Finally, a US Airline will ply the New York - Lagos Route.

[panasharp]

For 5 years the Nigerian government did not allow any Nigerian airline to fly the Lagos-New York even though there was an open air agreement. The government frustrated efforts by many to ply the route (please do not include Ritetime).Continental to fly New York - Lagos route

[Progress]

"For 5 years the Nigerian government did not allow any Nigerian airline to fly the Lagos-New York even though there was an open air agreement. The government frustrated efforts by many to ply the route"

... If it really were that simple! The US government was not exactly keen to let just any airline fly the route, read the article you posted. Even with the "open skies" agreement US airlines did not choose to fly direct to Nigeria but instead signed agreements with other airlines (KLM etc). Furthermore, PRIOR to the five years, there was a mutual ban by both countries on each other airlines. The US governments reaction to the agreement signed with Virgin Airlines is very "telling" ...

Extracts from Thisdayonline article [http://www.thisdayonline.com/nview.php?id=3655]

Virgin Nigeria: US Moves Against Deal
EFCC disagrees with liquidator over Airways' property
By Tunde Rahman, 12.05.2004

United States authorities may have thrown spanners into the wheel of the Virgin Atlantic/Nigeria deal under which Virgin Nigeria is to emerge as the national carrier to operate Lagos-New York route and other domestic routes in the country.
The Financial Times of London quoted a Senior US Aviation official as saying at the weekend that the deal could be in breach of US regulations.
The Director of the Office of International Aviation in the US Department of Transportation, Mr. Paul Gretch, said the US would block any plan by Virgin Nigeria to start services to that country from Nigeria, on the grounds that the carrier would be deemed to be under the control of a United Kingdom Airline, Virgin Atlantic.
This would be said to be a breach of the bilateral air services treaty between Nigeria and the US, which as in most of the world stipulates that national carriers of two countries must operate such services.
Contacted last night over the telephone, Virgin Atlantic Nigeria Representative, Chief John Adebanjo, said the issue was beyond Virgin Atlantic airline.
"It's a government matter. Its the Nigerian Government that can handle that part. Its not on our part," Adebanjo said.

... we now know what that decision was!
So before we leap for joy and again "smite" our government lets us not be naive about our other "adopted" governments, there is ALWAYS more than meets the eye!

[panasharp]

The Financial Times of London quoted a Senior US Aviation official as saying at the weekend that the deal could be in breach of US regulations.....

This would be said to be a breach of the bilateral air services treaty between Nigeria and the US, which as in most of the world stipulates that national carriers of two countries must operate such services......

The regulations that the agreement between Virgin and Nigeria Gov. violated is not a new regulation. The US has no open sky agreement with the British government. If Virgin Atlantic owns 51% stake in Virgin Nigeria it could be construed by US regulator as an attempt to circumvent the existing bilateria air agreement between UK and US. Both US and UK signed the agreement to protect each countries airline industry.

All efforts by a Nigerian airline to operate the Lagos -New York route (as a nigeria airline) was rejected by the Nigeria government for five years. The Nigerian government will not let Nigerian airlines ply this route but they see no problem allocating it to a foreign airline Virgina Atlantic. Though the agreement allows for more than one airline to operate the route.

The agreement the US airlines signed with KLM to my knowledge is not new. Northwest has had an agreement with KLM for more than 10yrs. United and Lufthansa have not agreement per see except that they are in the Star Alliance together which allows code sharing. Just like American Airlines and British Airways.

My only hope is that more Nigerian and american airline will fly the route and bring in more competition.

[Progress]

Originally Posted by panasharp

The regulations that the agreement between Virgin and Nigeria Gov. violated is not a new regulation. The US has no open sky agreement with the British government. If Virgin Atlantic owns 51% stake in Virgin Nigeria it could be construed by US regulator as an attempt to circumvent the existing bilateria air agreement between UK and US. Both US and UK signed the agreement to protect each countries airline industry.

And which is why Virgin's bid to start up a US-based airline will probably fail as predicted For a country that preaches open markets US trade policies are "surprisingly" myopic! When it comes to the airline industry there are worse offenders (France is a good example), and for both economical and security purposes (and as an exception) I agree with their (US) protection of the airline industry and space.

Originally Posted by panasharp

All efforts by a Nigerian airline to operate the Lagos -New York route (as a nigeria airline) was rejected by the Nigeria government for five years. The Nigerian government will not let Nigerian airlines ply this route but they see no problem allocating it to a foreign airline Virgina Atlantic. Though the agreement allows for more than one airline to operate the route.

Can we clarify some history/context here? Nigerian Airways was forced to close its operations from Lagos to New York in 1993 after the United States imposed a ban on the direct flight because of "worsening security situation at Lagos International Airport" the ban was lifted only after Nigeria's return to civilian rule in May 1999! Since the return to "democracy" Nigeria has been pursuing the privatisation/liberalisation route in making erstwhile public-owned services efficient and profitable. If you want to sell something it has to be of value, so it is economically wise to "reserve" lucrative routes for the new airline and open up to competition after the new venture has found its feet (this is not a new practice, classic example in telecoms is the licensing of a second national operator only after privatization/corporatization of the incumbent, also exclusivity periods attached to the purchase of spectrum licences). The airline industry requires significant investment, more so after the events of Spet 11 I personally don't think the domestic airlines we have could financially maintain the route (Ritetime being a case in point) and that may be why to date no solely Nigerian venture has been able to use it. I recall that in Feb 2001, the government contracted South African Airways to fly this route under a joint venture agreement with Nigeria Airways. In March 2002 SA Airways ended the joint venture after suffering losses amounting to about R54 million!

Also, in the same way that the govt did not "allocate" the route to South Africa, they have not "allocated" it to Virgin, their obtaining the route is as a result of having brought into Nigerian Airways. They are using the landing rights Nigeria has in the US. I'm interested to know if the Nigerian airlines you mentioned were rejected by the govt had secured landing rights in the US and were thinking of using those of Nigerian Airways. Which brings me to the last comment ...

Originally Posted by panasharp

The agreement the US airlines signed with KLM to my knowledge is not new. Northwest has had an agreement with KLM for more than 10yrs. United and Lufthansa have not agreement per see except that they are in the Star Alliance together which allows code sharing. Just like American Airlines and British Airways.

The global airline industry has not recovered from its recession and industry players are looking to make as much money with as little committment hence partnerships (which I did not mean to say were "new") that effectively extend an airlines "presence" in as many countries as possible ... not surprising when Nigeria tried to find an investor for Nigerian Airways in 2003 ONLY South African Airways expressed an interest, few have the amount money required for the investment so the govt (as far as I am concerned) did a good thing by reserving the route until a buyer/investor had been found for Nigerian Airways.

Originally Posted by panasharp

My only hope is that more Nigerian and american airline will fly the route and bring in more competition.

I hope so too, but I doubt it! The statement about "executives in energy-related industries" by the Continental representative hints of cream-skimming!
I really am interested in your comments on this, I have an interest in the (social-)politics of the privatization of industries. Its kind of like a hobby(!)

[panasharp]

Originally Posted by Progress

If you want to sell something it has to be of value, so it is economically wise to "reserve" lucrative routes for the new airline and open up to competition after the new venture has found its feet (this is not a new practice, classic example in telecoms is the licensing of a second national operator only after privatization/corporatization of the incumbent, also exclusivity periods attached to the purchase of spectrum licences). The airline industry requires significant investment, more so after the events of Spet 11 I personally don't think the domestic airlines we have could financially maintain the route (Ritetime being a case in point) and that may be why to date no solely Nigerian venture has been able to use it. I recall that in Feb 2001, the government contracted South African Airways to fly this route under a joint venture agreement with Nigeria Airways. In March 2002 SA Airways ended the joint venture after suffering losses amounting to about R54 million!

Nigeria Airways was not an airline but a coffin in the air. That said, the government can provide an enabling environment for Nigerian investors to seek foreign partnership in operating the Lagos - New York and Lagos - London routes. Similar to what the government in the telecom industry.

Due to incompetent management and corruption of the Nigerian government, Virgin Atlantic is servicing the Nigerian portion of the bilateral air agreement between UK and Nigeria. This, in addition to being the second carrier operating the UK portion of the air agreement. Does that create competition? Easier said that no Nigerian venture can manage the Lagos – New York and Lagos – London routes just like some said few years ago that no Nigeria venture can operate a successful telecommunication company.

All the European airlines charge a arm and a leg flying in and out of Nigeria, yet the Nigerian government loves its citizens so much that it is yet to allow any form of competition. Lufthansa – Germany, Air France – France, KLM – Netherland etc none of these airlines have competition on their routes.

Once Continental starts its operation and hopefully another US airline joins the company to make two US airlines that operate the route, I wonder what steps Nigerian government will take. Maybe get British Airways to operate the second portion on its behalf.

In reference to the telecom industry in Nigeria. A second national carrier license was sold to Globacom due to the inability of the government to reform NITEL and commence its privatization.

I hope so too, but I doubt it! The statement about "executives in energy-related industries" by the Continental representative hints of cream-skimming!
I really am interested in your comments on this, I have an interest in the (social-)politics of the privatization of industries. Its kind of like a hobby(!)

It is result of market survey and creation of services to meet existing demand. What is wrong in Continental Airline servicing executive of energy related industries that have business interests in Nigeria? Doesn’t BA and Virgin Atlantic serve executives of UK energy industry that have business in Nigeria? If Continental airfare is expensive we have the option of patronizing the European airlines (not that they are any better).
COMPETITION! COMPETITION!! COMPETITION!!!

[Progress]

I see us going back and forth here and I'm not sure there's really much point!

Nigeria Airways, Nigeria Eagle Airline, Air Nigeria, Coffin Air ... whatever name you want to call it ... from the Nigerian end is the "easiest" access (to date) that any non-US airline/investor has to the Lagos-New York route. If you want the landing rights for the route either obtain it from BOTH Govt or buy the airline that already has!

Let's not be naive, there are scarce resources in every sector - spectrum in telecoms, landing-rights especially to hub airports is one in the airline industry. That was one of my initial points - its convenient to point to/blame Nigeria as though everything is okay at the other end or with the global industry. It is not! Nigerian airlines have access to international routes that used to be serviced by "Coffin Air" [http://www.nigeriafirst.org/article_2380.shtml] they just aren't the (perceived) most lucrative one!

The title of your post "Finally, a US Airline will ply the New York - Lagos route" made it sound as though Nigeria had been standing in the way of US Airlines flying to Lagos ... (since the lifting of the mutual ban) that impression is NOT true. Airlines are cash strapped and anyone looking to service new routes needs a strong business case to do so. Your comments that "the government can provide an enabling environment for Nigerian investors to seek foreign partnership in operating the Lagos - New York ... Similar to what the government in the telecom industry" is also interesting. If we look at the facts and experiences of the past 5 odd years, what Nigeria has control over it has sought or tried to liberalise or privatize. The domestic airline industry is to an extent competitive, so when it comes to its own airspace, whilst not perfect (the circumstances surrounding shutting down of Kalu's airline being a case in point) Nigeria cannot be said to be inefficient. With the telecom licenses Nigeria has (within guidelines) control over spectrum within its borders - which it has licenced out and for which Nigerian investors sought foreign partnerships to buy. To fly to New York you need permission to land in New York, Nigeria as a country has such rights which are allocated to its national airline. Nigeria sought to "sell" this airline (with all its landing rights as "bait") and NO ONE but South African Airlines bidded, in fact there were between four-five enquiries made but only one bidded ... where were the Nigerian investors with foreign partnerships? They are not interested in the airline but in the route - so should Nigeria farm out the international routes it has landing rights for independent of its airline? That's a tough decision to make and, going back to telecoms is what the whole Nitel SAT-3 debate is all about, ... personally, I think stripping a business you plan to sell of its most attractive assets is economically STUPID!

Originally Posted by panasharp

All the European airlines charge a arm and a leg flying in and out of Nigeria, yet the Nigerian government loves its citizens so much that it is yet to allow any form of competition. Lufthansa – Germany, Air France – France, KLM – Netherland etc none of these airlines have competition on their routes.

Airfares will continue to cost "an arm and a leg" because as you stated there is nothing "... wrong in Continental Airline servicing executive of energy related industries that have business interests in Nigeria? Doesn’t BA and Virgin Atlantic serve executives of UK energy industry that have business in Nigeria? ..." And again this impression that competition on international routes is due solely to the Nigerian govt and all other nations are just trowing open their airspace, wake up, you know that's not the way it happens! That Ghana Airways once fly between Nigeria and the UK was in on behalf of BA when they were kicked out of the country - and look at the mess they made due to their weak financial position. BA was the first to service the Nigerian portion of the UK-NGR bilateral air agreement and Virgin was given the contract precisely to encourage competition. There was also a time Belview Airline was flying the Lagos-London route on behalf of "Coffin Air" (...catchy name!)

Originally Posted by panasharp

COMPETITION! COMPETITION!! COMPETITION!!!

AMEN! AMEN!! AMEN!!!
And it will come our domestic airlines will grow, become financially competent to take on more international routes either directly or in partnership with other airlines ... but also remember Pan that the trend in the global airline industry is CONSOLIDATION, internationally, few are looking to invest in new airlines.

[panasharp]

Originally Posted by Progress

The title of your post "Finally, a US Airline will ply the New York - Lagos route" made it sound as though Nigeria had been standing in the way of US Airlines flying to Lagos ... (since the lifting of the mutual ban) that impression is NOT true. Airlines are cash strapped and anyone looking to service new routes needs a strong business case to do so.

The topic was meant to indicate the fact that there will now be an alternative for Nigerians that reside in US. Nigerian government has not stood in the way of US Airlines interested in operating New York - Lagos route.

Your comments that "the government can provide an enabling environment for Nigerian investors to seek foreign partnership in operating the Lagos - New York ... Similar to what the government in the telecom industry" is also interesting. If we look at the facts and experiences of the past 5 odd years, what Nigeria has control over it has sought or tried to liberalise or privatize. The domestic airline industry is to an extent competitive, so when it comes to its own airspace, whilst not perfect (the circumstances surrounding shutting down of Kalu's airline being a case in point) Nigeria cannot be said to be inefficient. With the telecom licenses Nigeria has (within guidelines) control over spectrum within its borders - which it has licenced out and for which Nigerian investors sought foreign partnerships to buy. To fly to New York you need permission to land in New York, Nigeria as a country has such rights which are allocated to its national airline. Nigeria sought to "sell" this airline (with all its landing rights as "bait") and NO ONE but South African Airlines bidded, in fact there were between four-five enquiries made but only one bidded ... where were the Nigerian investors with foreign partnerships? They are not interested in the airline but in the route - so should Nigeria farm out the international routes it has landing rights for independent of its airline? That's a tough decision to make and, going back to telecoms is what the whole Nitel SAT-3 debate is all about, ... personally, I think stripping a business you plan to sell of its most attractive assets is economically STUPID!

My point here is that: the Nigerian government licensed a second national telecom provider because of the bureacracy and politics involved in selling NITEL. They have tried to sell NITEL a couple of times but with not serious bids from investors because no investor wants to inherit a corporation with too much headache: unions against privatization, and politics. Most importantly, NITEL has not been audited in who knows how long. How then does an investor perform an adequate due diligence before acquiring the corporation. No foreign reputable bank will provide financing for such an acquisition. Same applies to Nigeria Airways (coffin air), no investor wants to inherit the problems that comes with acquisition of Nigeria Airways. NITELS monopoly was broken, same should be done to Nigeria Airways or whatever they choose to call the airline.

The US government was not protecting the route for five years so that Continental c

[Progress]

I agree with you but for just one point! Nigeria was going to get a second national operator with or without a privatized/sold Nitel.
I guess being in the UK, and being able to fly with literally any airline to Lagos at a reasonable price (cheapest being approx £260 inc tax), means that I don't fully appreciate the experiences of Nigerians in America when it comes to air travel.

[panasharp]

Virgin to Fly on 7 Year Monopoly Below are excerpts:

THE Federal Government has granted its fledgling flag carrier, Virgin Nigeria a seven-and-half-year protection on the country's plum international routes valued at over $400 million.........

With the protection, which is already causing ripples in the aviation industry, the new carrier will be immune from competition. In effect, no other Nigerian carrier will be designated for the next 7.5 years on the lucrative routes, which include London, New York, Dubai, Jeddah and Johannesburg.

The new flag carrier, will have a share capital of $50 million at the equity ratio of 51 per cent ($25.5m) to Nigerian institutional investors and 49 per cent ($24.5m) to Virgin Atlantic.

Somebody please help me understand the rationale behind this move, is the government of Nigeria protecting the interest of the country and its citizens? All the lucrative routes are allocated to a foreign airline and no competition will be allowed for 7.5yrs.
Virgin is investing $24.5m in Virgin Nigeria but the routes are valued at $400m (granted I don't know how the number was calculated). What value does Nigeria get from this deal? How does this help the local aviation industry? Is somebody smoking dope?

Please read the whole article.

[Progress]

I always suspected that an exclusivity period will be attached to the contract but 7.5 years is ridiculous (I thought it would be like 2-3 years, and even that is bad enough to some). This has caused an uproar and questions are thankfuly already being asked ... I'll be surprised if the 7.5 years clause goes through.