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Profitable national carrier: Fiji as case study

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Profitable national carrier: Fiji as case study

The benefits of having a national carrier cannot be underestimated. The pay-offs and prestige achieved by Ethiopia, South Africa and others through their airlines are there for all to see. WOLE SHADARE writes

 

Deafening calls
In the last few weeks, the call that Nigeria does not need a national airline had been deafening. These calls came from no mean quarters. They are from respected aviation professionals both in Nigeria and outside the country.

 

Just last month, Director General of Airport Council International (ACI), Angela Gittens, disclosed to the media that Nigeria does not need a national airline.

 

She said, “Your market is determined by the magnetics of your destination, the economy of your country, the percent of the middle class that you have in your country that can travel, whether you have a strong Diaspora, because visiting friends and relatives is very strong reason for travel.

 

“So there are all kinds of magnetics within your country and that is what you have to look at. You have to look pass your national carrier and if you have strong magnetics, frankly you don’t need a national carrier”.

 

Penultimate week, airline operators under the aegis of airline Operators of Nigeria (AON) met in Lagos and reached a consensus that national carrier, which the Federal Government may have concluded plans to set up by December this year was not only unnecessary but ‘counterproductive.

 

The clamour

 

This recent criticism of national airline is coming at a time majority of Nigerians are clamouring for a national airline when the country’s flag carriers have failed to operate profitably, with the lifespan of many of them not exceeding 10 years.

Whatever the position of AON, not a few believes the advantages of what a national carrier brings far outweighs the demerits they are scared of.

 

Had flag carrier airlines done well and offered good services and represented Nigeria well, no one would have backed the idea for a national airline.

 

Arik was very disappointing. It came with so much promise but went the way it came; now restricted to just domestic operations and a few regional operations.

 

Virgin Nigeria equally disappointed because the airline stood on a very shaky foundation and also disappeared.

 

Other critical stakeholders have lauded the efforts of government to do what it promised to give to the country before next year.

 

Many of them believe that investing in a national airline will help government to take the country’s brand and all its potential to the world, thereby boosting the growth of tourism.

 

Chief Executive Officer of Kitari Consult Limited, an aviation-consulting firm, Ali Magashi, recently stated that a national carrier airline as its country’s brand to the world would bring the world into its country and take the country to the world.

 

National airline is like an embassy with wings, transporting its country’s talents, skills, commerce, culture, cuisine, human resource and goodwill around the world.

 

Conventional wisdom suggests that developing countries with small economies and high growth potential invest in national airlines. Dubai and Singapore have successfully made their airlines their main brands, driving their national identity and growth strategy, and so have Ethiopian Airlines and EgyptAir have done here in Africa.

 

 

Fiji example

 

Fiji, a country in the South Pacific with a population of 898,760 as at 2016, has a thriving national airline called Fiji Airways. Just last week at the just concluded Annual General Meeting (AGM) of International Air Transport Association (IATA) in Sydney, Australia announced the launch of Oneworld; a new platform for linking up to the world’s premier airline alliance-enabling customers to enjoy more services and benefits across an even more extensive network.

 

The airline operates a fleet of 18 airplanes including five A330s with a sixth joining the fleet shortly, five NextGen B777s plus eight turboprops-ATR 72 and 42s and DHC6-Twin Otters.

 

In 2017, the airline boarded 1.6 million passengers, generating revenues of $452 million and achieving profits of $44 million at the operating level and $38 million net. It employs more than 1, 3000 people.

 

Founded in 1951, it is 51 per cent owned by the state of Fiji, with Qantas holding 46 per cent. Mainly the governments of Samoa, Tonga, Kiribati and Nauru hold its remaining shares.

 

Nigeria can really borrow a leaf from Fiji and other countries in Africa such as Ethiopian Airlines and until recently, South African Airways and Kenya Airways. RwandAir, EgyptAir, and Air Maroc,that are good examples of airlines that had been built over the years and are pride to the people of those countries.

 

 

Keeping strong brands

 

South Africa Airways and Kenya Airways are rebuilding. Their strong brands have kept them alive as they plan to return to profitability in few months.

 

The benefits of having a national carrier cannot be underestimated. The paybacks achieved by Kenya, Ethiopia, Egypt and South Africa through their respective airlines is there for any interested party to see. In Rwanda, young Rwanda has a highflying Air Rwanda.
It is evident that the national carriers of the respective countries also share the billions of dollars raked in by tourism.

 

Of the top largest airlines by passengers carried, four of them are based in the United States; three of them are centered in China. Here, we could argue that US and China are vast territorial countries.

 

The list is also populated by Irish and United Kingdom low cost budget airlines Ryanair and Easyjet, making it to the top 10 respectively.

 

When it comes to fleet size, still five out of 10 are based in US. China has two, Germany, France and Canada with their respective national carriers; Lufthansa, Air France and Air Canada making it to the top 10.

 

 

National airlines top

 

In terms of the countries visited by airlines, the top four airlines are national carriers, namely Turkish, Lufthansa, Air France and Qatar Airways. It is evident that a functional national spurs growth in tourism, which is a multiplier effect in the profitability of airline business.

 

An airline business needs top management. Aviation is a highly volatile business and needs great care and handling. The main reason why most national carriers have gone under is management.

 

It is needless to speak about US or UK, which has no state-owned national carriers; these are developed countries, which can’t be compared to a least developed country such as Nigeria.

 

Besides, those countries already rake in billions of dollars and pounds respectively from the various tourism, educational and health facilities which Nigeria doesn’t have.

 

 

Last line

 

So, comparing Nigeria with UK, and US not owing an airline is myopic in the business sense. Nigeria definitely needs a national carrier. However, there should be the strong will in the government to oversee success of the industry.

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