Wednesday, August 20, 2008

Virgin Nigeria to lose its virginity?

There have been rumours that Branson has wanted to pull out of Virgin Nigeria for a while. The enforced move to MMAII last week may have been the last straw. Prima facie, the VN position makes a lot of sense: that being based at MMAI is the platform for expanding Lagos as a hub with VN playing the role of de facto national carrier.

However, I've never understood why there could not be a free flight-side bus link between the terminals - facilitating movement and connecting flights etc. This is pretty standard stuff at international airports (as a developing country example: Mumbai airport has exactly this system in place). Rather than having one airline playing the hub-building role of quasi national carrier (leaving other airlines to feel out of favour), this would have the added advantage of allowing several airlines to help build the 'hub' together. Bellview, Arik etc. could all then offer a smooth interconnecting service to their passengers.

Is this yet another idea that's so simple it could never work in Nigeria?

Here is the article by Matthew Green in today's FT that prompted the post:

Virgin Atlantic is in talks to sell its 49 per cent stake in Virgin Nigeria, which it set up in 2005, following an increasingly acrimonious dispute with the Nigerian government over the location of the loss-making west African carrier's domestic operations.

Sir Richard Branson, president of the UK longhaul carrier, on Tuesday accused the authorities of using "Mafioso-style" tactics to force Virgin Nigeria to move services from the international terminal in Lagos, the commercial capital.

"It is regrettable that events have caused us to review our shareholding and whether it is appropriate that the Virgin brand should remain linked to Virgin Nigeria," Sir Richard said.

Virgin Nigeria was hailed as a symbol of investor confidence in Nigeria when it was set up by Virgin Atlantic and Nigerian institutional investors, in part to meet demand for a reliable carrier given the country's poor record for air safety.

Virgin Atlantic claims that the government reneged on a deal signed under Olusegun Obasanjo, the previous president, that let it use the international terminal for all services.

The administration of Umaru Yar'Adua, who took power in May last year, says Virgin Nigeria's claim is not legally valid.

Virgin Atlantic's criticism echoes accusations by companies including Royal Dutch Shell and Mittal Group, which accuse the government of tearing up contracts signed under its predecessor.

Mr Yar'Adua's officials say his administration is only reversing deals in which foreign companies tried to exploit the country and is committed to promoting investment.

Sir Richard claimed thugs were sent to smash up Virgin Nigeria's domestic lounge this year. "The behaviour of the authorities was similar to the way the Mafioso behaved in the US in the 1930s and not what I would have expected from the authorities in Nigeria," he said.

"If Virgin Nigeria can be treated in this way, can any company in the world seriously consider investing in Nigeria in the future?"

Aviation authorities forced Virgin Nigeria to relocated domestic flights from the international terminal at the Murtala Muhammed airport in the past week.

The airline says a court appeal against the decision is pending. Virgin Atlantic said it had been in talks with potential purchasers for its stake in Virgin Nigeria for several weeks.

Virgin Nigeria says it needs to operate both international and regional services from the same terminal to ensure smooth services for transit passengers.

When Virgin Nigeria was created in 2005, it was seen by the Virgin group as a potential model for its aviation interests in developing countries.

The group has airline interests in the UK, Australia, the US, Belgium and Malaysia.


onydchic 11:05 am  

Honestly, I don't see what the big deal is all about. It's not like they were asked to do something unusual. Keep your international wing in the MMIA and the local wing in the MMA2. It's their refusal to comply and belief that they're oh-so important that caused the government to trash their lounges in the first place.

Instead of them to work on their poor flights, constant delays and other hiccups, they're busy whining about a move. If location means more to them than quality, the Branson can take his brand and shove off.I fail to see the relevance of their complaints.

naijalines 11:34 am  

I don't think any government has the right to use mafioso tactics on companies to force them to do its bidding. It is wrong, wrong, wrong. It can only happen in Nigeria and there is no justification for it. If a government cannot abide by its own laws, why should the people?

The Nigerian government champions lawlessness in the country everyday. So how can Nigerians respect law and order? It is just so sad!

Anonymous,  12:27 pm  

Nigeria should take action against virgin if they don't offer proof to support their Allegations. Anyway like bakassi obj did a lot of things outside the bounds of the law that now need to be fixed.

Anonymous,  2:17 pm  

"It's their refusal to comply and belief that they're oh-so important that caused the government to trash their lounges in the first place."

Really? And that's OK with you? Nothing about that shakes you up or disgusts you?

Anonymous,  2:21 pm  

This has nothing to do about breached contracts, but with politics.

Why should VK move to MMA2 and Arik remain at the (cheaper) GAT? If all domestic operations have originate from MMA2, why not Arik Air? If the authorities were sincere, they wouldn’t make an exception for any airline.

The owner of Arik intends to build his own terminal for his (inter)national flights. This will be allowed by the government as Arik Air is supported by powerful politicians...

It's a pity Virgin is leaving Nigeria. Potentially, VK could still become a successful airline, as they are gradually expanding their network. And more important, the financing of VK is not surrounded with allegations about money laundering and misuse of public funds as is the case with Arik Air. Finally, compared to Nigerian standards, Virgin Nigeria's services are not that bad.

Anonymous,  2:27 pm  

"However, I've never understood why there could not be a free flight-side bus link between the terminals - facilitating movement and connecting flights etc."

This should be provided by the authorities, but they are not able too! The second runway is now closed for over two years due to mismanagement, and their are now signs it will re-open soon.

Saymama 2:35 pm  

I don't think trashing and vandalizing their lounge and stuff was a civilized approach by the Nig. authorities. It's nasty and unnecessary and plain gangsta.

Having said that, I don't quite understand what the big deal is for VN to move to the domestic terminal. If they want passengers to catch or make their connecting flights 'seemlessly' (which they rarely do anyway, due to their perpetual lateness and disorganization presently at MMA1) then how hard is it to ferry them with a coach bus to the neighboring terminal for them to catch their flights and schedule accordingly??? It's done all over the world, so I fail to understand the rocket science here and what the yah-yah is about o jare. As Naeto C would say: 'kini big deal'..

But finally, Branson pulling out? Not a good sign for the country image-wise.

anonymaus,  3:57 pm  

There are many rumours about the real reason for Virgin's wanted withdrawal from Nigeria.

Here is one

"...Airline industry operators contend that Sir Richard Branson, the chief executive of VAL, was under pressure from Singapore Airlines, a key shareholder in VAL, to dump its loss-churning venture in Nigeria. "Singapore Airlines has told Branson to choose between it (Singapore Airlines) and Virgin Nigeria Airlines," said our source who would not want his name in print..."

taken from

Whatever the reason or real reasons, if a government can't fulfill it's side of the promise. Why would anyone ever consider seriously investing in a country where agreements are not abided by? Why bother when you can go elsewhere and get an equally good return in the knowledge that the investment climate is more secure. This does beg the question is there anything like a continuity in policy at all, running from one government to another? How can progress be made when one government reverses the policies of it's predecessor? If things go on like this no progress will be made at all.

Kody 4:46 pm  

Pleeeasse International Airport = International flights

Domestic airport = domestic flights.

Its not rocket science so i fail to see why Virgin Nigeria should be accorded any special privileges. Its service is crap anyway; energies are best focused on improving it.

aronke,  6:26 pm  

Onydchic said: It's their refusal to comply and belief that they're oh-so important that caused the government to trash their lounges in the first place.

I can't even begin to believe you wrote that. I can only say 'wow' at your level of 'jungle' intelligence. Surely you're no better than all the other moronic cretins running about in government.

Whether or not Virgin services are good is not the point. The point is there may or may not be a binding contract and if there is, the Federal Government has an obligation to abide by it, like it or not. Otherwise, like anonymaus said, why the heck would anyone consider investing in a country where agreements are not honored and contracts can be torn up at will by succeeding governments?

onydchic 7:22 pm  

@anonymous 2:17 and aronke

ok fine, maybe I phrased that wrong. I was irritated with the hype this whole thing is getting. What I meant was, they were asking for trouble. Perhaps trashing their lounge was not the best way forward. But it still doesn't take from the fact that they made this issue bigger than it needed to be.

onydchic 7:24 pm  

And yeah the quality of their services IS the point. They're not exactly honoring their part of the bargain if they aren't even doing a really good job. Virgin Nigeria is synonymous with complaints.

I'm sorry, I feel no sympathy for them.They should just friggin move.

Anonymous,  7:49 pm  

aronke, oh brilliant one, and what if as the government contends, the contract isn't legal. then what?

Anonymous,  8:36 pm  

"Perhaps trashing their lounge was not the best way forward."

Perhaps? We're talking about a government brazenly indulging in mafioso tactics to quell a business dispute. It is completely inexcusable. Completely.

What next, breaking people's knees for not paying taxes?

Aronke,  8:52 pm  

@anon 7.49. Well obviously, if the contract is not legal, then it's not binding so duuuuuhhhhhh.... let's all go sip pina coladas by the pool and forget about this.

My point was and is: if there is a LEGAL contract, i don't know if there is, please educate me, then the govt is obliged to honor it. And even if it's not, what's with the totally pedestrian behaviour of trashing their lounge? I mean WTF??? Is that any way to behave??

yodude,  9:35 pm  

Everyone seems to be forgetting the international implications of this action Virgin is taking...

Knowing Nigerians, we adopt a gang mentality and say things like they had it coming, domestic is domestic, they can go if they want to and so on.

Hardly the tactic needed in this case. This WILL have international implications in the long run. Doesnt anyone care about the reputation of Nigeria in the eyes of the world? Arent we the ones who try to prove what Naij has to offer?? Sir Branson has a right demo all he wants since his claims are backed up on paper. And hes not some small boy (read push over). He does have some influence.

The government,instead of using bully tactics in some misguided effort to prove they follow the 'rule of law' should instead realise the PR mess this could become both in term of Nigerias image and foreign investors and act accordingly. Geeez

jubril,  9:50 pm  

anyone seen the contract?? it was apparently signed outside/after the MAIN m.o.u as a quickie deal with the then minister!

the tactics used aren't appropriate but thats the reaction when you realise someone on your turf has played a fast one- many capitalist will be swayed by this cheap blackmail!

how can progress be made when companies play dirty...

Ohi-UK,  11:45 pm  

It's a shame to know that a Nigerian minister signed such a dodgy document which technically should be binding... but thankfully Yaradua's govt is dealing with it from the point of it not done with the interest of the nation in mind.

As much as support the govt stance on this matter, I am totally against uncivilised demolition. For heaven sake, VN station could have been mandated yo be forcefully closed instead.

We can only hope that ministers would be more proactive in future and have the interest of the nation at heart when signing deal. Let's hope there was no brown envelopes were involved when the deal was signed.

Anonymous,  9:19 am  

Bloody fuck, i can't believe some of the comments here!!

Yodude has got it right, forget everything else, this is going to be a HUGE PR mess for nigeria, mark my words. I can just imagine that mindless twit yardy going around soliciting foreign investors and everyone asking 'aherm, and what happened with richard branson....'

anonymaus,  10:46 am  

I've no doubt that most people have already made up their minds on this issue. But I do feel that some things need to be stated.

1) Jubril you raised this point "anyone seen the contract?? it was apparently signed outside/after the MAIN m.o.u as a quickie deal with the then minister!"

The minister of aviation at the time was Malam Isa Yuguda, this is an extract that you might find interesting.

"However, former minister of aviation and current governor of Bauchi State, Malam Isa Yuguda, who called this reporter to speak on the travails of VNA, lamented that the forced relocation of the flag carrier's domestic operations to MMA2 was a disservice to the nation's aviation industry.

The governor, as minister of aviation in 2004, was instrumental in the emergence of VNA.

He said the decision to allow the flag carrier to run its domestic operations from the international wing of MMA was premised on the fact that Lagos was to serve as a hub for airlines in Africa.

He contended that former president Olusegun Obasanjo gave him the permission as minister of aviation to sign the undertaking allowing VNA to run its domestic operations from the international wing of MMA because that was the wisest thing to do at the moment because of the synergy that the airline would derive from it.

The governor said that the decision to breach the agreement allowing VNA to run its domestic operations from the international wing of MMA has sent wrong signals to foreign investors...."

Taken from

Ok, whoever signed the document in question, did it on behalf of the government (it is stated the permission came from the then head of state). We are talking about the government of the country here, not some people who just emerged from remedial school. It is their responsibility to make deals that are of mutual benefit to the nation and the other concerned party. If for some reason(s), they failed to consult widely enough or appointed the wrong people to research into the issue (or didn't follow an appropriate decision making process), they have no to blame but themselves. If it is beyond them to make such decisions they should step down, or better yet walk to the nearest prison and asked to be admitted for blatant incompetence. You can't just go around tearing up agreements because you don't like it, then you complain that people are ignoring (ie people claiming that "Africa is increasingly marginalised") you when agreements are breached, you can't have it both ways.

2) This quote

"Virgin Atlantic’s criticism echoes accusations by companies including Royal Dutch Shell and Mittal Group, which accuse the government of tearing up contracts signed under its predecessor...."


Will tell you the damage that is being done by such reckless actions by the government. Reputation is very important, especially in a business environment. In America people go to court to defend "their good name" ie reputation. With this act and others, the government is covering itself in an undesirable cloak. Mittal and Royal Dutch Shell are not backroom operations, at a time when the government is appealing for foreign direct investment, this can't be wise move.

All this aside, the damage is done. What is now in place to prevent the next government from reversing the policies of it's predecessor? Will this whole unfortunate affair bound to repeat itself unendingly for the same old questions to be repeated again? Are there any checks and balances in place?

Anonymous,  12:26 pm  

aronke, other than these accusations, what proof do you have that what virgin says it true. is it because they are a foreign company you automatically think anything they say about nigeria is true.

how do you know their lounge wasnt thrashed by a competitor rather than the government

Aronke,  7:58 pm  

Heeeeeyyy! See me see wahala o! Anonymous, wetin do me and you sef? Dem send you to me? Abeg I no dey o! Which accusations have I made? Na me talk say dem trash dem lounge? Abi no be for newspaper we all read am? Na only me talk am? Wetin be dis?

And puleaze, if you are the sort of ignoramus who would automatically believe any story once it's told by a foreigner, that's your business, do not ascribe such pedestrian thinking to me I beg you.


Jobs in Nigeria 10:04 pm  

well i think vandalizing VN properties are outrageous, the government should have better ways of making companies comply to their rules and regulations.

The government must not always act as if they make efforts on their own, when even the airaceport could face power cuts, who are they to order Virgin nigeria around?

Anonymous,  10:40 am  

Richard Branson is an arsehole.

The article is mis-leading, Virgin PLC has no hand in VN. RB as an individual has the stake, in league with Gbenga OBJ. See why it is 'political'?

VN have been prevaricating and posing ever since they were asked to move. Making silly statements in the press and just being obnoxious generally.

If they had shown some respect and not tried to bluff their way, they might have had some sympathy.

RB should fuck off. After cutting the deal under the table, he now wants to play 'White Knight' in public. Idiot!

From day one VN didn't do what they could have done - used their influence and political connections (under OBJ) to slash the cost of international travel for Nijas - LOS-LHR for £250 would have been a great start, and would have won them many friends, whilst still yielding profit.

Today their case would have fallen on more sympathetic ears.

As it is they joined the gravy boat instead - now they are being thrown overboard.


Anonymous,  4:07 pm  

I swear based on the comments I've read, it is apparent:

1) Many do not understand the roles of Govt. and Private Enterprises.
2) Contracts: (how is it an under g contract when the Minister who is entitled to speak for aviation ministry signed the document?). After all if the owner signs a check to you for payment of services, can the bank call it a fraudulent check?
3) To think a terminal building MUST be reserved for international OR domestic traffic only shows you lack of knowledge of global aviation standards.
4) To think the govt can cause undue loss on a private enterprise shows a lack of knowledge in business/invenstment. Perhaps you'd like it if your house/business etc is demolished in front of your eyes by govt officials. Nevermind the fact you and the appropriate govt official signed a land purchase aggreement and building permit.

Clueless set of people.

Anonymous,  7:56 am  

Where is the westers "civilised' countries do you hear of politicians taking backhanders, the government trashing airport lounges etc etc etc corruption corruption corruption.
Get a grip and learn that the work African really means "Corruption".
I'm not surprised that Richard Branson wants to pull out. This is just another example of the West pitying Africa, lending a hand to help the African make things better then realising that its just another money wasting excercise.
Wake up and smell the coffee (before another african steals it)
Do you really think Africa can lead itself without help from western countries?
Wake up, learn and teach. Just dont steal in the process!

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