Why Branson cannot rescue Virgin Nigeria’
By OYETUNJI ABIOYE
Published: Wednesday, 14 Jan 2009

The recent decision by Virgin Nigeria Airways to suspend its long haul flights has again thrown up the controversy over the real owners of the country’s flag carrier, its true financial position and the conflict of interests among its original owners.
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The chairman of Virgin Group, Sir Richard Branson

The airline was established in 2004 from the ashes of the liquidated Nigeria Airways, with the Chairman of the Virgin Group, Sir Richard Branson, and Nigerian institutional investors controlling 49 and 51 per cent shares respectively.

Industry observers and stakeholders were shocked by Virgin Nigeria’s announcement of the suspension of its long haul flights last Friday giving only three weeks notice to passengers.

The carrier said, effective January 27, 2009, flights to Johannesburg, South Africa, and Gatwick, London would be suspended, citing product review as reason.

Industry watchers wondered why Virgin, supposedly set up to fill the vacuum created by the liquidation of Nigeria Airways, made such announcement.

Experts are saying that again it is bringing to the fore the question of whether the flat carrier was properly done or not, whether Branson is still committed to it, and who are the Nigerian institution investors.

The former Minister of Aviation, Mr. Felix Hyat, had a few months ago declared that the process was not transparent, saying “due process was not followed.”

Virgin, however, insisted that it was not true, saying South African Airways and some other companies participated in the bid.

But a source at the South African Airways who pleaded anonymity told our correspondent that though it participated in the bid and won it, it was never given.

He said that SAA went through all processes involving the Bureau of Public Enterprise, but at the last minute when the former President Olusegun Obasanjo was to append his approval, “Virgin was brought in from nowhere to take over everything.”

According to him, the carrier was to be named Nigerian Eagle until Branson came in, adding that the template was designed by SAA, with the international call sign that was adopted by Branson.

The Chief Executive Officer, Belujane Konzult, an aviation consulting firm, Mr. Chris Aligbe, said that Virgin Nigeria was not originally set up to be the country’s flag carrier, adding that “the impression that a flag carrier was being set up was a facade”.

He said that Nigeria Airways, which had one-tenth liabilities of its asset was wrongly liquidated and that put the government under pressure to bring in Branson.

Branson he said, came in with the plan to create a strong domestic and regional carrier and not an intercontinental flag carrier for the country.

He said, “Virgin Nigeria is not a true Nigerian flag carrier. It was not programmed to make long haul operations. They did not plan it that way. No flag carrier will go to Gatwick instead of Heathrow. The number one hub in Europe is Heathrow. The main purpose of Branson’s investment is to get what the Virgin Group could not get – the Cabotage right. It was created to feed Virgin Atlantic. We saw it ab-initio. We shouted but no one listened.”

A source at Virgin Nigeria who did not want his name mentioned said the airline was returning its two long haul aircraft to firms that leased them.

Virgin had been using two Boeing 767-300 to service Johannesburg and Gatwick.

The Belujane boss argued that Branson had the clout in the global sector to get better competitive aircraft for Virgin Nigeria if he wanted it.

This, he said, could only be done if he wanted the airline to be an effective long haul carrier.

He said, “Why is Branson called a core investor? It is because as a technical partner, he has the capability to make the difference. Virgin Group is gradually pulling out of Virgin Nigeria.”

The Virgin Atlantic Airways spokesperson in Nigeria, Mrs. Kudirat Isiaka, in a statement confirmed this, saying, “Virgin Atlantic remains a minority shareholder in Virgin Nigeria and fully supports its decision to focus on its profitable domestic and regional routes, throughout West Africa.

“The future strategy of Virgin Nigeria has always been a matter for the Virgin Nigeria board, which includes UBA.

She also said, “Virgin Atlantic is 100 per cent committed to Nigeria and continues to be a major operator on the Lagos to London Heathrow route. We are proud to carry many Nigerian passengers between the two cities every week.”

Stakeholders, including Aligbe said that VAA was stating the obvious-Branson has divested.

Investigation by our correspondent revealed that Branson had only seven per cent shares left in Virgin Nigeria.

A source in one of the aviation agencies said that the recent restructuring in which about 200 workers were laid off from Virgin was at the instance of UBA.

Some stakeholders have said that the “product review” which is the reason stated by Virgin for the suspension of its long haul flights might be true since it is currently being managed.

A source said that UBA’s current role in Virgin was a sure indication that Branson had divested from the carrier.

Aligbe expressed support for the current role UBA was playing to reposition Virgin Nigeria, noting that if it was not done, the airline would have been “one of the airlines that will collapse in 2009.”

He also said that it was a good development that UBA had acquired effective control the Virgin brand was costing Virgin Nigeria $250,000 monthly excluding management charges, adding that the carrier could hardly survive under such atmosphere.

He said, “Virgin Nigeria has been making zero profit since the beginning of its operations.”

Aligbe said that it would be sad for the sector if the airline should go under, urging government to take immediate action to save the carrier.

This, according to him, was important otherwise aviation would be a drag and indeed, a major set back in the nation’s quest to attaining vision 2020.

More importantly, he said such news would send a bad signal to the international community about aviation business in the country.

In doing this, Aligbe recommended that the government could consult International Finance Corporation to carry out a due diligence on the airline, by conducting an investment audit into it with a view to determining the level of investment and the actual investors and the quantum of investments.

After this, he advised, government should pay off all the investors, acquire it, and invite a technical partner to rebuild or set up the airline. He said that country could use the Kenya Airways model to reposition it.

This view was supported by the Managing Director, Sabre network, Mr. Gabriel Olowo. He said it was necessary to move the carrier ahead.

The President, National Cabin Crew Association of Nigeria, Mr. Olumide Ohunayo, corroborated the view that Virgin Nigeria could only be a low cost regional carrier, and not international, given Branson‘s pedigree of offshore airline investment in low cost regional carriers.

The General Secretary, Aviation Round Table, Mr. Sam Akerele, said that the Nigerian Civil Aviation Authority might need to audit the airline.

On what impact it could create should if the airline should go under, Aligbe, Akerele and others said that it would make travelling difficult on domestic and regional routes because it could take time for the existing carriers to fill the gap.

On the international route, they said it would not, as Virgin had no strong footing there. http://www.punchng.com/Articl.aspx?theartic=Art200901141525093

what do we do to the OBJ and richard for taking advantage of us like this?

we can moan and sigh

once again the Nigerian people have been exploited
whatever gave them the impression that Branson had thier interest at heart?
being the top most business man in the world doesnt come with having emotional feelings moreso to "developing" countries like nigeria

It is still a white supremacy thing, who said Nigerians cannot make an air carrier work without having to collaborate with any white arse moda foker?

can u try to civil in ur words?

anyway to answer ur question, the same person that made it obvious that Nigeria doesnt have the money to foot the bill of having a national carrier
scrap that, the nigerian aviation sector is not vibrant enough to attract the nigerian investors that are willing and bouant enough to invest in it.
coupled with the issue of corruption that has eaten deep into the fabrics of the nigerian society.
Bureaucracy, Nepotism, standard players in the Nigerian government.

@Bluespice

What are you talking about - so Branson is corrupt - hence Virgin Nigeria failed? or must you lay the blame of everything on the foot of corruption? what of politicval maneuvres? what of him trying to cheat, etc? Must you always blame your own?

from my good knowledge of nigeria aviation wat is happening at virgin nigeria basically boils down to poor business planning by the people that started the carrier, the lack of will of the investors(both local and international) to commit much funds and the fact they hope too much on government advantage. you can't blame obasanjo instead praise him for the reforms in the aviation sector becos after virgin came in more people were willing to invest much more in the sector, like arik and the heavy reinvestment by aero, but ironocally that is what hurt virgin. virgin be wan make im papa fight im mate for am, they no serious

superboi:

from my good knowledge of nigeria aviation what is happening at virgin nigeria basically boils down to poor business planning by the people that started the carrier, the lack of will of the investors(both local and international) to commit much funds and the fact they hope too much on government advantage. you can't blame obasanjo instead praise him for the reforms in the aviation sector because after virgin came in more people were willing to invest much more in the sector, like arik and the heavy reinvestment by aero, but ironocally that is what hurt virgin. virgin be wan make I'm papa fight I'm mate for am, they no serious

Excellent analysis superboi. You are right on the mark.

bluespice:

can u try to civil in ur words?

anyway to answer ur question, the same person that made it obvious that Nigeria doesnt have the money to foot the bill of having a national carrier
scrap that, the nigerian aviation sector is not vibrant enough to attract the nigerian investors that are willing and bouant enough to invest in it.
coupled with the issue of corruption that has eaten deep into the fabrics of the nigerian society.
Bureaucracy, Nepotism, standard players in the Nigerian government.

superboi:

from my good knowledge of nigeria aviation what is happening at virgin nigeria basically boils down to poor business planning by the people that started the carrier, the lack of will of the investors(both local and international) to commit much funds and the fact they hope too much on government advantage. you can't blame obasanjo instead praise him for the reforms in the aviation sector because after virgin came in more people were willing to invest much more in the sector, like arik and the heavy reinvestment by aero, but ironocally that is what hurt virgin. virgin be wan make I'm papa fight I'm mate for am, they no serious

truth no go finish for una mouth