Dele Momodu
3 July 2009
analysis
Lagos — Please, don't get me wrong. I'm not about to pummel a dead horse, which is what Virgin Nigeria is almost becoming today. I'm a great admirer of Sir Richard Branson, the maverick chairman of the Virgin Group. I love the Virgin brand. The brand is usually associated with quality and innovation. Sir Richard is a modern day King Midas. He's been able to turn everything he touched into gold, except Virgin Nigeria.
It is important to examine how vast the Virgin Group is in order to see how sad it is that such an experienced company is not able to survive in Nigeria. The group runs a range of products globally that would be difficult to match by an ordinary entrepreneur. The Virgin logo has become one of the most famous brands in the world today.
The Virgin group is a conglomerate with interests in music, airlines, beverages, trains, financial services, books, fashion, cosmetics, games, holidays, media, telecommunications, films, and charities. The visible Virgin logo has been proudly attached to many great products, such as Virgin Trains, Virgin Cola, Virgin Mobile, Virgin Money, Virgin America (a US budget airline based in San Francisco), Virgin Blue (the Australia-based airline operating in the South Pacific), Virgin Active (a health club chain in the UK, Australia, South Africa, Portugal, Spain and Italy), Virgin Books, Virgin Brides, Virgin Colours, Virgin Limousines, Virgin Green Funds (changed from Virgin Fuels to seek alternatives to the current aviation fuels and overdependence on petroleum), Virgin Megastores, Virgin Spa, Virgin Limited Edition (exclusive luxury hotel operator in Morocco, the Caribbean and others), and our troublesome Virgin Nigeria.
History would record Sir Richard as the man who came meekly into the precarious airline business in 1984, and took on the giants in the aviation industry. His running battles against British Airways in particular were herculean. But he succeeded in making a powerful statement that it is possible to run an airline successfully without killing passengers with unreasonable fares. This is one reason Virgin Atlantic became an airline of choice for many world travelers. In fact, several countries virtually invited Richard Branson to establish local arms of his stupendously popular airline.
Virgin Atlantic is substantially owned by the Virgin Group (51%) and Singapore Airlines, which owns 49%. The airline operates in the United Kingdom, North America, the Caribbean, Africa, Middle East, Australia and Asia. The Virgin Atlantic Airways Ltd has been able to weather the storm everywhere. Nigeria is one of its best routes in terms of passenger volumes. Everything was going fine for the company until it made the wrong move of adding its brand-name to Nigeria, a country where government officials hardly play by the book.
Of course, as a proverb goes, the bean cake usually turns into bone in the mouth of a toothless man. Such is the tragedy of Virgin Nigeria. It instantly inherited the heavy burden of the defunct Nigeria Airways, one of the most unfortunate airlines ever run by some of the most corrupt human beings on earth. The mistake the Virgin Group made was to think it could remain untainted from the stigma of Nigeria Airways. But most Nigerians saw Virgin Nigeria as a replacement of Nigeria Airways, name change or not. That impression was heavy baggage.
Also, Virgin Nigeria was expected to provide excellent services like Virgin Atlantic. But this was not the case. The aircraft were inferior, old and rickety. The fares that were expected to drop never did. Passengers had to deal and cope with ill-trained staff, some of whom were as saucy as they come. They experienced all manner of difficulties in the process of checking in for their flights. Revenue plunged because of the recalcitrant attitude of the ground crew. Many of its long-haul operations had to be suspended, including the very important London, Dubai and Johannesburg routes.
I once had a very unpleasant experience in South Africa last year, when we lost an engine as we were taking off. It was a miracle how the pilots managed to abort what could have been a monumental tragedy. Passengers on that flight included famous artistes Sammy Okposo, D'banj and Don Jazzy, who were returning to Nigeria after a shoot for the telecoms giant, Globacom. The plane had to be fixed on the tarmac, and I had to plead with Sammy Okposo not to disembark as a result of the fright he suffered.
Despite this terrible experience, some of us still remained loyal to the Virgin brand. I continued to fly both Virgin Atlantic and Virgin Nigeria. Only last week, I was selected as Virgin Nigeria's highest flyer by The Eagle Flyer team. It is for this reason of being a loyal customer that I'm deeply worried about the near-collapse of Virgin Nigeria. The airline has struggled against all odds to stay afloat. Some of its services have improved. Even its staff are now wonderfully behaved. Many others have been sent into the unemployment market, a most pathetic development. The Nigerian government should have done everything possible to help this airline which was already becoming a major force on the West African coast. Nigerians are already suffering enough hardship, and we can do without more. Unemployment should ordinarily worry any sensitive government.
Besides, there should always be continuity in government. Nigeria is one bad example of how not to honour agreements. We knew once Obasanjo left office, his successor, though hand-picked, has never honoured agreements. They were bound to disgrace him on many fronts. The facilities which were offered Virgin Nigeria at the Murtala Mohammed International Airport were canceled because it was a privilege that ran counter to another agreement reached with Wale Babalakin's Bi-Courtney over the Murtala Mohammed Airport 2, the local airport that had been constructed to replace the one razed by fire. The incorrigibility of government was the cause of the confusion, and after much controversy, Virgin Nigeria was compelled to move its domestic operation to MM2. All the money it spent on refurbishing the decaying international airport was wasted.
This was the beginning of the end. Sir Richard Branson was livid, and he threatened to pull out of Virgin Nigeria. According to impeccable sources close to the businessman, he was sick and tired of the uncertainty of doing business in Nigeria. Unfortunately, the bank that partly funded the business was very worried about its investment with the manner the airline was going from one crisis to the other. In order for the airline to compete in the market, it must enjoy some urgent cash injection which the bank was reluctant to undertake. The last we heard was that Virgin was removing its logo from Virgin Nigeria.
There have been allegations and counter-allegations about the reasons for this move. Virgin claims is has not been paid the royalties that accrued to it for the use of the brand, and that no dividend has come to it since the company started. What's worse, Singapore Airlines, the part owner of Virgin Atlantic believes that the business of Virgin Atlantic was being smeared by the controversy in Nigeria. They have advised Richard Branson to count his losses and pull out of the problem-prone deal in Nigeria.
On the other hand, our Nigerian friends are saying that Richard Branson would not be allowed to blackmail them. They insist that the double standard that was employed by the company is the root-cause of the problems facing the ailing airline. It is claimed that Richard Branson never undertook any risk when he invested in Virgin Nigeria. Rather, what he invested was taken out almost immediately in the form of technical service fees, royalties for the use of the brand, and for the lease of old aircraft to Virgin Nigeria. He merely hid behind the Nigerian investors to do business here. Even the Virgin Atlantic staff who were seconded to train the Virgin Nigeria crew were paid double their normal salaries. Same was the case with the technical crew that worked on the airline.
Virgin Nigeria thus bore unbearable overhead costs from day one. All it got from Richard Branson was his famous trademark. Sooner than later, it became impossible for Virgin Nigeria to honour its many obligations. Also, passengers clearly saw the difference between Virgin Atlantic and Virgin Nigeria and began to move away in droves. What was more; Arik Air came like a thunderbolt with brand new aircraft, and challenged Virgin Nigeria on several of its major routes.
The ding-dong affair between the Virgin Group and the Nigerian authorities has continued. Onlookers are worried especially for the future of the Nigerian workers who seem to have been caught in the crossfire. We must not throw the baby away with the bath water. I believe Virgin Nigeria can be given a new lease. Nigerians have more to gain from its survival. I pray the parties involved would return to the table for reasonable negotiations.
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