Fortune News | Jun 12,2021
Ethiopian Airlines' entry seems to have irked domestic airlines in Nigeria the wrong way, as they came together in November, filing a lawsuit against the Airline and three parties to halt Nigeria Air's consolidation.
Ethiopian Airlines is battling at a Lagos court millions of dollars worth of litigations from private airline companies in Nigeria who were timid over its entry into their fledgling markets. Other defendants include the Nigerian Minister of Aviation, Hadri Sirika; Nigeria Air Limited; Nigeria's Attorney General Abubakar Malami.
Lawyers representing the Airline Operators of Nigeria (AON) have filed lawsuits as part of their effort to ground the establishment of a national carrier dubbed Nigeria Air, demanding payment of two billion Nairas (nearly 4.3 million dollars in the current exchange rate), claiming damages from exclusion to a bidding process.
The Ministry of Aviation in Nigeria floated a bid in September to re-establish the Nigerian National Carrier, defunct in 2003 amidst a flurry of allegations of mismanagement of resources and corruption. In operation for 48 years, the bid was issued to transfer a 46pc stake in the newly incorporated Nigerian National Carrier (NNC) to investors, while the federal government keeps five percent. Ethiopian Airlines won a 49pc stake in NNC, adding to its ownership stakes in Togo, Zambia, Malawi and Mozambique.
Nevertheless, the expected takeoff for the new Airlines is delayed until February 13 as judges in Lagos Court adjourned on January 16, 2023.
Air Peace, the largest domestic airline in Nigeria, along with Azman Air, Max Air limited, United Nigeria, Top Brass and the registered trustees of airline operators, were the groups that had filed the suit initially. The Chief of Air Peace, Allen Olyenma, believes Nigeria Air should be wholly owned by its citizens. The plaintiffs have challenged the decision to award the Ethiopian Airline over its eligibility to bid, and the award failed to meet the public-private partnership laws of Nigeria. They have appealed to the judges to nullify the deal.
Justice Lewis Algoa of the Federal High Court in Lagos passed an interim injunction in November ordering the maintenance of the status quo by all parties involved. Three other defendants, besides Ethiopian Airlines, had filed a motion on January 13 to transfer the legal proceedings to a court in Abuja, Nigeria's capital city, arguing that they were outside of the jurisdiction of the Lagos court that filed the injunction.
The Judge adjourned the hearings upon the counsel's request, as two plaintiffs also exhibited clashing interests.
Kaleysus Bekele, the aviation industry journalist for decades, attributes the uproar by the domestic airways to their desire to maintain a price hegemony over the Nigerian market and not much more.
"The absence of a national carrier helps them charge high ticket prices," he told Fortune.
Kaleyesus, who has written for African Aerospace Magazine in the last few years, applauded Ethiopian Airlines for daring to engage in a "challenging" working environment.
"They know they would fail to compete with Ethiopian Airlines," he said.
Kaleyesus believes Ethiopian Airlines would be endowed with a secondary hub in West Africa if it manages to get the deal through. Ethiopian Airlines filed its defence on December 19 2022, through its country representative, Wondesen Beyene, arguing that it has subscribed to all legal and international standards as the court hearing loomed close last week.
The aviation industry in Nigeria has been full of contention as the International Airlines Transport Association (IATA) report last year revealed that Nigeria had withheld 450 million dollars from international carriers that operate in the country. Nigeria's President, Muhammadu Buhari, had made a campaign promise to re-establish a national airline in his campaign in 2015. The announcement for the incorporation of Nigeria Air was made three years later.
A collaboration between British billionaire Richard Branson dubbed 'Virgin Nigeria' also attempted to revive Nigerian National Aviation before it ceased operations in 2012 after several rounds of rebranding: Nigerian Eagle Airlines and Air Nigeria. However, the partnership with Virgin had a similar ownership structure to the current attempt, with Virgin owning 49pc.
Nigeria Air, partnering with Ethiopian Airlines, is the latest effort by Nigeria's government to establish a national carrier with its current Minister of Aviation Hadri, after his appointment in 2019. Months following the announcement of Nigeria Air at the Farnborough Air Show in 2018, the project was derailed following a questioning of its relevance by members of the Nigerian administration. It was renewed in 2022 with an initial budget of 300 million dollars and the revealing of Ethiopian Airlines as the preferred bidder and single majority stake owner.
The new arrangement would have had Ethiopian Airlines providing aircraft, cabin crew, technical personnel and management of the airlines. The 23 domestic airline companies operating in Nigeria appeared alarmed by the entry of a continental juggernaut like Ethiopian Airlines into their fledgling market.
Executives of Ethiopian Airlines have not been available to comment on this story despite several attempts through phone calls and email messages.
PUBLISHED ON Jan 21,2023 [ VOL 23 , NO 1186]
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