AMERICAN AIRLINES, PRONACO PETITION US GOVT OVER VIRGIN NIGERIA'S PLAN TO FLY NEW YORK DIRECT

 

LAOLU AKANDE

NEW YORK

FEB 10, 2005

 

Plans and considerations for the resumption of direct air travel between Nigeria and the US is gathering a controversial momentum here in the US as four American companies, including three commercial airlines have submitted objections to the US government on the application of Virgin Nigeria airline for permission to fly the US-Nigeria route direct.

 

This is not coming as a surprise to aviation watchers internationally because the New York-Lagos route which is at contention is regarded as one of the very lucrative in the airline business.

 

But it is not only the Americans who are filing objections. The old rivalry between more popular Nigerian groups and the government-initiated Nigerians in Diaspora Organization, NIDO has also reared its head in this matter.

 

While NIDO have been actively supporting Virgin Nigeria's application to the US Department of  Transportation and trying to mobilize Nigerians abroad to deliver petitions in support of Virgin Nigeria to the US government, other groups like the PRONACO-US have risen in opposition to the Virgin Nigeria application.

 

Indeed PRONACO-US in a letter sent to the US Transportation Secretary Norman Y. Mineta, the group specifically asked the US authorities not to consider approving the application.                                                                                                                                                        

 

Virgin Nigeria filed its application for a foreign air carrier permit with the U.S. Department of Transportation, DOT, on December 22, 2005 seeking authority to provide scheduled passenger and cargo air service between Nigeria and the United States.

 

But less than one month after, by January 6, 2006, four US companies had filed objections to this application. 12 days after Virgin Nigeria also filed its responses to the US companies.

 

The objections among other issues deal with the previous refusal of the Nigerian government to allow US airlines fly direct to Nigeria and also on the ownership structure of Virgin Nigeria and its identity as a truly Nigerian airline. But Virgin Nigeria, in its reaction and response to the US government,  is vigorously defending its identity as a truly Nigerian airline. 

 

Even PRONACO also questioned what it called "the corrupt way Virgin Nigeria became the national carrier in Nigeria."

 

The US firms that objected are three airlines: American Airlines, North American Airlines, Continental Airlines, and Federal Express.  Under statutory US regulations such objections and comments are normally welcome after an application of this nature before the government makes a ruling. As at press time, The Guardian was informed that one of the objections have been stepped down, that being the one from American Airlines which was withdrawn last Wednesday Feb 8 2006.

 

In its objection American Airlines had argued that "the Nigerian government did not approve a code-share arrangement between American and British Airways." For this reason, the US airlines saw no reason why the US government should also approve Virgin Nigeria to fly Nigeria direct.

 

The response of Virgin Nigeria to this response is that "Such a code-share arrangement is not specifically authorized by the bilateral aviation agreement between the United Kingdom and Nigeria.  However, Virgin Nigeria has been informed that the Nigerian government will nevertheless approve this arrangement. Indeed by last Wednesday, February 8 when the American Airlines withdrew its objections it said "our objection was based on the lack of approval by the government of Nigeria of a proposed codeshare arrangement between American and British Airways to serve US-Nigeria market via London."

 

But according to the American Airlines statement signed its Associate General Counsel Carl B. Nelson Jr., "On Feb. 7, 2006, we received written confirmation that the government of Nigeria approved the America/British Airways codeshare arrangement on Jan. 23, 2006 in accordance with the US-Nigeria open skies agreement. In these circumstances, we withdraw our objection to the Virgin Nigeria application."

 

Members of the NIDO heralded this objection withdrawal with uttermost excitement in the hope that it would lead to other withdrawals by the three other US companies, but it is apparent that the Nigerian government succumbed to the American/British airways codeshare arrangement just so the Virgin Nigeria application would sail through. A codeshare arrangement will allow American Airlines to also fly to Nigeria in association with British Airways and through London.

 

Besides, the objection from Continental Airlines is for three reasons. The first essentially is that "Virgin Atlantic (a British airline) is using Virgin Nigeria to provide flights from Nigeria that would not otherwise be permitted under the bilateral aviation agreement between the U.S. and Great Britain."

 

In replying this objection, Virgin Nigeria explained to the US government that the "same objection could be raised with respect to any foreign airline from a developing country and, if upheld, would effectively preclude it from flying to the U.S."

 

Also Virgin Nigeria submitted that "since Nigeria is not a category 1 country under the International Aviation Safety Assessment Program; Virgin Nigeria must make an arrangement (a so-called wet lease) with a western airline to operate its flights between Nigeria and the U.S.  A refusal to permit this arrangement would prevent Virgin Nigeria, or any developing country airline similarly situated, from flying to the U.S."

 

Continental Airlines also categorically challenged the position that Virgin Nigeria is owned and controlled by Nigerians, claiming that this is not the true picture considering the significant ownership structure and control of Virgin Atlantic a UK airline in the whole deal. 

                                          

But Virgin Nigeria responded that "a majority of the shares are owned by Nigerians and a majority of the Board of Directors are Nigerian citizens."

 

According to Virgin Nigeria, if the US Transportation Department  "finds that this is not enough, it has the authority to waive the ownership and control requirement and has done so numerous times in cases involving other foreign airlines.  Moreover, both Virgin Atlantic and the Nigerian investors in Virgin Nigeria have made it clear that one of their top goals is to continue to increase the percentage of Nigerian ownership and control in the years ahead."

 

The third objection from Continental Airlines is that "Nigeria has not approved Continental’s application to fly between the U.S. and Nigeria. And in its response Virgin Nigeria observed that as a company "Virgin Nigeria has no objection to the Nigerian government approving Continental’s application.  However, Virgin Nigeria understands that Continental is no longer interested in flying to Nigeria. The Nigerian Government has stated that it welcomes applications from Continental and others and has stated its willingness to approve a codeshare application it recently received from Continental – Air France."

   

The third US airline to object is North American, Airlines, which happens to be the same company called World Airways that managed the last US-Nigeria direct flights under the RiteTime/ World Airways arrangement. Those flights were suddenly ended over disagreement between World Airways and RiteTime, the latter being a Nigerian company. The US government has recently fined World Airways $350,000 for its role in the abrupt termination of the US-Nigeria flights which left many passengers stranded in Nigeria.  A class action lawsuit is also pending in the US brought by mostly Nigerian passengers against World Airways and RiteTime.

 

In its objection, North American a.k.a. World Airways is also accusing the Nigerian government for not yet approving its application to fly between the U.S. and Nigeria.

 

In its response, Virgin Nigeria noted that it has been informed "that the Nigerian government intends to approve North American’s application and the Nigeria government has written to North American indicating this." 

 

The final objection from a US company comes from the courier firm-Fed Ex. Fed Ex laid out two main objections.

 

According to it "Virgin Nigeria is not owned and controlled by Nigerians as required by the U.S. – Nigeria aviation bilateral agreement and this requirement should not be waived." But just like it did in response to that same allegation from Continental, Virgin Nigeria explained that "a majority of its shareholders and Board of Directors are Nigerians.  If that is not enough, DOT should waive the requirement as it has done in many other cases. A waiver is justified here in order to promote U.S. policy in Africa which states a strong preference for private sector solutions to improve aviation safety. "

 

– Secondly, Fed Ex complains that "Virgin Nigeria should not have chosen a British airline as its private sector technical partner because the British have a very restrictive aviation bilateral agreement with the U.S. which does not allow Fed Ex to provide the cargo services it desires."

 Responding Virgin Nigeria argued that "Nigeria engaged in a comparative selection process to choose its technical partner which was open to all.  This led to a choice between South Africa Airways which is a state-owned carrier from a country with an even more restrictive aviation bilateral agreement with the U.S. and a British carrier, Virgin Atlantic.  Virgin Nigeria should not be penalized for choosing Virgin Atlantic just because the U.S. is engaged in difficult negotiations with the UK over aviation policy, policies over which Virgin Nigeria has no control."

 

According to Virgin Nigeria"each of the objections relate to actions or expectations of the Governments of Nigeria and/or the United Kingdom.  While Virgin Nigeria should not be held responsible for these Government decisions, it is supportive of the requests of these four companies." 

 

Summing up its position a spokesperson for the Virgin Nigeria in the US said "The primary complaint of American and North American is that the Nigerian government has not granted their applications to serve Nigeria. Virgin Nigeria has been informed that it is likely those applications will soon be granted."

 

Besides, the source who wanted to remain anonymous added that "The primary objection of Continental and Fed Ex is that Virgin Nigeria is controlled by a British airline, Virgin Atlantic, and they object to the aviation policies of Great Britain.  But the U.S. should not block service by Virgin Nigeria because of its displeasure with the aviation policies of Great Britain.  Rather, it should recognize that Nigeria is attempting to build a safe and reliable airline with western help and in a way that is consistent with U.S. policies that favor private sector management.  Granting this application will help build closer ties between the U.S. and Africa and meet the needs of individuals and businesses that have long been clamoring for such service."

 

However the PRONACO-US group of Nigerians disagreed with NIDO which has been asking Nigerians abroad to send supportive petitions to the US government on the application of Virgin Nigeria. In a letter sent to the US Transportation Secretary by the group, it made its objection very clear:

 

"We are writing to ask that the United States Department of Transportation not to consider the application of Virgin Nigeria Airways or to be given the sole rights to provide direct flights from Nigeria to the United States but also look at all options including giving competitive opportunity to other US and other international carriers/ airliners and enforce the open air agreement.  The parent company of Virgin Nigeria or Virgin Atlantic Airlines already has authorization to land in the United States."

 

In a four-paragraph letter signed by Dr. Baba Adam and Bukola Oreofe, Chairman and Secretary of PRONACO-US, it was noted that "We understand the importance of Nigeria to the United States especially in terms of economic and military interests, but we are worried that giving special privileges to Virgin Nigeria would be tantamount to endorsing the corrupt way Virgin Nigeria became the national carrier in Nigeria with issues that arose from its questionable emergence still subject of litigation in the Nigerian courts.   We strongly believe that the United States should not be seen providing legitimacy to a carrier that emerged through non-transparent acquisitions by rewarding it the exclusive rights to fly directly into the United States."

 

In addition and in a veiled reference to NIDO, the PRONACO letter said "The groups of Nigerians advocating issuing of landing rights to Virgin Nigeria in the US do not represent us."

 

The letter added that members of PRONACO "are not only writing as member of Nigerians in Diaspora but also writing as voting United States citizens who have friends in the US Congress and the White House. We are available to testify if necessary. As United States citizen and member of the Nigerians in Diaspora in the United States, it is our sincere hope that Virgin Nigeria's application in its current form is not approved contingent upon Nigeria government granting approval to US carriers."

 

PRONACO then added that it was ready to participate in a public hearing over this matter with the representatives of ... US carriers with democratic bodies of Nigerians in the USA and Diaspora."

 

But other Nigerian professionals abroad are actively supporting Virgin Nigeria's application.

 

Mr. Francis James, (a founding member of the Organization for the Advancement of Nigeria, the group that conducts the Nigeria Independence Day parade annually in New York) said  his interest in this matter is purely to support the yearning of the Nigerian community here that desires a direct flight to Nigeria.

 

Said James "we got some work to do. Let's fight for all reputable and interested Airlines to get their approval. Our community stands to benefit from lower prices that will arise from the competition."

 

A spokesperson for NIDO, Ms Jumoke Akin-Taylor, another Nigerian professional here in the US who is a strong advocate of the Virgin Nigeria application noted that the withdrawal of the American Airlines objection translates to better chances for Virgin Nigeria obtaining the permit to operate the direct route. 

 According to her "It is our hope that more qualified Air carriers will be granted the permit to travel that route.  The competition will mean better service and fair prices for the route!!!"