African state airlines: Necessity or folly? Africa's state-owned airlines have such a troubled record that it is surprising governments persist in setting them up, but one striking success story suggests they could enjoy a better future.

Author:Raji, Rafiq
Position:SPECIAL REPORT: AVIATION
 
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In May 2017, the Nigerian government announced plans to set up a national airline. Considering the country's chequered history with such ventures, more than a few eyebrows were raised. The last time an attempt was made at setting up a national airline, the Nigerian government entered into an arrangement with Virgin Atlantic, a British airline.

It did not end well. And if the objective was to restore the national pride that supposedly comes with a national carrier, that too failed. The issues that led the Virgin Group to finally leave Nigeria are complex. When Nigeria had a national airline, it was called "Nigerian Airways" and it was a source of pride.

While African countries like Ethiopia, Kenya and South Africa have since then been able to run airlines that by and large meet the mark internationally, Nigeria has floundered ever since Nigeria Airways ceased to exist officially in 2003 (it stopped major operations years before).

With his re-election bid underway, Nigerian President Muhammadu Buhari has pledged to set up a successor. The original plan was to merge a couple of private airlines, which due to insolvency, had been bailed out by the state's "bad bank" and thus are effectively owned by the government, but there was a change of plans. Instead, the Nigerian government appointed international advisers for the setting up of a brand new airline in May 2017 and held talks with a consortium led by Lufthansa.

In early February, it emerged Lufthansa's terms might have been a little onerous for the government. The terms, which included a 75% upfront payment of costs in euros to be domiciled in an international bank, suggest Lufthansa took a few lessons from the nation's troubled economic history. As the parties could not agree, the Nigerian government appointed the UK-based Airline Management Group in Lufthansa's stead.

With elections due in about a year and the government in full election mode, how much progress will be made is doubtful. And should the Buhari administration fail to get re-elected, it is not unlikely that the idea would be jettisoned by the new government.

Corruption, cost-cutting, little or no profit

There is a consistency around the sad narratives of state-owned African airlines: corruption. Whether it is Kenya Airways, South African Airways, Air Zimbabwe, to mention a few, their troubles can be traced to fraud, patronage and mismanagement. And to repair the damage, the modus operandi is almost always the same...

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