Nigeria Air - Mixed Reactions Over Planned Aircraft Lease

3 August 2022

Mixed reactions have trailed the proposed plan by the federal government to start the national carrier, Nigeria Air, with three wet-lease aircraft.

The Federal Executive Council (FEC) had last week approved the lease of three aircraft for the commencement of operation by the national carrier.

"We have said in our outline business case, which was earlier approved, that we are starting with three aircraft for the first instance and then we progress. We will have a mixture of Airbus and Boeing because every airline that will grow big uses the two," Minister of Aviation, Senator Hadi Sirika, said at the end of the FEC meeting.

Analysis by Daily Trust revealed that the federal government may be spending an average of N50m monthly to lease one aircraft translating into N150m monthly for the three aircraft.

This figure was arrived at using the average lease per hour of $400 for 10 operating hours which translates into 120,000 hours monthly calculated at the official exchange rate of N417 to a dollar.

With the planned wet lease, it means the aircraft and even the crew that would operate the flights are completely foreign, prompting concerns from stakeholders about the kind of national carrier being proposed.

Though the federal government has said it would have five percent stake in the proposed carriers, experts also raised issues on the proposed 49 percent for the strategic partners.

Aviation analyst, Capt. Alex Nwuba, said the proposed lease of aircraft to start a national carrier sounds absurd.

Speaking with journalists on the sidelines of the League of Airports and Aviation Correspondents (LAAC) conference in Lagos, Nwuba who is the President of Aircraft Owners and Pilots' Association wondered how the national carrier would survive in the current challenging operating terrain for airlines.

He stated that the airline can hardly survive with wet lease aircraft.

He said, "But let's ask some fundamental questions. The market exists. Airlines are operating in this market, they have challenges with the price of fuel, and they have challenges with foreign exchange to pay suppliers. You even have the challenge of airlines that are selling tickets; hundreds of millions of dollars that cannot repatriate those funds. How will these three planes operate on the basis of wet lease?

"What's a wet lease? Wet lease is an arrangement where the government has engaged an airline outside the country to bring airplanes and crew. So how does that solve our problem as a nation in terms of creating employment as an industry? How does that solve the problem of foreign exchange that we are already facing because we had to pay for that wet lease in foreign exchange?

"How does that solve the problem of availability of funds through the central bank or will the national carrier get its money through the black market to fund its operation? It is absurd; it's essentially an absurd proposal made to a group of people that have no knowledge of what's going on... "

He said it would be a miracle for the proposed national carrier to see the light of the day.

Asked on the better model to adopt, he said, "One of the ways is to go to the market and sell the 51 percent for the Nigerian public through the stock exchange. That would invigorate the stock exchange. It will get the stakeholders' buy-in. The average Nigerian will be able to put a few dollars that they put in MTN share and buy into the national carrier."

Another analyst, Sindy Foster, stressed that the coming of the airline expands opportunity for members of the travelling public, adding that starting with three aircraft sounds good for a new carrier.

She however suggested that before the airline would take off, the other 95 percent shareholders must be kn

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