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Aviation Update: 27th November, 2022


We are resuming our aviation updates with a weekly review and analyst commentary on key and pertinent updates in the sector both within Africa and globally.


Should you wish us to initiate coverage in any area of interest or would like to contribute to the weekly updates, kindly get intouch with us at commercial@dreaviationconsulting.com

we also welcome any feedback to any of our topics covered and would appreciate your insights.


Whilst we bring you news and analysis of the happenings in the industry we give you a leading insight on our opinions and advisory on specific topics and we hope that you find these useful in your day to day role and decision making process.



Africa


Ethiopia

  • Ethiopian Airlines plans to double fleet to 270 aircraft by 2035

  • Ethiopian Airlines closely monitoring Nigerian national carrier situation - delays and uncertainty affect fleet planning and financial forecasts


Ghana

  • dre aviation to undertake key aviation executive interviews in Ghana in the run up to the new year; if you would like to be interviewed or would like to nominate any of your senior management please get intouch by emailing us at: commercial@dreaviationconsulting.com

  • Kenya Airways connect Accra to Senegal with new additional route expansion announcements expected in due course


Nigeria


The saga with Nigeria's national carrier took a number of twists this week with the AON (Airline Operators of Nigeria) taking the government to court in order to prevent the launch the national carrier. The Court passed an injuntion for the current status quo to remain in the Nigerian market and deferred the next hearing into the matter until the 13th February, 2023. Details below:


Domestic airlines ask court to terminate FG-Ethiopian deal


The national carrier project may be stopped by the court as domestic airlines have taken the Federal Government and its foreign technical partner and majority shareholders to court.

About eight local airlines and their association took the government to court on Friday, listing Nigerian Air, Ethiopian Airlines, Minister of Aviation, Hadi Sirika, and Attorney-General of the Federation, Abubakar Malami, as defendants.


Among other prayers, the indigenous airlines want the court to stop the national carrier deal and withdraw the Air Transport Licence already issued to Nigeria Air by the Federal Government/Nigerian Civil Aviation Authority.


They also claimed that the firm which served as Transaction Adviser for the transaction, was incorporated in March last year and alleged that the company was linked to the aviation minister.


The local airlines further alleged that ATL issued to Nigerian Air did not pass through the normal security clearance.


According to them, the Federal Government’s partnership with Ethiopian Airlines on the project will send domestic airlines out of business by opening up the domestic air travel market to Ethiopian Airlines.


In September this year, the Federal Government named Ethiopian Airlines Consortium as preferred bidder for Nigeria Air. The Minister of Aviation, Hadi Sirika, announced this in Abuja.

But it was learnt on Sunday that the Registered Trustees of the Airline Operators of Nigeria, including Azman Air, Air Peace, Max Air, Topbrass Aviation and United Nigeria Airlines, filed a suit against the move on Friday.


The defendants in the suit include Sirika, Nigeria Air Limited, Ethiopian Airlines, and the Attorney-General of the Federation, Abubakar Malami. The suit was filed in the Federal High Court of Nigeria in the Lagos Judicial Division.


Four defendants


The first, second, third and fourth defendants in the suit were Nigeria Air Limited, Ethiopian Airlines, Senator Hadi Sirika, and Attorney-General of the Federation.


The court summoned Sirika and other defendants named in the suit to cause an appearance to be entered for them to the summons within 30 days after service of the summons on them.


The court said the summons was for the determination of several questions. It outlined the questions to include, “1. Whether on proper construction of the Companies and Allied Matters Act 2020, SEC (Securities and Exchange Commission) Nigeria Consolidated Rules & Regulations 2013 (as amended in 2022), Nigerian Investment Promotion Commission Act, International Civil Aviation Organisation Convention, Civil Aviation Act, Public Procurement Act, Concession Regulatory Commission (Est.) Act, 2005, Federal Competition and Consumer Protection Act, Procurement Processes for Public Private Partnership in the Federal Government under the National Policy on Public Private Partnership (N4P) and Nigeria Civil Aviation Regulations, 2015 and other regulatory statutes on aviation, companies and investment laws in Nigeria; the action, conduct and or decisions in the sale of the shares and operations of the 1st defendant is not invalid, null & void.


“2. Whether on construction of International Civil Aviation Organisation Convention, among others, the entire administrative actions and decisions of the third and fourth defendants in the sale of the shares of the 1st defendant to the 2nd defendant and its consortium is not invalid, void and of no effect having regard to the process embarked upon and the extant local and international laws and regulations on aviation including the terms and condition stated in the request for proposal.


“3. Whether, on a construction of Section 78 (1) & (2) of the Companies and Allied Matters Act 2020, Rule 406(2) of SEC Nigeria Consolidated Rules & Regulations 2013 (as amended in 2022), section 20 of the Nigerian Investment Promotion Commission Act, Article 7 of the International Civil Aviation Organization Convention, section 33 of the Civil Aviation Act Cap C13 LFN 2004 (as amended in 2006); the 2nd Defendant and its consortium were competent and qualified to bid for shares in the 1st Defendant and commence business accordingly.


“4. Whether, on a construction of Sections 4 & 5, among others, of the Infrastructure Concession Regulatory Commission (Est.) Act, 2005; Sections 24 & 27, among others, of the Public Procurement Act; and Clauses 2, 3 and 4 of the Procurement Processes for Public Private Partnership in the Federal Government under the National Policy on Public Private Partnership, sections 76-81 of the Federal Competition and Consumer Protection Act; the selection of the 2nd Defendant and its consortium as the sole bidder in the bidding exercise for the Nigeria Air Project conducted by the 1st, 3rd& 4th Defendants is proper, lawful and valid?


“5. Whether the entire process for the sale and transfer of shares of the in the 1st Defendant to the 2nd defendant and its consortium by the 3rd and 4th Defendants is in line with the provisions of the Infrastructure Concession Regulatory Commission (Est.) Act, 2005, Federal Competition and Consumer Protection Act, International Civil Aviation Organisation Convention, the National Policy on Public Private Partnership, sections 76-81 of the Federal Competition and Consumer Protection Act and does not affect the entire process including the selection, approval or grant to the 2nd Defendant and its consortium by the 3rd and 4th Defendants is not invalid and thereby entitling the entire process to fresh bidding exercise?”

The domestic airlines demanded, in the court document, an order directing the immediate revocation and cancellation of the Air Transport License issued by the Nigerian Civil Aviation Authority to the 1st Defendant.


N2bn damages


They also demanded an order of N2bn only as damages “for the injury suffered by the Plaintiffs and still suffering as a result of the wrongful exclusion of the Plaintiffs, wrongful action; unlawful bidding and selection processes and their wrongful projection of the plaintiffs as not having properly, rightly and timely bid for the Nigeria Air project.”

The Federal Government’s choice of Ethiopian Air¬lines as the core investor and technical partner in the Nigeria Air project, had been described as a win for the East African carrier and a huge loss for Nigeria.

Some critics argued that instead of giving Ethiopian Airlines a 49 per cent stake in Nigeria Air, there could have been better partnership arrangements that would benefit Nigeria more.

The Assistant General Secre¬tary, Aviation Round Table, Olumide Ohunayo, said though Ethiopian Airlines had been a successful airline in Af¬rica, its partner carriers on the continent had all failed.


Ohunayo named the failed partner carriers to include Congo Air¬ways, Tchadia Airlines, Zambia Airways and others, adding that it was on Asky Airline that was surviving as it (Asky) just upped its fleet of aircraft to about 12.


The Chief Execu¬tive Officer, Centurion Security Limited, Capt. John Ojikutu (retd.), had said in an interview with The PUNCH that similar partnerships in the past by the defunct national carrier, Nigeria Airways, with KLM and South African Airways in the early 1990s did not benefit Nigeria.


He said this new move with Ethiopian Airlines would not be different from the others.


Aviation minister


As analysts and operators raise diverse concerns about the national carrier project, the government through its aviation minister, Sirika, gave reasons why it picked Ethiopian Airlines as the preferred bidder for Nigeria Air.


Sirika told journalists in Abuja on Thursday that Ethiopian Airlines was the only airline that responded to the government’s requests for expression of interest and fulfilled all the stipulated conditions laid down by Nigeria.


He said other airlines in the world ignored Nigeria’s call to join hands with the country to float a national carrier despite the fact that he personally went to the airlines and met with them at several air shows and international aviation events to convince them.


Sirika, however, said the airline proved that it was not only efficient and prosperous by registering over $1bn profit after tax even in the wake of COVID-19, but had continued to flourish despite the challenges in the aviation sector globally.


He said, “We did not cede Nigeria Air to Ethiopian Airlines. It is the only airline in the world that made $1bn profit even during the COVID-19 pandemic. It is the most prosperous, efficient and leading airline in the African continent and it was the only airline that responded to our request for partnership to run the airline after many months of advertisement of expression of interest.


“Even after some interested persons asked Nigeria to extend the time of EoI and we did, none of them showed interest. Officials of the Ministry of Aviation led by me personally visited some of the leading airlines across the world and pleaded with them to take up the partnership with Nigeria to set up the airline.


“None of them signified interest except Ethiopian Airlines, which has been allotted 49 per cent shares, while Nigerian institutional investors take up 45 per cent and the Federal


Government will take up only five per cent.


“The choice of Ethiopian Airlines is good for Nigeria and it is in line with the African Union Agenda. Our desire is for Africa to come together and lead the African aviation market through our new partnership with Ethiopian Airlines. The partnership will also reduce cost of operations and airfares for Nigerian and African air travellers as opposed to the current situation.

Source: The Punch, Nigeria


Court issues interim injunction, stops Nigeria Air after Minister’s ‘no court can stop project’ Jibe


A Federal High Court sitting in Ikoyi, Lagos has issued an Order of Interim Injunction restraining the Minister of Aviation, Federal Ministry of Aviation, Senator Hadi Sirika, Attorney General of the Federation and other defendants from executing the proposed National Carrier, Nigeria Air.


This is coming after the Minister of Aviation, Senator Hadi Sirika said that no rational court can stop the airline as it is a Limited Liability Company .


His Lordship, Hon Justice A. Lewis-Allagoa after hearing the submission of Nureni Jimoh SAN with Abubakar Nuhu Ahmad Esq.counsel for the Plaintiff/Applicant move in terms of the Motion paper granted the injunction.


The injunction read,”The Court after careful consideration of the application and submission of counsel.it is hereby ordered as follows:1.That an Order of Interim Injunction is granted restraining the Defendants either by themselves, agents, privies, Principals or any other persons whosoever from draft the proposed executing “NATIONAL CARRIER ESTABLISHMENT AND AGREEMENT BETWEEN THE FEDERAL GOVERNMENT OF NIGERIA (represented by the 3rd and 4th Defendants) and the strategic equity partner (the 2nd Defendant) or giving effect to and or suspending the sale and transfer of the shares & operations of the 1stDefendant by the 2nd Defendant pending the determination of the Motion on Notice.


“That an Order of Maintenance of Status Quo by all parties in this suit from taking any further step(s) in relation to the subject matter of this suit pending the determination of the Motion on Notice is granted.


“3. That an Order of Accelerated Hearing of this suit is granted.


The Minister, Sirika earlier stated that no court can stop anyone for establishing a legitimate business especially as the country is seeking foreign direct investment ( FDI).


The Minister was reacting to questions from the media earlier today at an event where he reacted to some burning questions.


A national daily earlier in the week reported that the national carrier project may be stopped by the court as about eight local airlines and their association took the government to court on Friday, listing Nigerian Air, Ethiopian Airlines, Minister of Aviation, Hadi Sirika, and Attorney-General of the Federation, Abubakar Malami, as defendants.


According to the report, the indigenous airlines want the court to stop the national carrier deal and withdraw the Air Transport Licence already issued to Nigeria Air by the Federal Government/Nigerian Civil Aviation Authority claiming that the firm which served as Transaction Adviser for the transaction, was incorporated in March last year and alleged that the company was linked to the aviation minister.


The local airlines further alleged that ATL issued to Nigerian Air did not pass through the normal security clearance.


However, Sirika who reacted not knowing of the injunction said he has not been served and so he can talk about it stressing, ” I have not seen any rational court that would say I am stoping somebody from establishing a company because Nigeria Air is a Limited Liability company in the Corporate Affairs Commission( CAC)”


” If anyone wants to invest in that company, he continued,there is no law in Nigeria stopping them from doing so. You can own a hundred per cent” he said.


He gave examples with May & Baker, Julius Berger, Price Water Cooper, Unilever asking what the big deal was.He said,” This is what we want, we want FDI. So it it is US350bn for the airline and somebody brings USD 200 million dollars into Nigeria, why not?”.


Source: Nigerian Flight Deck


dre aviation Opinion: The whole saga has been a long time coming to a head and the latest legal approach by the AON comes as no surprise. The court have rightly upheld the current status quo of the Nigerian aviation market however many questions do arise which include why Nigeria Air fast tracked an ATL without going through due NCAA processes. Knowing the situation in detail we believe that the current proposed National Carrier structure goes against the public interest and needs to go back to the drawing board. We will issue as separate paper in the coming weeks on this subject.


Other Nigerian Aviation News

  • Air Peace announce suspension of their Dubai route due to issues regarding Nigerians not being able to apply for UAE visas

  • Ibom Air wet lease 2 A320-200s from GetJet for a period of 1 year, aircraft already in Nigeria and deployed on key routes

  • Runway 18L/36R reopens in Lagos following the successful implementation of new lighting system

  • Air Peace resume Monrovia service from 2nd December, 2022

  • Air Peace resume Uyo service from 1st December, 2022

  • Arik Air resume flight operations to Owerri and Kano

  • MamaJ holds Annual Aviation Career Conference in Lagos

  • dre aviation to undertake key aviation executive interviews in Nigeria in the run up to the new year; if you would like to be interviewed or would like to nominate any of your senior management please get intouch by emailing us at: commercial@dreaviationconsulting.com

  • Aviatrix Hub graduate their first batch of 13 Dispatchers, we congratulate Aviatrix Hub and the 13 colleagues, well done and best wishes.


Nigerian flight delays analysed:


Europe

  • Bulgaria Air expands codeshare partnership with Air France

  • British Airways partner with Uber - to offer Avios points for each Uber ride which can be used towards to free flights

  • Air France KLM workers in Frankfurt join warning strike

  • Wizz Air expand operations in Cyprus - forming another potential hub

  • Ryan Air expand routes to link Shannon to Naples and Porto

  • Virgin Atlantic withdraws support for 3rd runway at Heathrow

  • Wizz Air launch direct service from Suceava (Romania) to Tel Aviv


Industry debate: 1 pilot flights to become a reality? A must watch video.



Asia Pacific

  • Melbourne Airport welcomes resumption of Garuda Indonesia service to Jakarta

  • Tata Group to merge Air India, Vistara, Air India Express and Air Asia india

  • JAL to assess Exec pay dependant on CO2 cuts

  • JAL and Yamato give details on their new domestic cargo freighter networks

  • Oneworld in talks with China Southern about joining alliance

  • Air India expands international network with 6 more routes into Europe and the USA

  • AASL report $15m profit in first 7 months of their financial year

  • Emirates launch direct Dubai to Columbo service


Middle East

  • Emirates predicts surge in bookings once China reopens post Covid restrictions

  • Etihad livestreams world cup soccer matches onboard

  • Emirates increases Dubai to Brussels frequencies from 12 to 14 per week (double daily)


The Americas

  • dre aviation launch cargo GSA services in Miami and New York

  • LATAM Airlines A320 declares emergency upon descent into Sao Paolo

  • LATAM Airlines and Delta announce non-stop service between Sao Paolo and LAX

  • Jamaica welcomes Neos Air direct flights from Italy

  • Avianca and Viva appeal merger denial decision in Columbia

  • Aviation investor update by CNBC


Standby for a lot more content next week as we introduce our Jet A1 fuel analysis and more detailed inhouse opinion on the key factors affecting African aviation.


Have a good week ahead.


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