymity said: “I feel sorry for the state governor. He has ventured into a wrong area with state funds. He will spend and spend and spend and won’t see any returns. By the time he realises this, it might be too late. People no longer go into the airline business for the glamour. It is a bad decision.”
An indigenous aircraft engineer added: “This may sound good for the electorates but it was ill advised. I know the governor; contrary to what the Commissioner said, the Governor will not step aside for professionals to run the airline, and that will be the beginning or its problems.”
Typically, airlines begin to turn a profit after eight years, if they are well managed. Also, minor or substantial government ownership of airline is not unheard of: Ethiopian, Lufthansa, Air France-KLM, Kenya Airways and Emirates.
If the history of the industry is anything to go by, scheduled airlines in Nigeria are more likely to collapse, than prosper. Far more local airlines have folded up than hung around for even a decade, and the deceased include Earth, IRS, Okada, Fresh Air, Kolkol, Harka, Gas Air, Fassey Royal, Savannah, Freedom, Oriental, Hamza Air, ADC, Sosoliso, Triax, Harco, EAS (NICON) Bellview, Holdtrade, Capital, Afrijet, Air Nigeria (Virgin Nigeria) Barnax, to mention just a few.
The airlines in our skies at the moment survive by the skin of their teeth, and once promising players Arik and Aero Contractors have been taken over by the Assets Management Corporation of Nigeria (AMCON) an indication that they both lost their viability. These two airlines once flew up to 20 aircraft each and were thought by some to be unassailable, but today, are on life support, and only because the Buhari Administration retrieved them from imminent bankruptcy.
At the moment, the scheduled operators Dana Air and Air Peace serve Uyo from Lagos and Abuja. Through them, the state enjoys multiple connections to the two prime markets of air travel throughout the nation, daily. They actually make the provision of flights to the same destinations by some new carrier, an unneeded surplus.
So what does Ibom Air want to do that Dana and Air Peace are not doing already? What is it bringing to the table that these two aren’t?
It’s hard to conceive of any Nigerian airline matching the premium product ADC and Bellview offered in their heyday. Then ADC and Bellview were a cut above the rest. On the whole, standards these days are the same and no airline has been able to provide a differentiation that would set their product apart. Jet travel speeds are set by convention as all makes of commercial aircraft travel at about the same speed between any two places. So, Ibom Air cannot fly faster than the ones on ground, or is it the air.
And with regard to selection of the CRJ 900 instead of the more popular Boeing 737 Classic, although the CRJ is seen as more advanced than the Boeing in some respects, its unit cost is significantly higher than the 737’s, for an offering of far fewer seats (typically 130 versus 90.) This might cancel any savings Ibom Air might make from the lower fuel burn of the CRJ 900. Again, pilots and technicians qualified and experienced on the Boeing are plentiful in this country, a legacy of defunct national carrier Nigeria Airways, which flew earlier iterations of the type. By contrast, experienced hands on the CRJ are very few in these climes.
What worries observers, both indigenous and national, is the issue of transparency, which is a troubling characteristic of the Udom Emmanuel government. There are no full disclosures on Akwa Ibom State government’s equity and ownership structure of the new venture.
Usually reliable sources have hinted that the airline was actually the idea of a former managing director of an aviation parastatal, who approached Gov Emmanuel for financial backing. “Udom Emmanuel bought into it quickly because he was desperate for something to showcase to the people,” the source said. Already, the reputed initiator is said to be unimpressed by many of the decisions taken by the governor.
With opaque ownership structure and equity, two conclusions can easily be drawn: Ibom Air could be imploded by a rancorous ownership dispute even before its maiden flight; the airline could be yet another conduit pipe to drain state funds, the bulk of which would be in foreign exchange.