FAAN: ‘Local airlines will merge to form a national carrier’

The Managing Director of the Federal Airport Authority of Nigeria (FAAN), Mr George Uriesi, shed some light on the plans of the Federal Government to assist local airlines. First of all, he explained that the national airline being set up by the Ministry of Aviation will emerge from a merger of domestic airlines in March 2013:

The Federal Government will not launch a new national carrier but it will help some new companies’ access funding to build a new national carrier. A couple of airlines will merge by March 2013 to emerge as the national carrier. [The] conditions that will enhance these developments are currently being put together.

Secondly, he denied that the Federal Government will set up an aircraft leasing company or distribute aircraft among the local airlines. Rather, the Federal Government will assist airlines in negotiating and funding the acquisition of new aeroplanes:

The Federal Government of Nigeria is not buying any number of aircraft that as being rumoured about. The government is just negotiating with aircraft manufacturers to supply brand new aircraft at globally competitive price to Nigerian airlines and funds to make the purchase will be provided by the government.

Watch the full interview here.

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15 responses to “FAAN: ‘Local airlines will merge to form a national carrier’”

  1. AfricanAviation (@AfrAviaTribune) says :

    Nigeria, does this conflict with Princess Stella’s address earlier in the week regarding “owning a new airline”? From my understanding, the merger of several smaller airline’s into a larger one doesn’t constitute the FG “owning” a carrier.

    Thanks.

    • Eric says :

      It conflicts with lots of things that the ministry has said so far. They also said they will be purchasing 30 Aircraft to assist the domestic airlines now they say they are not purchasing the aircraft rather they will assist airlines in negotiating and funding the acquisition of new Airplanes.

      • Aviation in Nigeria says :

        There is not much discrepancy between her interview earlier this week (http://allafrica.com/stories/201301240678.html?viewall=1) and what the FAAN MD is saying. The Federal Government is probably adjusting its plans, which were criticised and sometimes unrealistic.

        The idea of setting up a national airline with the technical support of LH or AF didn’t work out, as these airlines declined the invitation. But from the beginning, the Minister has been very clear that the new carrier will be privately owned, so it won’t be completely funded by the FG. Since AMCON has a stake in all the major airlines, it was suggested to merge them into a national airline. Apart from all the practical hurdles involved, this plan doesn’t really make sense. Supposedly, the FG wants to support an airline that competes with Arik and Aero, rather than create a situation with just one ‘state airline’. It’s difficult to predict what will happen, but a call for an investment partnership will be advertised soon.

        The confusion about the thirty aircraft is partly due to poor journalism. The Minister has always said that the FG was negotiating with several manufactures about leasing rates, etc. The number of thirty was just an estimate. Only the press wrote about thirty Embraers. Anyway, it’s a good thing that the Minister has dropped her plan to set up a leasing company or to introduce the Chinese model to Nigeria. From the latest interviews, it seems that they are going to assist airlines that ‘meet the criteria’ in acquiring and funding new aircraft through the already existing Aviation Intervention Fund. Not at all a bad idea.

    • Greg says :

      AfrAvtnTrbn, the Princess is confused

  2. Eric says :

    I agree. I also think this new approach is better. This way the airlines will be able to get aircraft that best suit them.

    I also agree with you on the part of poor journalism causing some confusion there because I was beginning to wonder why the talk was going back and forth.

    I will guess that the FG adjusting its plans might mean that they have started listening to some expert advise after facing criticism.

    • Alaba says :

      AIN talks about competition and that is so right…for fares and services. So the proposed airline made up of a merger will get some funding support by the FG and the others will whistle dixie?
      Will this AN other airline be granted favoured status by FG ?
      (already has by allocated partial funding support)
      What happens when the private investors want to draw out their stake or a default is underway?
      In the video clip, much again is talked about corporate governance as if it was a new thing. Its not.
      Question is :
      Who / m will revamp governance rules for not just the proposed airline but for the whole of the aviation sector and when as the take off time seems near?

      Can we also once and for all forget this ‘state airline’ business and move on.

  3. skywalker says :

    Looks like the FAAN and the Ministry are the ones running the show. I watched the interview in Channels tv over the weekend, like Chris said on the show its all about the economic regulation which has not been done, which explains why airlines come and go. The NCAA needs to play a very important role most especially in the financial aspects of airline operation, without proper Financial regulation or monitoring any airline coming will still have the same fate.

  4. Eze says :

    A few months ago I speculated that the Govt’s plan was to merge a few local airlines into a flag carrier. I remember citing AMCON’s ownership of a large percentage of these airlines’ debts (and by extension, control and management. I was received with lots of skepticism! Today, it is no longer a crazy idea. Which airlines will likely be merged? Although I initially thought that an AERO/Arik merger resulting in a 45+ aircraft carrier would be good for Nigeria and Africa as a whole, I fear its effect on local competition because together these airlines control about 75 to 80% of the current market share. On the other hand the other airlines are financially very troubled or just recovering from crashes, and are not large enough to achieve economies of scale: Dana, IRS, Changhangi, etc. Could it be that the government is planning to revive Air Nigeria and merge it with most of the smaller airlines? To the best of my knowledge, AMCON did not intervene in the smaller “briefcase” or “tokunbo” airlines mentioned above.

  5. LAF says :

    Here’s a Boeing and Airbus calculator http://graphics.thomsonreuters.com/10/PlaneCalc.html

    Double check prices at the source just in case.

    One can sense the planning and putting of (good) heads together, a radical departure from previous eras. Setting, raising and maintaining standards is the name of the game.

    One way or another, the local operators need assistance on several fronts beside just the raw financing and quite a good number of points in the show indicate the industry is still years behind in other aspects beside basic safety.
    The enforcement of stringent corporate governance conditions couldn’t come sooner.

    If this team work like crack squad, and roll this planout, ther will opportunity to monitor and make adjustments if needed.

    Thrown to the other side, it will be interesting what alternatives the airlines themselves could have come up with that either match or better the financing proposal being offered.

    • LAF says :

      Yep.That’s been a the picture of the last couple of years. You can look up a lot more photos of the Lasham Chronicles out there. Aero Con are gradually approaching the point of no return on the use of classics.

  6. Anonymous says :

    Steve Ridgway, the CEO of Virgin Atlantic has some interesting things to say about his biggest regret at the helm of VAA……….

    http://www.flightglobal.com/blogs/airline-business/2013/02/what-was-steve-ridgways-bigges.html?utm_source=twitterfeed&utm_medium=twitter

    • LAF says :

      The regret feeling likewise, though for opposite reasons. The foundation of the Virgin adventure dictated it’s ultimate outcome.

      Here we are with opportunities for a new beginning to get it right on all fronts.
      Only what we roll up our sleeves and painstakingly build ourselves that we can truly be commited to maintain and protect.

      • Anonymous says :

        Do you think they’d get involved again? He seems to think the opportunity is there!
        How about Fastjet, I know it is unlikely but with the issues they are facing with Fly 540 now, they may have some trouble setting up in Accra like they planned to. What’s to stop them coming to buy Air Nigeria’s assets for $1 and setting up shop in Lagos, people would flock to them in droves if they could fly to Abuja for $20 like they said.
        In Tanzania all in, people are flying for around 60-80 dollars which would just kill all our local airlines :)

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