THE BANE OF STATE-OWNED AIRLINES

The airlines are drains on scarce resources

Since President Bola Ahmed Tinubu removed fuel subsidy at the inception of his administration, each of the 36 states and 774 local government areas has been receiving humongous funds from the Federation Account Allocation Committee (FAAC). Rather than invest the money on things that will advance public good, some of the states have embarked on vanity projects. After establishing airports that are not viable and dumping them on the federal government, there seems to be a new competition among governors in the high-risk airline business. Yet many of these highly indebted-states are yet to meet the primary requirement of their citizens, like the provision of potable water, good hospitals, schools, and road infrastructure.

This trend was pioneered by Akwa Ibom State with the establishment of Ibom Air which started flight operations in 2019. This was closely followed by neighbouring Cross River which established Cally Air in July 2021. Within the last one year, Enugu, Ogun and Ebonyi States have also established their own airlines. Out of these, only Ibom Air has an Air Operator Certificate (AOC). And it is for a reason. Akwa Ibom State had a long-term vision in aviation development. It was a dream started by the first elected governor of the state in the fourth republic, Obong Victor Attah, who laid a road map for the establishment of an airport, which was completed by his predecessor, now Senate President, Godswill Akpabio. Udom Gabriel Emmanuel, who succeeded Akpabio, brought the airline into fruition. This long-term vision culminated in the establishment of Maintenance, Repair and Overhaul (MRO) facility for aircraft checks, and the training of the indigenes as engineers, pilots, airport technical management personnel and acquisition of other aviation skills. This is the only state that seemed prepared to go into aviation business, and appears to be doing well. This is different from what other states are now doing.

There are indications that after some of these states had built their own airports, it dawned on them that the facility would become grossly underutilised, knowing they cannot attract commercial airlines. They thereafter decided to establish their own airlines. Ebonyi State built an airport that obviously does not have commercial value.  The same with Bayelsa State, which does not have a business community that could travel through the airport. Ogun State’s Gateway Airport has the challenge of proximity to Nigeria’s busiest airport in Lagos. Cross River State is developing its tourism destinations like Obudu Cattle Ranch, Tinapa, the business rendezvous and the annual Calabar Carnival which has become a global attraction. But this is a yearly event, which does not justify any investment in airline business.

For all practical purposes, these airlines are being established for the comfort of the political elite and other VIPs whose regular trips to those states cannot generate enough revenue to sustain their operations. Hence, they are monuments to waste. Airline operation is capital intensive. For the states to sustain the airlines, they must regularly allocate funds for their operations, and this will be a huge drain on scarce resources.

Nigerians may benefit from the fact that the foray of states into airline business will provide more aircraft to the air travel market and make more seats available to the travelling public. But the main challenge remains the sustainability of such a business. Airlines business is not only risky but has minimal rewards. Even some of the biggest airlines generate revenues without profit for years. In such a precarious situation, how many states can continue to fund these airlines, especially when governors come and go? Besides, every airline must go through the process of recertification, retraining and maintenance of its aircraft. Will these states be able to fund all these in the long-term?

Governors should prioritise projects that will benefit most of their citizens, not ones for the comfort of a few.