Minister says new national airline won’t kill domestic airlines, mute on reasons
…Notes that a failure will become a threat to us
The Minister of State for Aviation, Senator Hadi Sirika has assured that the emerging new national air carrier, billed to be unveiled at Farnborough International Public Airshow on July 18, 2018 in London, will not kill domestic airlines operating in the country.
However, he was silent on why the national carrier expected to amass over 30 aircrafts in few years of operations on government deep pocket, will not stifle struggling private airlines in Nigeria.
The minister was quick to note that a failure of the scheme “will become a threat to us”.
Sirika spoke while receiving the Certificate of Compliance to proceed with the procurement process from the Director General, Infrastructure Concession Regulatory Commission (ICRC), Engineer Chidi Izuwah.
The proposed airline will gulp $8.8million preliminary cost and $300 million as take-off cost, claiming that the federal government is not fully funding the airline as it has adopted midwifing it via the option of a Public Private partnership.
Though government is yet to make public, the set of private sector investors behind the push for the carrier, Sirika disclosed that the first set of five airplanes for the airliner will arrive on 19 December.
Believing that the government will make profit in three years, he revealed that “We will make the investments and follow the business plan through private sector management.
“We intend to get a 30 aircraft market in five years. But we will begin with five aircraft on the day of launch. It was not clear whether an order has been made for the aircraft, but the minister in May met a team from Boeing in Abuja.
“At Farnborough International Public Airshow coming up on July 18, 2018 in London, we will unveil the name, logo, colour scheme, the structure and the type of airplane about the national carrier.
While disclosing that “We will also place the order for the aircraft at the Farnborough International Public Airshow,” he explained that the government would step in to cover the funding gap at the onset and ease out thereafter.
Experts are however worried when the Minister said that the government would not get involved in the management of the national carrier without making the core private sector investors public.
Izuwah had while presenting the Certificate of Compliance, averred that the feat was an official green light to proceed with the procurement process ahead of July 18 order placement in London.
ICRC boss explained that what government is doing is to jumpstart the airline as the amount of equity the partners would hold would determine government contribution.
He said after the take off, “The rest of the investment will be equity injection which will happen in tranches because you do not need all the monies at once. External capital injection also depends on the profitability of the airline.
“Though, you need that initial government financial to make it take off, but what is important is that the national carrier will be entirely private sector controlled.
Izuwah averred that “There will be zero government interference,” stressing that “if that happens, it invalidates the certificate and the entire process”.
According to him, “This is a bankable business, and the government will get a strategic partner who will invest in the national carrier and when we get through the bidding process, more facts will emerge. “The government will have to spend the pre-start up cost like the brand name, the office and other start up,” ICRC stated.
