Don't Miss


Home   >   Business   >   Industries   >   Aviation   >   Arik Air resumes preparations to bid for flag carrier status

Arik Air resumes preparations to bid for flag carrier status

By on August 17, 2015

There are indications that Arik Air, a Nigerian airline operating  domestic, regional and international flight network may have resumed preparations for its bidding for the flag carrier status in line with industry sentiment which favours the airline for the job.
Industry sources told THISDAY at the weekend that one of the hurdles before the airline was the condition handed down by the immediate past minister of aviation, Osita Chidoka that the airline would be designated as a flag carrier should it sell its shares to the public. The measure was aimed at ensuring that Nigeria had a strong airline with full government support to represent the country and end the present rip off Nigerians by foreign airlines.
THISDAY checks however showed that Arik was already working with Goldman Sachs and Vetiva, an investment and financial advisory firm, which are working towards the airline going public next year, which would make the airline, divest its stakes to the public.
The plan to designate a flag carrier may be revived in response to the firm commitment of the present administration to establish a national airline to enhance the development of the aviation industry and for the country to benefit from over $2.5 billion air travel market in Nigeria which is predicted to hit $5 billion in next couple of years.
President Muhammadu Buhari last week directed the Ministry of Aviation to quicken the modalities towards the establishment of a national carrier, hence the discussion with the nation’s largest carrier, Arik.
But many industry operators and analysts have agreed that for such national airline to succeed it must be private sector driven; therefore, the country would go for one or two flag carriers with full government support.
The stakeholders in the industry are already meeting on the issue with plan to issue a proposal to President Buhari, suggesting that flag carriers are what the country needs.
Industry operators said the federal government and Arik needed each other in the realisation of the project because it would be easy for government to establish a flag carrier with existing airline, but difficult to start an entirely new airline as national carrier; although the President’s commitment would make it realisable within a given time.
It was also argued that it would be difficult for Arik to sustain its operation beside a national carrier without its input as the airlines currently operates to almost all the airports in the country that are safe and even performs some diplomatic duties to the federal government as a privately owned airline.
Arik and government had held similar discussions few years ago which collapsed, prompting government to start the failed experiment of establishing a national carrier with Aero Contractors.
Informed source told THISDAY that part of the reasons why the plan collapsed was that it was believed in government circles then that Arik was to be used to float a national airline because of the fact that it had the highest number of New Generation aircraft, it is being maintained by world renowned Lufthansa Technik and deemed a very safe airline.
But the challenge, industry sources said, would be how much of its stakes Arik would be willing to offload to the public in order to establish a strong national carrier; although experts in the industry said for the planned airline to succeed, government would not have controlling share and also would not decide the management of the airline.
The source disclosed this was what led to the collapse of the initial talks to use Arik as a national carrier when Senator Stella Oduah was the Minister of Aviation, but the then President, Goodluck Jonathan, was said to have insisted that Oduah did not exhaust negotiation possibilities before she decided on using Aero.
“Arik Air is internationally recognised airline because it acquired its aircraft directly from well-known aircraft manufacturers, Boeing, Airbus and Bombardier; these are international companies that influence decisions in the International Air Transport Association (IATA) and the International Civil Aviation Organisation (ICAO). In addition to this, Arik’s maintenance partner is Lufthansa Technik, which indicates the airline has highest standard of safety. Arik is often mentioned in international aviation fora,” industry source told THISDAY.
However, an official of Arik, who pleaded for anonymity, said it had been carrying out the responsibilities of a national carrier, carrying out services for the federal government without asking for payment. It added that it airlifted the national team, Super Eagles, and the junior team to various countries without any payment from government and had also airlifted Nigerians from the Central African Republic for government when there was crisis there.
“Arik has 26 brand new planes and our contract with Lufthansa as technical partner expires in 2019 and that will be renewed. We are the only Nigerian airline that operates international destinations and have been certified to operate to more international destinations, including direct flight to Israel. We have spares worth over $250 million and our deposit with Boeing is over $140 million and Lloyd of London valued the airline to be worth over $5.3 billion,” Arik source told THISDAY.
The source said that NAL still owed people and organisations all over the world so any airline believed to be owned by the Nigerian government would be impounded when its aircraft travel to these countries where the former national carrier owe debts.

Industry insiders also said that the easiest way to develop a strong domestic carrier is to give Arik all government support in order to actualise a national airline for the country.

 

[ThisDay]