NIGERIA: State-Owned Airline At A Time Like This

The recent expansion of fleet by Ibom Air, a state-owned airline, has raised a few brows in a clime where many private operators are lamenting and sacking. Ibom Air, owned and sponsored by Akwa Ibom State government, received its fifth aircraft from Canada on August 1. That was about the time that airline majors in Nigeria were lamenting and sacking. Air Peace, for instance, sacked about 70 of its pilots in one fell swoop!

Currently, the aviation industry is in dire straits with the major blame going to the Covid19 pandemic. Even before then, many Nigeria airline operators had accused their foreign counterparts of benefiting from trade imbalances. For instance, the Bilateral Air Service Agreement (BASA) and the Open Skies Agreement (OSA) were said to be giving foreign airlines the opportunity to deplete Nigeria’s economy. With all of these, many then wonder if Ibom Air, which started operation just in June last year, sees what others can’t yet see. Perhaps!

The airline, so far, with five 90-seat Bombardier CRJ900, prides itself as the only one with “the lowest average fleet age amongst Nigeria’s airlines.” Its older aircraft is six years old, while the lowest for others is 10. Talk of a marketing edge! Undeterred by the economic down-turn occasioned by the pandemic, the airline sees itself as a continental leader in the next three years. The long-term strategy is for Uyo to offer one-stop connections from coastal Central African states to Lagos, Abuja and other points in West Africa.

George Uriesi, the Chief Operating Officer, told Martin Rivers of Forbes recently that they would soon add a larger aircraft type to drive expansion across West Africa and Central Africa – and “maybe up to East Africa eventually”. Countries like Equatorial Guinea, Gabon, Cameroon and São Tomé and Príncipe are expected to benefit more, since they have poor connectivity. Additional seven aircraft are soon expected to bring the tally to 10. “This fleet strategy is in line with our vision to be a world-class African regional airline,” it says.

Yet, the questions remain: What’s in this for the state and the people? Why is it that while other states and nations are shying away from airline business, Akwa Ibom is going neck deep? There are more questions, indeed. But the answers all seem to be in daring the odds. Most discoveries and technologies enjoyed in the world today emerged from the can-do spirit of man. All it takes is commitment, dedication and the will to dare the odds. Like they say, the proof of the pudding is in the eating. The fact that other states and nations are abandoning airline business does not mean it cannot be done.

Yes, big-names like Lufthansa, Turkish Airlines, Air Canada, etc. have moved to the private sector. Yet, as noted by Joanna Bailey of “Simply Flying,” many airlines are still government-run, especially in the European market. For instance, the Portuguese maintains its interest in Air Portugal; the Serbian government wants Etihad’s shares of Air Serbia, etc. Those who argue against state-owned airline point at the tendency towards politicization of operations; inefficiency; lack of motivation, etc. The government may politicize or interfere in decisions; the workers may be lackadaisical since they will get paid even with poor productivity; government may not easily invest in new technology to enhance productivity. Some even add that: “State businesses tend to do things the same way they always have, and often struggle to sack surplus workers”.

However, not all instances are the same. Where one state fails, another may succeed. A state which adequately learns from the mistakes of a failed other may do well in similar endeavor. As noted by Bailey, “Thinking about these points makes it sound like there is nothing going for state-owned airlines at all. However, in some situations, it works well.” He says there are plenty of pros and cons on the either sides of government or private ownership. “While there seems to be no hard and fast rule on whether it will work or not, there are case studies on both sides of the fences”. While some private airlines are doing well globally, others like Malaysia Airlines’ experience of privatization has been mixed, with the carrier returning eventually to the government in 2000. Baliey recalls that Aerolineas Argentinas, in Latin America, was once sold to a consortium in 1990 but entered bankruptcy protection in 2001. When it came out of that, the government took back full control in 2008.

For Ibom Air, the hope of its survival is in efficient management. So far, the airline seems to be running smoothly. The management appears top shape and the government deserves applause for thinking towards a post-crisis boom. For now, the immediate fruits for the state and the people  are glaring in job opportunities as well as economic returns. While many private airlines are tottering and lamenting of a suffocating environment, the benefit Ibom Air enjoys is that in its worst moment, government can inject funds to revive the emerging cash-cow! Alitalia and South African Airways routinely enjoy such injections, though I argue for an effective management that would not be expecting a routine revival from the state.

Granted, the governor’s stint in the business and financial industry probably gave him the business focus. And, he deserves commendation for daring to “gamble” with the people’s money, as some argued when he ventured. Now, what is expected of him is not just the investment. Akwa Ibom people now expect Governor Emmanuel to nurture the airline to maturity, as an enduring legacy. He should allow it to breath, with less state interferences. The governor should be conscious that, as argued by Bailey: “An airline that is owned by the government but allowed to operate as an efficient, profit-focused entity can do very well, but those that are too encumbered by politics are unlikely to succeed”.

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