The long-awaited disaster that many travel and tourism industry practitioners have been waiting for to hit Virgin Nigeria has finally happened. The bad news for one the nation’s flag carriers was made public last Friday, January 9, 2009, when the suspension of its flights to lucrative London and Johannesburg, South Africa routes was announced.
A release signed by the airline media manager, Samuel Ogbogoro said the suspension takes effect beginning January 27, 2009.
According to the release, the decision to suspend both services is to enable the airline to review its entire long-haul operations that includes its product offerings on these routes.
“In the mean time, our focus is on consolidating and continuing to expand our profitable domestic and regional flight operations. Once the long haul product review has been finalized, we are certain to return to the long haul routes,” Ogbogoro said.
The airline management, therefore, assured its loyal customers on the Eagleflier scheme who have acquired miles from its long-haul flights of the validity of the miles saying the program remains in place.
The airline says it apologizes for any inconvenience that the suspension may cause its esteemed customers and that plans have been put in place to re-protect affected customers on other carriers at no extra cost to the passengers.
Meanwhile, source close to the airline told some media organizations that the final blow came when the airline’s bank, United Bank for Africa Plc [UBA], called for the restructuring of Virgin Nigeria operations that compelled the airline to suspend its long- haul flights to London and Johannesburg effective January 27, 2009, pending a review of its international operations.
Further investigation by travelafricanews.com revealed that Virgin Nigeria was forced to suspend its flights to London and Johannesburg by UBA as a result of the airline’s rising debt running into several millions of dollars.
In addition, poor operating results, rising costs, and the increasing number of competitors on the long-haul route made it difficult for Virgin Nigeria to meet its debt obligations to UBA, which holds a minority stake of less than six percent in the airline.
Report also indicated that UBA thinks that if Virgin Nigeria alters its business strategy by focusing more on short-haul of domestic and regional flights as a low-cost airline, it could increase its market share and become profitable over time.
Though the news did not come as a surprise because many Nigerians knew long ago that the airline cannot compete against the likes of British Airway, South African Airways, European airlines and even Virgin Atlantic. With just one frequency to London and another one to Johannesburg daily, it was simply not going to be profitable to the airline.
In addition to the suspension of its international routes, part of the restructuring plan initiated by UBA also compelled Virgin Nigeria to lay-off some of its ground staff.
Other measures include the decision by the airline not to purchase outright its brand new Embraer aircraft ordered from Brazil. Instead, UBA has advised that it leases them under a wet lease arrangement as a way of saving money.
Virgin Nigeria took delivery of the first of the Embraer aircraft in September last year. Since then, two more have been rolled off the assembly line awaiting delivery to Virgin Nigeria. The airline in 2007 placed orders for 10 Embraer airplanes.
Added to this is the recommendation by UBA to suspend the sale of 42 percent of Virgin Atlantic’s equity in the Nigerian airline, pending improvement in the economic climate.
Virgin Atlantic currently holds 49 percent in Virgin Nigeria, but indicated its desire to divest 42 percent of its equity in the company late in 2007 through a private placement.
Virgin Atlantic, however, would have continued to provide technical and management support to Virgin Nigeria under a technical services agreement, but is still nursing the ambition of giving up its investment completely.
In the interim, there is talk that UBA has met with the management of Virgin Atlantic to review the subsisting technical services agreement it has with Virgin Nigeria which it also believes that the terms are not favorable to the Nigerian airline and erodes its earnings.
Responding to the airline’s announcement, the director general of the Nigerian Tourism Development Corporation [NTDC], Otunba Segun Runsewe, apex tourism agency in the country in a telephone interview with travelafricanews.com, said, “ Nigeria needs a national airline that will be supportive of its agency tourism marketing, promotion and development.”
To some industry practitioners, it is puzzling that such a vast market like Virgin Nigeria failed to take advantage of the juiciness of the London/Lagos or Abuja routes and the Johannesburg/Lagos routes. Many attributed the failure of Virgin Nigeria to its management recklessness and ineptness as well as blaming them for misplacing their priority.
In the last few years that the airline operates the London and Johannesburg routes, the airline never made any sensible marketing decisions. It is either sponsoring musical events, or its taking actors and actresses on unproductive trips abroad.
Meanwhile, tourism officials both in the private and public sectors urged the airline to attend major travel events in Africa and Europe at least to learn how it can come up with packages that will enhance its colorless services and flap operations.
Not surprising, though, Virgin Nigeria officials were unable to market Nigeria to the Diasporas, much more competing with well-established British airlines. For many in the travel and tourism press in Nigeria, it was a matter of when but not how the airline will go under on the routes before.
Regrettably, Virgin Nigeria would have been a thing of the past, if not for the cover–up it enjoyed from the media in the country as an unhealthy airline, most especially the aviation journalists.
With about 4 million Nigerians living in the United Kingdom alone, and sizeable numbers of Nigerians in Southern Africa, why can’t Nigeria’s flag carrier cannot operate more than a flight daily to the aforementioned destinations?
Read more details as to why Virgin Nigeria failed on the London and Johannesburg routes respectively by visiting www.travelafricanews.com next week.