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Ethiopian Airlines’ selection by the FG as its national carrier has received mixed reviews

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Industry players have responded differently to the allegation that the federal government is in talks with Ethiopian Airlines, the continent’s most profitable airline, as their choice of main investor and technical partner for the prospective national carrier, Nigeria Air.

In Addis Abeba last week, a team from the Ministry of Aviation discussed Ethiopian Airlines’ selection as the national carrier’s primary investor and the fact that it was the only airline to submit a bid in response to the Ministry’s call for bidders.

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THISDAY has learned that the Ministry of Aviation has begun negotiations with Ethiopian Airlines after waiting for a while and seeing no other bidders express interest.

From the Ethiopian side, it was discovered that Mesfin Tasew, CEO of Ethiopian Airlines, revealed that Ethiopian took part in a bid filed by the Nigerian government, which invited airlines interested in working with the government to develop a new national carrier.

The Ministry of Aviation selected Ethiopian as a preferred strategic partner after considering the proposal. Tasew informed the Addis Ababa-based local media that “they have written a letter to us telling us of their decision.”

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Additionally, THISDAY verified that on Monday, September 12, 2022, a delegation from the Nigerian government, led by the Minister of Aviation, Mr. HadiSirika, traveled to Addis Abeba and met with the Ethiopian Airlines Group executive management team.

Although the minister who recently promised to engage the media on the matter noted that an agreement had not yet been signed between the Ministry of Aviation and Ethiopian Airlines for the start of the partnership, negotiations have been ongoing for the creation of the national carrier.

Nigerian officials claim that the private sector will be the driving force behind the proposed national airline, Nigeria Air. While Ethiopian would hold 49% of the airline and Nigerian investors would own 46% of it, the Nigerian government would keep 5% of the company. The Nigerian government expects the private sector to contribute $250 million.

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Tasew was cited as saying, “We plan to have some share and cooperate with them to develop a viable national airline.”

The largest aviation company in Africa, Ethiopian Airlines, is expanding by 20–25% annually. One of the most lucrative airlines in the world is this one. The national flag carrier generated a net profit of $937 million for the fiscal year 2021–2022. The airline generated $5 billion dollars revenue, a whopping 79 per cent growth from the previous year. Last April, the airline celebrated its 76th birthday.

However, a lot of reactions have followed the announced partnership. While many industry stakeholders applauded the plan, others criticised it, saying that Nigeria should have partnered with a carrier outside Africa. The critics talked about Nigerian pride and how Ethiopian Airlines may not provide the support Nigeria Air would need.

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Some critics also said that instead of giving Ethiopian 49 percent stake, there could have been better partnership arrangement that would benefit Nigeria more. The Minister of Aviation, Senator Sirika is expected to speak on the deal to affirm whether government had decided to continue with Ethiopian Airlines.

Reacting to the planned partnership, the Chief Executive Officer, 7Star Global Hangar Limited, Isaac Balami, was reported to have stressed the importance of the national carrier.

Balami reportedly stated that for aviation to deepen its root in Nigeria and develop further, there was the need to have a national carrier, which would help in developing technical personnel through the training of pilots, engineers, marshallers and others; just as it was during the time of the defunct Nigeria Airways Limited (NAL).

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“There is no doubt at all on the importance of having a national carrier. Whether the architecture or the variables are components that have to do with a flag carrier, it doesn’t matter.

British Airways today is a national carrier but also a flag carrier. It is majority privately owned. American Airlines is privately owned, Delta and United Airlines in the United States are all privately owned but the issue is that the government over the years have put structures in place to ensure these airlines compete and survive.”

He emphasised that the national carrier was another window to achieving private sector participation in aviation, as well as the development of aircraft maintenance facilities and flight simulators, stressing that having a national carrier is beyond just flying an aircraft, but needs aircraft maintenance and training facilities.

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Balami said it was not enough to have aviation colleges in Zaria but having advanced courses and simulators, adding that there should be a hybrid model of private and government participation, which he described as the best bet for the development of the aviation industry, saying that all the variables must be looked into to enable the sector to survive and support other players in the industry.

But industry consultant, Marketing and PR Strategist, Sindy Forster, observed that the national carrier without a change in Nigerian Civil Aviation Authority (NCAA) rules would not be able to attempt to gain optimal benefits from BASA (Bilateral Air Service Agreement) for two years.

“We already have flag carriers who need support with BASA, what support have they been given? What BASA support will existing airlines continue to receive? An airline alone cannot take full advantage of SAATM (Single Air Transport Market), lots will be missing before SAATM can be fully utilised.

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What ‘competition’ when they are selectively supporting one private foreign airline over the privately owned domestic airlines. This is unfair competition, and market distortion, having three additional aircraft when we may lose more aircraft from unsupported airlines that will not lead to competitive fares

“Wet lease does not generate Nigerian employment and there is a risk that the Nigerian MRO may never see the light of day. Ethiopian will most likely want to use their MRO as they have with every other JV they have entered into. They use their engineers, etc. Will they use existing ground handling companies or provide their own?” she queried.

She also observed that so far the “national carrier” has been 100 per cent driven by government officials and contractors paid to do what they are told.

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“Why will the government be focused on creating an enabling environment for one airline rather than all? What support will existing airlines receive? How will they compete for BASA routes? Why provide fiscal incentives for a private airline you only own 5 per cent of? They should buy 5 per cent of all for it to be a level playing field,” she added.

 

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