Business News of 2014-05-07

Advisor to be named for new national airline

The Ministry of Transport is expected to soon name a transaction advisor to advise government on the establishment of a new national airline.

The airline will be run on a public-private partnership basis, and the transaction advisor is expected to advise government on the ownership structure, funding, business model and routes among others.

The Ministry is currently in the final stages of selecting the winning bid from six transaction advisors that were shortlisted, said Mr. Twumasi Ankrah-Selby, Chief Director of the Transport Ministry.

Government has been keen on creating a new national carrier to tap into the growing aviation industry in Ghana. The interest also stems from the desire to create jobs, as the aviation industry remains largely labour-intensive.

The country’s aviation industry has been growing at an annual rate of 10 percent in the past decade. International passenger throughput for the 28 airlines flying to Accra hit one million last year. KLM, Emirates, British Airways, Arik and Delta are among the leading carriers in terms of traffic.

“Looking at the growth in the sector over the last decade, if we have a national airline it will generate revenue for the state and help keep some of the profits made by airlines in the country,” Mr. Peter Addai, Air Namibia’s Country Manager, told the B&FT.

“We often talk about capital flight, but this is also one of the ways of making money that will stay in the country,” he added.

The bid to launch a new national carrier follows two previous state-owned carriers that collapsed under debt and mismanagement.

Ghana International Airlines (GIA), the last national carrier that was 70-percent owned by government, ceased operations in May 2010 amid financial challenges and a shareholder dispute.

GIA’s predecessor, Ghana Airways, was once a respected regional and international carrier that was set up in 1958. Years of mismanagement influenced by nepotism and cronyism however brought the airline to its knees, and it was finally liquidated in 2005.

Given this history, analysts believe a new national carrier should be left to private management with little government involvement.

Mr. Ankrah-Selby said a private partner will be asked to take a majority stake and manage the proposed carrier. He said the selection process will be opened up for interested partners to bid, and then government will make a choice.