For decades, Nigeria has been trying and failing to set up a national airline. Why? This is the story of a long chain of Nigerian aviation scandals.
On a sunny afternoon in December 2001, President Olusegun Obasanjo walked briskly into the State House in Abuja. Justice Obiora Nwazota and other members of the panel Obasanjo had constituted to investigate the affairs of Nigeria Airways (Nigeria’s flag carrier) stood up as protocol demanded. However, the president was not in the mood for niceties. Obasanjo had only been in government for two years and one problem he was having difficulty solving was the declining performance of the national carrier, Nigeria Airways. A year earlier, Obasanjo had set up the judicial panel and instructed Justice Nwazota to investigate Nigeria Airways and find out why its earnings continued to nosedive despite attempts at keeping it afloat.
But it was not Obasanjo’s first attempt at solving the problem. Shortly after his inauguration on 29 May 1999, Obasanjo received a report from the Jonah Jang Panel. The report indicted all 12 past chief executives of the airline for ‘gross mismanagement and stealing’. Unsatisfied with the Jang report, Obasanjo instructed Justice Nwazota to carry out another investigation and ‘look into the financial position and financial management of Nigeria Airways and to examine all books of account and records to ascertain their compliance with appropriate regulations.’ Furthermore, the panel was asked to investigate the application of funds, including budgetary allocations, special grants, loans for specific projects and proceeds from the airline’s services as well as to verify, evaluate and ascertain just how much debt the airline authentically had between 1983 and 1999.
When Obasanjo met the Nwazota Panel in December 2001, it was to assure them of his support as their investigation had already begun to ruffle a few political feathers. A court order had already been issued, restraining the panel from discharging its duty but Obasanjo vowed to get the court order removed to allow for the smooth running of the panel’s investigation.
A year later, when the Nwazota panel of inquiry submitted its report alongside a white paper, the content was damning. The report indicted 20 former Nigeria Airways staff for their role in destroying the airline and recommended they be banned for life from public office. The panel revealed that over N6 billion ($50 million) had been stolen from the airline’s account and that another N25 billion remained unaccounted for. At an aviation industry event in 2012, Obasanjo said that it was clear that Nigeria Airways had sunk into failure; that mismanagement and corruption had made the airline lose its status as one of the fastest growing airline companies in Africa. ‘When I was leaving office in 1979 as the military Head of State,’ Obasanjo said, ‘I left behind 32 aircraft but 20 years later in 1999 when I assumed office as the elected president, there was one aircraft flying.’
In September 2004, Nigeria Airways officially liquidated leaving behind a web of debts, airplanes confiscated across the world and unpaid salaries amounting to over N70 billion. Despite the recommendation of the Jonah Jang Panel’s four-volume report that those indicted be prosecuted and the embezzled funds recovered, nothing was ever done. Instead, 19 years after the death of Nigeria Airways, Nigeria seemed to be actively pursuing the revival of a national carrier through the equally controversial, Nigeria Air.
On 26 May 2023, three days before the end of the Buhari administration, Hadi Sirika, the then minister of aviation unveiled a supposed national carrier, promising that 35 more planes would be acquired in five years. It was, however, later revealed that the plane which was branded Nigeria Air during the unveiling was an Ethiopian Boeing 737-800 aircraft. Checks later revealed that the plane which was owned by Ethiopian Airlines was loaned to Nigeria for two days before it returned to its Addis Ababa-Mogadishu route.
NIGERIA AIRWAYS: THE RISE
In 1946, the then-British-owned British Overseas Airways Corporation established the West African Airways Corporation (WAAC) to provide aviation services to four colonies in West Africa: Nigeria, Ghana (then called Gold Coast), Sierra Leone and the Gambia. Nigeria was the major shareholder, holding 68 per cent of the company, followed by Ghana which controlled 29.5 per cent. Sierra Leone held two per cent while the Gambia held the rest.
By the mid-1950s, the independence of these colonies was on the horizon, and on 01 October 1958, the WAAC was formally dissolved. Nigeria inherited the company and operated it as WAAC Nigeria, establishing Nigeria’s national carrier while the other shareholders went on to set up their own airlines.
In the 1970s, Nigeria experienced an oil boom: in 1971, the country joined the Organization of Petroleum Exporting Countries and, that same year, WAAC Nigeria was rebranded as Nigeria Airways. Oil production rose from 5,000 barrels per day as of 1958, to 2.3 million barrels per day in 1974, and government revenue increased from N200,000 to N3.7 billion within the same period. In two years, state profit increased by almost 50 per cent to an all-time high of N5.3 billion in 1976. According to the World Bank, ‘public expenditure increased greatly, as did the country’s access to international capital markets.’
During the oil boom, Nigeria Airways enjoyed a kind of golden age. Nigeria acquired more planes with the country becoming the 83rd customer to acquire two Boeing 727-200s. By 1975, Nigeria Airways employed over 2,000 workers. In 1979, Nigeria signed an agreement with the Dutch airline, KLM, to trainNigeria Airways workforce and make Nigeria Airways profitable. At the time, Nigeria Airways had a fleet of 28 airlines and more than 4,000 workers. The airline, however, had last declared a profit in 1963 and was now only being sustained by government funding.
NIGERIA AIRWAYS: THE CRASH
On the last day of 1983, General Muhammadu Buhari took over Nigeria in a military coup. This coup changed the trajectory of Nigeria Airways. Over time, many of the KLM-trained staff were sacked while Air Commodore Bernard Banfa was appointed managing director of Nigeria Airways.
In the mid-1980s, global oil prices began to dwindle and by 1986, oil prices had collapsed. With Nigeria highly dependent on oil revenue (oil accounted for less than one per cent of Nigeria’s GDP in 1962 but rose to 36 per cent in 1985), Nigeria’s economy was badly affected and that was when the rot within Nigeria Airways began to unravel. In 1987 the New York Times described the airline as ‘Nigeria Airwaste’ claiming that:
For every plane owned by the company, there are 500 employees, or about twice the international average. Yet domestic air fares, set by the government, average 6 cents a mile – half the international average -and international fares are also kept artificially low.
In 1987, the International Monetary Fund urged the Nigerian government to privatize Nigeria Airways as it was increasingly becoming evident that it was being mismanaged and only being kept afloat with government spending. In 1987, Nigeria’s minister of transport and aviation, Brigadier Jerry Useni, described Nigeria Airways as a disgrace and accused employees of, ‘lateness, delays, outright cancellation of flights and a nonchalant attitude of the staff toward customers are now part of your operational guide.’ Despite 3,000 workers being sacked in 1987, the nosedive the airline was experiencing continued, with the company being accused by the BBC of mismanagement, corruption and overstaffing. Despite earning $5 million monthly as of 1987, the airline was spending about $5.175 million monthly, with salaries accounting for about $1.1 million; debts repayments to the International Merchant Bank taking $500,000; Nigerian Airport Authority Fees collecting $375,000; International Air Transport Association (IATA) receiving $1.1 million, while $2.1 million went to fuel expenses.
With Nigeria Airways owing as much as $250 million, the IATA suspended the airline from the clearing house for non-payment of debt in 1987. In early 1988, two planes were seized in Europe for non-payment of refuelling, maintenance and landing fees. The airline lost $350,000 for not completing payment for an order for six ATR-42s. Nigeria Airways continued to operate at a loss, with a key loss driver being that government ministries and parastatals used the services of the airline without paying. By 1992, three Boeing 707s were impounded in Europe for both safety reasons and unpaid debt.
In 1997, the UK Civil Aviation Authority banned Nigeria Airways from operating within the UK, citing safety concerns. In response, the Nigerian government banned the Nigeria operations of British Airways, a move that did little to save the image of Nigeria Airways. Subsequently, experienced pilots, engineers and flight crew left Nigeria in droves, further weakening the operations of Nigeria Airways. This left the airline accounting for as little as three per cent of total air travels across Nigeria by 2000 according to the Central Bank of Nigeria.
To rescue Nigeria Airways, in 1997, the government commissioned the International Finance Corporation (IFC) to assist with restructuring and privatizing the airline. Little was however achieved as four years later, the UK once again barred the airline from operating the Lagos-London route. The IFC withdrew from its advisory position in 2001, stating the unwillingness of both the company and the Nigerian government to carry out the necessary measures that would make the airline attractive to potential investors.
By May 2003, Nigeria Airways had only one airline and the number of its passengers had fallen from 2.1 million annually in 1985 to just 10,000 in the first quarter of the year according to the Nigerian government. The airline was also burdened with debt of over $528 million. In the same year, Nigeria Airways unceremoniously shut down.
And still, there was an epilogue to Nigeria Airways’ sad story: in 2004, Nigeria and the British airline, Virgin Atlantic, went into a partnership to revive an airline from the ruins of Nigeria Airways. Nigeria owned 51 per cent of Virgin Nigeria while Virgin Atlantic held the rest, and the new airline went into operation in 2005. Virgin Nigeria operated for three years before Virgin Atlantic announced that it was going to sell its 49 per cent stake. A 2012 Reuters report claimed that Virgin Atlantic had pulled out in frustration due to ‘interference by corrupt politicians and regulators.’ A year later, Virgin Nigeria was rebranded as Nigerian Eagle Airlines.
In 2010, Nigerian lawyer and businessman, Jimoh Ibrahim, acquired the majority share of the Nigerian Eagle Airlines and renamed it Air Nigeria. Two years later, however, its operation was grounded after the company fired all its staff ‘for being disloyal’ according to Business Day. On 10 September 2012, Air Nigeria ceased operations.
ETHIOPIAN AIRLINES, NIGERIAN COLOURS
Over a decade later, at the National Aviation Stakeholders forum held in Abuja on 23 March 2023, Nigeria’s minister of aviation, Hadi Sirika, proudly declared that new national airline, ‘Nigeria Air’ would take to the sky before the end of the Muhammadu Buhari administration on 29 May. His promise barely elicited celebratory reactions from Nigerians perhaps because five years earlier, the minister had made a similar pledge.
In the 2017 budget, the Nigerian government earmarked the sum of N555 million for the establishment of a national carrier and another N200 million for consultancy fee. This was followed in 2018 by another N50 million which was set for the establishment of the carrier, while another N20 million was earmarked for consultancy.
The following year, Sirika announced at the Farnborough International Airshow in the UK, that Nigeria would launch a national carrier in December 2018, in fulfilment of President Buhari’s campaign promise to revive a government-owned airline. In July 2018, the Ministry of Aviation unveiled the airline’s logo which was designed by Bahrain-based branding and advertising agency, From 6 Communications. There were speculations in the media that the government paid the company as much as $600,000 for the design of the logo although the minister denied this.
Two months after unveiling of the logo, the government announced the indefinite suspension of the project without providing any explanation. A report by Premium Times, however, claimed that the decision to suspend the project was reached following its rejection by the Economic Management Team, (a body set up by the president made up of experts to advise on economic matters) which was against the government financing a national carrier.
For a project whose announcement in 2018 came with so much fanfare, to the point where presidential aides were wearing apparel with the airline’s logo, its suspension two months later came as a surprise to a lot of Nigerians. For seasoned experts in the aviation industry, however, Nigeria Air, when it was announced, was doomed to fail. Victor Banjo, a former director of human resources at the defunct Virgin Nigeria, said the project was already on the path to failure due to the fact that ‘in terms of transparency, too much was shrouded in secrecy for a project that a huge chunk of taxpayers’ money was about to be committed, and time will tell if it will move from being premature to a stillborn.’
NIGERIAN AVIATION SECTOR: A COCKTAIL OF PROBLEMS
Once government-led, private companies now dominate the Nigerian airspace. However, Nigeria’s aviation industry is plagued with so many problems that many airlines are struggling or have exited the airspace. Albarka Airline stopped operations in 2005, Afrijet and Bellview stopped operations in 2009 while Med-view ceased operation in 2019. Judging by this, a re-entry into the sector by the government is a recipe for disaster. For a long time, the aviation industry was plagued by frequent air crashes. Between 2005 and 2006, Nigeria experienced three air crashes that claimed the lives of 301 passengers and crews. According to Accident and Investigation Bureau, from 1969 to 2022, 2,038 people died from air crashes in Nigeria.
Apart from safety, management of the aviation industry has also been subpar. In May 2022, airline operators in Nigeria threatened to shut down operations due to what they described as the difficulty in service delivery. In a letter to Sirika, operators complained that the cost of aviation fuel which had risen from N190 to N700 per litre made their operations and service delivery difficult. Although the strike was suspended, the price of air tickets rose by 97.09 per cent.
Nigeria’s economy which has plunged into recession twice in the last nine years has only worsened the challenges facing the aviation industry. In the area of service delivery, it has become commonplace for flights to be cancelled or postponed at will by airlines. In some cases, flights are overbooked and passengers are forced to look for alternatives. In 2022, 877 flights were cancelled compared to 529 the previous year while 47,144 delayed flights were recorded in 2022 compared to 41, 398 the previous year.
On the monetary side, worldwide industries are only now recovering from the effects of the COVID-19 pandemic with losses estimated to surpass $200 billion. While the global aviation industry started to pick up in late 2022, the situation has not improved in Nigeria. According to the Civil Aviation Authority of Nigeria, airlines were owing the government N22. 7 billion for ticket and cargo services in 2022.
The image of Nigeria within the global aviation industry is also in a terrible state. In 2022, British Airways threatened to suspend operations in Nigeria and Emirates Airline followed through on a similar threat due to their inability to repatriate their dollar earnings, which were in excess of $500 million. Although the Central Bank of Nigeria stepped in with the release of $265 million, Nigeria’s ongoing forex deficit posed a recurring problem made even more damning given the aviation industry requires international participation.
Nigeria currently owes N41.60 trillion in external debt. Operating a government-owned airline that will most likely be subsidized is, therefore, ill-advised. National carriers are also not what they used to be and many nations that used to own them as status symbols have privatized them for efficient management and improved profitability. In some cases, the states own a percentage of these airlines For example, British Airways was state-owned until 1987 when it was privatized and is now being managed by the International Airline Group, an Anglo-Spanish multinational airline holding company. Air Canada was owned by the government until 1989 when it was privatized and now controls only 6.4 per cent while majority ownership is held by entities like the Vanguard Group, Inc. and U.S. Global Investors, Inc.
Some state-owned airlines have proven successful like Ethiopian Airlines and Singapore Airlines. Ethiopian Airlines has been operating its day-to-day business independently as a commercial entity. This is also the same for Singapore Airlines as the country has stressed its non-involvement in the management of the company. Despite this, many airlines become a burden to the states and have required bailouts to survive. It will be folly for the Nigerian government to be entering a market many countries are exiting.
The hurried launch of the Nigeria Air three days before the end of the Buhari administration further exposes the corruption embedded in the industry. Data by the National Bureau of Statistics and Compilation of Budgetary Allocations show that the federal government ‘spent N85.42 billion on transaction advisers, working capital and consultancy bills for Nigeria Air between 2016 and 2023.’ The former chairman of the House Committee on Aviation, Nnolim Nnaji, declared the launch of Nigeria Air a fraud and expressed shock when he found out that the plane that was launched was merely a chartered flight and thus was allowed to be painted in the Nigerian colours. He said: ‘A careful review of the process indicates the exercise to be highly opaque, shrouded in secrecy, shoddy and capable of ridiculing and tarnishing the image of Nigeria before the international community.’ In more bizarre development, the former aviation minister, Sirika, accused Nnaji of demanding for five per cent shares in the Nigeria Air, further exposing the rot that the attempt to launch a national carrier has enabled. On 6 February 2024, operatives of the Economic and Financial Crimes Commission arrested Abubakar Ahmad Sirika, the younger brother of the former aviation minister after the former was reportedly awarded four aviation contracts by the latter.
RAIL: THE FUTURE NIGERIA NEEDS?
On 17 March 2023, Buhari signed 19 bills into law one of which was the railway bill, which now allows states to build rails. If tapped into, both the federal government and states have the opportunity to connect major cities and towns and improve railway infrastructure to facilitate cheaper, easier and quicker transportation of goods and people.
China has been a frontrunner in rail infrastructure and the country has become a model for how countries can make rail infrastructure a major driver of economic growth. Since 2008, China has operated over 25,000 kilometres of dedicated high-speed railway. This has helped to decongest cities and to allow people thrive in rural parts of the country. Local production of goods has also seen a boost thereby resulting in ‘equitable spatial distribution of economic activities by facilitating technological diffusion and spillover, and expanding access to education and capital in underdeveloped regions.’ According to Martin Raiser, the World Bank country director for China:
China has built the largest high-speed rail network in the world. The impacts go well beyond the railway sector and include changed patterns of urban development, increases in tourism, and promotion of regional economic growth. Large numbers of people are now able to travel more easily and reliably than ever before, and the network has laid the groundwork for future reductions in greenhouse gas emissions.
Nigeria stands a lot to gain from an improved rail infrastructure in order to bolster regional development. There have been complaints that development has been sheltered in major cities leading to high population densities in those places while towns and villages suffer neglect. A functioning nationwide rail system will stimulate the local economy and improve food and raw material production and distribution. This could reduce agricultural waste, especially for perishable goods, and keep food costs competitive. This could also help reduce importation of local materials and set Nigeria up for improved earnings from exports.
Nigeria has tried and failed three times in its bid to either manage or restart a national airline. It is a white elephant project that history suggests will only provide avenues for mismanagement and corruption. The industry does little to directly improve the lives of the majority of Nigerians. Alternatives like rail infrastructure, however, offer an opportunity to transform the lives of Nigerians at large, especially the 133 million who are currently living in multidimensional poverty⎈
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