AM EDITORIAL: When Nigeria’s State Governments Establish Airlines
After the official liquidation of Nigeria Airways, private investors have been left to run airline business in Nigeria. Private airlines emerged and collapsed due to numerous challenges including policies, operating environment, fuel costs, exchange rate, maintenance costs, poor business plans, lack of good corporate governance, limited access to capital and sovereign credit.
In recent years, the quality of customer service, airline staff welfare, high cost of training and On-Time-Performance have raised concerns too.
Over the years, state governments have been investing hugely in establishment of airports. The trend has now been extended to airline business as some are setting up airlines. Others are partnering with branded carriers to do so.
Ibom State Government’s Ibom Air was established in 2019 and its model is already telling a success story with profitability, projecting increase in revenue to N150 billion in 2025 from N95 billion in 2024. Despite being 100% funded by the state government, efforts in the direction of good corporate governance are visible as it opens its books to scrutiny.
Ogun State Government recently entered into operational partnerships with ValueJet for commercial flights and the airline has commenced operations in October 2025.
Enugu State government has launched Enugu Air this 2025, operated by XEJet Airline. Cross River State’s Cally Air, launched in 2021, was an arrangement run through a partnership with an existing operator.
ValueJet has a sub-lease and operational services agreement with Cally Air, under which ValueJet will manage and operate two Bombardier CRJ1000 regional jets on behalf of Cally Air. Under the sub-lease, ValueJet will be responsible for the day-to-day operating functions for the two CRJ1000s.
Many more states in Nigeria like Lagos, Ebonyi, Anambra and Bayelsa have indicated interest in setting up airlines, implying that state governments have found airline business attractive as a venture to invest in, apart from airports.
The trend of state governments establishing airports can indeed, make it easier for local airlines to acquire modern aircraft and confront the huge start-up costs. It could also help stimulate economic activity with more flight options for inter-state connectivity and movement ease for investors and business people. Enhancing competition in domestic airline business can equally minimize flight delays, cancellations, and limited routes that hitherto left many regions underserved. State-funded airline operations, is creating employment opportunities in the sector, both directly and indirectly.
However, it is important that state governments looking to set up airlines, do so with right motives and due diligence to correct the perception that government owned airlines do not do well in Nigeria. Imo Air that was set up by Imo State government some years ago, did not have a success story.
Interested state governments should set up airlines with an understanding that funding airline operations is a fiscally responsible decision. They must consider the potential risks and benefits before embarking on them such initiatives to ensure success in the ventures. Compliance with and stability of agreements that the state governments are signing, are necessary for success of these state owned airlines. The process of obtaining full Air Operator’s Certificate (AOC) is also left to be seen in the coming days.
The aged monster of bureaucracy or government interference in the day-to-day running of its funded airline must be avoided like a plague, if these airlines must grow and succeed. Experience has shown that no airline is sustainable without good corporate governance. Airline management’s ability to resist political pressure is also critical.
There is nothing wrong with Nigeria having many state governments that own properly managed and profitable airlines. Is the country on that path? Time will tell.AM
