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HomeNewsAfricaBy relaunching Nigeria Air, is Abuja playing against its own camp?

By relaunching Nigeria Air, is Abuja playing against its own camp?

On 13 July, a Boeing 777 belonging to the private Nigerian airline Air Peace flew to Guangzhou with 240 passengers on board. The Chinese destination, which is now offered on a weekly basis, brings the number of long-haul routes operated by the airline to three, along with Dubai and Johannesburg. With more than 30 aircraft, Air Peace also serves 20 domestic routes and seven regional routes.

After China will come India and Israel, says Oluwatoyin Olajide, director of operations of the company founded just eight years ago, which also plans to serve Malabo in Equatorial Guinea and Kinshasa in DRC.

But while the company is accelerating, challenged by new entrants such as Ibom Air (2019) and Green Africa Airways (2021), the Nigerian government is working to revive the defunct national airline, Nigeria Air.

Aviation Minister Hadi Sirika said at the end of July that the Federal Executive Council (FEC) had authorised the lease of three aircraft for this purpose, first on domestic flights, “then international, regional and intercontinental.”

Bad timing

The announcement is likely to draw criticism, given that Nigeria Air has struggled to manage its finances in the past, many private Nigerian airlines already have large fleets, the country is struggling with growing debt and fuel prices are soaring.

“The timing of the launch of a national airline is particularly bad,” says Sindy Foster, senior partner at Avaero Capital Partners, who is concerned that a new state-backed airline could negatively affect companies already operating in the country. “Wouldn’t the government divert its financial support to the carrier in which it has a stake [of five per cent, according to Sirika]?” she asks.

Until now, Nigerian airlines have been able to count on Abuja’s support, be it for the launch of new routes, the acquisition of aircraft or the operation of charter flights to various countries around the world, says Stanley Olisa, head of communications for Air Peace.

Fuel and currency

“We are being told that we have a company with three planes. But instead of building capacity, there is every reason to fear that this airline will cause the withdrawal of 10 aircraft from the Nigerian market, dealing a fatal blow to other companies, three of which are currently on the brink,” says Foster, citing the temporary (voluntary) suspension of scheduled passenger services by Aero Contractors, Nigeria’s oldest airline, and the regulatory suspension of Dana Air.

Shortages and high fuel costs have led to higher travel costs, “which will result in lower passenger numbers”, she says. In February, the country’s airlines, under the auspices of the Airline Operators of Nigeria (AON), doubled airfares to cope with the increase in the price of aviation fuel from 200 Naira per litre in December 2021 to 800 Naira currently (from €0.43 to €1.88 per litre).

As for the availability of foreign exchange, this is a recurrent problem in Nigeria for the aviation industry, which pays a large part of its expenses in dollars (fuel, aircraft, etc.). In August last year, airlines, through the International Air Transport Association (Iata), complained of difficulties in repatriating more than $143m in revenue earned in Nigeria.

A few days ago, Emirates announced that it would reduce its flights between Dubai and Nigeria from 11 to seven weekly rotations from 15 August, due to its inability to repatriate some $85m.

“It is as if the Central Bank of Nigeria is working against the industry’s interests,” says Foster, who warns that these problems, “if not resolved, will cripple the Nigerian aviation sector,” including the national airline. “Changing the players doesn’t change the game,” she concludes.

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