Nigeria’s air transport sector reached a low point with the liquidation of national flag-carrier Nigeria Airways. But that event, which many in the industry viewed as long overdue, directly led to the establishment of Virgin Nigeria, when the then Nigerian government put out an international tender for a technical partner for a new private national carrier.
“After many ups and downs, Virgin Atlantic was chosen as technical partner, taking a 49% stake, with 51% held by Nigerian institutional investors, mostly local banks and finance houses,” says Virgin Nigeria chief executive Conrad Clifford. “Virgin Nigeria started in June 2005 and within 12 months, we had become the biggest Nigerian carrier, a position I think we still hold.”
The airline employs just shy of 1, 000 people worldwide, 85% of whom are Nigerian nationals. “We are very proud of the fact that we have Nigerians at every level of the company, from our chairman, Felix Ohiwerei, down,” says Clifford. “When we started, we had 44 managers seconded from Virgin Atlantic, today we have five. It has been a huge transfer of know-how and expertise.”
In its short existence, Virgin Nigeria has achieved 100% e-ticketing, completed the IOSA safety audit - one of only three carriers in the world to have been given a clean sheet in 2007, says Clifford - and in January/February will receive EASA 145 approval. It is also one of only two Nigerian airlines, the other is main competitor Aero Contractors, to be classified as safe by the US Consulate, and, together with Aero Contractors, has also passed all safety audits by the major oil companies.
Virgin Nigeria’s network includes regional services to Accra, Cotonou, Dakar and Douala, and domestically from Lagos to Abuja, Calabar, Kano, Owerri, Sokoto and Port Harcourt. Longer flights are operated northwards to London and south to Johannesburg. “We are an effective competitor to European airlines on the London route, and to South African Airways on the Johannesburg route,” says Clifford.
Virgin Nigeria carried 1.5 million passengers in 2007, 1.2 million on its domestic services. “About two months ago, we set up distribution in North America and that now puts us into the anti-trust arena with Virgin Atlantic, so we are starting to separate our activities. What we are really doing is franchising its brand and relying on it for technical audits, which we undergo every six months. We set up the distribution with the intention of starting operations to New York in 2008, either through a wet-lease or codeshare,” Clifford says. “But we have not yet worked out which. We are also starting a joint venture with Evergreen USA towards operating a joint freighter service between Lagos and Houston serving the oil market, but we will also be shipping fresh produce from West Africa.”
The airline now operates a mixed fleet of 10 aircraft, including five Boeing 737-300s, two 767-300ERs, two Fokker 50s and a single ATR 42, but these are in the process of being replaced. “In November we announced our short-haul solution with an order for 24 Embraer E-Jets with a capacity from 70 up to 120 seats [E-170/190/195], which will provide the lift we need both domestically and regionally,” says Clifford. “This will enable us to become the Emirates of West Africa – that’s how our chairman has described it. What this means is that we will create a major hub around Murtala Muhammed Airport in Lagos, from which we will distribute traffic to every city within Nigeria and West Africa. And we will fit our long-haul network around that hub too.”
First delivery of the Embraer jets, which he says represented the biggest single order for aircraft in Nigeria’s history, worth more than $800 million, will take place in September 2008. “We are also working on a long-haul solution,” Clifford adds. “The wet-leased 767s are not working for us; they are too old and have proven unreliable. We acquired them as a stop-gap measure, as no other suitable product was then available, but we are now urgently seeking a replacement and the Airbus A330-200 has come out as the right type for us. We initially need two aircraft, building up to six over the next five years.”
Getting to its pre-eminent position in Nigeria in such a short time has been a costly process. “Africa is an expensive place to do business,” he notes. “And we had to set up our infrastructure from scratch. The result is that we will not be profitable for another two years. We had always intended to float and still would like to increase the shareholder base and, through an IPO, the capital of the airline.”
The increasing competition within Nigeria from Aero Contractors, Arik Air, Chanchangi Airlines and Bellview Airlines is of less concern than the poaching of pilots by carriers in the Middle East and Asia, which is a problem that affects all African airlines, including Virgin Nigeria. “We put up our salaries for pilots by 30% in 2007 to try and keep hold of them,” Clifford reveals. “As a relatively small operator we cannot afford to lose more. At peak periods we need to hire in outside contractors from Europe and North America, which adds to our cost. There is not much one can do about this, we just have to train more pilots.”
Apart from this particular thorn in its side, the future looks bright for Virgin Nigeria. With only 6 million domestic passengers annually in a country with a population of 140 million, there is much potential for growth. “We are sitting on a large market, which can only become bigger. Nigeria is the world’s sixth-largest oil producer and eventually the money will filter down. Flying will become more affordable for many more people.”
Until his appointment by Virgin Nigeria, Clifford was director Asia-Pacific and Africa for Menzies Aviation. Prior to this he spent seven years at Virgin Atlantic, finally as commercial director. He has also worked with Cathay Pacific in various capacities.
Source: Airline Business
