Raising the bar through aviation technical service pact

This is good news. I hope Virgin Nigeria will grow to become a global player in aviation. We have suffered enough in the hands of oppressors

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One of Nigeria 's flag carriers, Virgin Nigeria, recently in far away Addis Ababa, Ethiopia, broke new grounds. The carrier signed a new technical agreement with the continent's most profitable airline - Ethiopian Airlines which is expected to lead to the stability of the country's carrier and reposition it for the challenges of air travel. WOLE SHADARE, who witnessed the signing of the agreement, writes on the benefits that will accrue from the deal and why other Nigerian carriers should take a cue from Virgin Nigeria

THE wait was long. Inside the expansive office of the Chief Executive Officer of Ethiopian Airways, Ato Girma Wake, the mood was pensive, although there was high hope that a deal would be sealed.

A team from Virgin Nigeria, comprising the Chief Executive Officer of Virgin Nigeria, Captain Dapo Olumide, Publisher, African Aviation Magazine, Nick Fadugba, Chief Executive United Bank for Africa (UBA) Plc, Amadou Hott, Corporate Communications Manager for the airline, Francis Ayigbe and Executive Assistant to the CEO of Virgin Nigeria, Christiana Imafidon waited all day, perfecting all their books, scrutinising the deal before it was signed late into the night.

While this was going on, Wake, who was obviously elated over the benefits the deal would bring to both carriers, waited patiently in his conference room with his team.

Both parties, after studying terms of the Technical Service Agreement (TSA), eventually signed what has become a landmark achievement that will see Ethiopian Airlines become TSA to the Nigerian flag carrier.

The Ethiopian Airline chief, unable to contain his joy, invited his guests, including the reporter to Hilton Hotel, Addis Ababa to pop Champaign to celebrate late into the night.

Girma Wake said, "it affords us the opportunity to work together. It gives us the opportunity to also look at one another's operations and see how to collectively come out with something that is acceptable to our customers. It will help us provide technical assistance to Virgin Nigeria which we hope will maintain good standard that they already have and on of the imperial benefits is the benefit to Africa and that is the most important thing."

Wake recalled that the deal took two weeks to achieve, stressing that the great potentials of Nigeria facilitated the signing of the agreement.

According to Wake: "We know Virgin Nigeria, we also know the potentials of Nigeria, and we believe Virgin Nigeria will serve the Nigerian public very well. I also think that as nations, we can also put in something to ensure that the work in Nigeria succeeds. Technical cooperation is a two way thing, and I believe that we will achieve synergy from this."

The deal came at a time Virgin Nigeria severed technical relationship with Virgin Atlantic and a first step towards exiting the Virgin brand.

The Nigerian management of the carrier had made their intentions known immediately they assumed office of their plan to re-brand, cut all extraneous expenses, reposition the airline to make revenue and make it attractive again for investors.

The idea according to sources was also to save the airline of over N1 billion spent annually to retain the Virgin logo, which to them has outlived its usefulness.

For the first time, the continent is seeing the most successful airline, Ethiopian Airlines, with strong track record of profitability, coupled with efficient operation and high-level expertise in aviation.

Virgin Nigeria had a very faulty foundation that compounded its woes but was not helped by a management that did not see anything wrong with the fortune of the airline.

How can one explain the circumstances that led to the indebtedness of the carrier to the tune of over $200 million? From all indications, the airline was not designed to make profit but as one of the avenues of enriching Sir Richard Branson, the maverick business mogul, who had boasted that the airline would collapse if he withdrew his investment from the airline.

For the first time, according to sources, the airline had become profitable, a fact Wake attested to during the financial presentation of the airline before the deal was sealed.

The new technical service agreement with Ethiopian covers audit oversight, operational control, ground services, cabin crew training and processes and maintenance oversight.

Not a few believe that the agreement was necessitated due to Ethiopian's Federal Aviation Administration's category one certification.

Ethiopian is one of the few carriers in the world that meets European, American and Asia 's highest safety standards. The airline is the most profitable airline in Africa. At a time mega carriers in Europe and the U.S. are reporting losses and closing some routes, ET as it is fondly called made profit.

In terms of maintenance, the airline has one of the best maintenance facilities in the world. It remains one of the safest in the world.

The airline on August 12, 2009 posted a net profit of $117 million in its fiscal year ended June 30, a 165 per cent increase over the prior year's figure and a company record.

Wake called the result "noteworthy and rewarding" and said ET survived "cutthroat competition in the industry, global economic crisis, escalating operational and capital costs led by the less predictable and fluid gyration of fuel prices and the shrinking trends of the market environment" during the period.

Speaking on the development, Aviation Consultant and a former director with the defunct Nigeria Airways, Captain Dele Ore lauded the idea, saying, "for the first time an airline is getting it right."

According to him, it is a good response to the Yamoussoukro Decision, which he said, encourages the liberation of Africa 's air transport business.

He explained that the deal has seen an African airline partnering another African carrier, which he said, was the most successful airline on the continent, stressing, "this is what Yamoussoukro Decision signed 20 years ago has been fighting for. This is the first positive agreement we are seeing, with an airline of Ethiopian Airlines pedigree, with good network. The airlines can now code share. It is going to augur well for them with the pull out of Virgin Atlantic; I congratulate the new management of Virgin Nigeria. This type of thing can only happen when you have professionals handling affairs."

Aviation analyst, Olumide Ohunayo described it as positive news to see two sub- Saharan airlines knot that type of deal, which he explained was usually between a European carrier and an African airline, "though it is not the first in Africa but the first with a Nigerian airline."

He reiterated that while Ethiopian Airlines handled the technical and operational aspect, Virgin Nigeria could concentrate on core managerial activities which he described as the tonic needed by the airline at this material time.

His words: "The icing in the agreement is the potential synergy for commercial collaboration considering Virgin Nigeria is strong on the West coast, while Ethiopian has Asia and Middle East. It also aids Ethiopian's long desire to penetrate the West Coast market, which was blocked by Nigeria. It's a win-win for the two carriers and strong source for future ancillary revenue, provided they are not entangled in socio-political issues that suffocated similar deals such as Air Maroc and Air Senegal international.

"I have a strong felling ET will gradually pull out of the new regional carrier, ASKY Airlines since the same objective can now be better achieved with Virgin which is on ground with IOSA certification and have out grown using diapers."

Commenting, Fadugba a key facilitator in brokering the deal, lauded the government for the bold step of not allowing the carrier to fail by showing commitment to the airline, stressing that of all the carriers in Nigeria, Virgin Nigeria has the brightest future.