Stop This National Airline Absurdity

Wed, 20 Mar 2013 Source: Baidoo, Philip Kobina

When Nkrumah established the national airline in 1958 it was a doomed enterprise from the outset. The simple reason is that there were not enough passenger traffic on the routes that were cobbled together to sustain the venture. However, because of prestige and political reasons that does not make any economic sense it was kept afloat by the tax payer. Nevertheless, the poor tax payer propped it up until it became economically viable. But then, another nemesis was lurking in the shadows – management incompetence and political meddling. The destruction of the national economy as a result of unwise choices and international pressures from the mid sixties to the early seventies paved the way for the era of ‘Kalabule’ and blatant corruption, which has now become an insidious cancer. Ghana Airways, like one of the many SOE that has collapsed, succumbed to the cancer. It became the milking cow for those who had the privilege to work for the corporation. They milked it dry without feeding it, and the corporation keeled over in the hot tropical Sun.

Of late there has been a lot of chatter about the revival of the national carrier. I did not give a second thought when the idea was floated by then Transport Minister designate during her confirmation hearing. Not too long after that the President himself put a bit of meat on the proposition with their newly discovered holy grail of economic salvation PPP, and it got me thinking.

If the clarion calls of the government to create jobs are genuine then I really sympathise with their effort, especially under the cut throat and pervasive threat of globalisation, besides the voracious appetite of the Ghanaian consumer for anything foreign. In that respect, it is very difficult to revive the dwindling manufacturing sector. High-tech manufacturing, which seems to be the brick and mortar route to prosperity in a modern economy, is on the decline due to increasing automation, and there is nothing that can be done about it. Though, our affinity for foreign goods has a lot to play in the fortunes of our manufacturing sector it is a global problem. It is even a tough call for the major G7 countries. With the exception of China, which happens to be the sweatshop of the global economy, the rest are being squeezed out. For example, in 2008 the UK car industry employed 180,000 people directly and 640,000 automotive supply, retail and servicing. As at 2012 direct manufacturing has reduced to 139,000. Though, that can be attributed to the global economic slow down, however, the related branches maintained respectable 611,000. So it seems the service industry is the way of the future. Despite the fact that, we are not in the position to undercut the Chinese currently with their horde of cheaply produced consumer products, on the other hand, the service economy like the airline industry regardless of its capital intensive investment we can run at a competitive advantage to the majors like British Airways, Virgin and many more with lower operating cost while they still enjoy their economies of scale. This can be done when it is in complete private hands and not a hybrid; is the uncompromising caveat.

The idea of the government running a business as sophisticated as the airline industry is absurd. I am not going to clutter this piece so I am going to use just a single example to draw home my point. BOAC and BEA both private airlines, were nationalised in 1974 and reconstituted as British Airways. Within seven years it was being run at loss and it was reverted back into private management in 1987, and it started turning out profit again. And this happened in Britain of all places not a Third World country that is notorious for corruption and managerial ineptitude. This goes to reinforce my belief that governments everywhere are incapable of running anything. Every sane Ghanaian knows that the government is incapable of managing anything, but in their pretence to do something they have conjured a new trick up their sleeves – Public Private Partnership.

To say the least PPP is a myth. It is just like the gamblers dilemma. What the government plans to do with PPP can be likened to a gambling junky who does not know that the odds are stuck against him, but prefers to live in a delusional parallel universe. The history of American railroad should serve as a sober reminder to the absurdity of government partnership with private companies. The PPP idea probably had its baptism during the American government desire to expedite the expansion of railroads to every nook and cranny in the early days of that industry. If you want a detailed picture of what I am driving at read the book by Steward H Holbrook: The History of American Railroads. In the book he sets out the record straight, and catalogued the success and failures of the industry; unlike the book by Frank Norris – Octopus, who painted the businessman as evil on the same subject. Holbrook made it clear that almost all the railroads that succeeded in America were built with entirely private capital. But those that were built with government support failed hopelessly, because they were poorly built and much thought did not go into their economic viability. And the worse, some even took the money from the government and absconded.

I will be very happy to see the national carrier revived; however, if private capital cannot afford a national carrier then we better not have it. What they plan to do is to take the taxes of ordinary citizens, who in a million years will not dream of climbing the gangway of an airplane just to satisfy their own self aggrandisement. PPP is a way of creating a political pool of bromides that always look for favours from the government. In other words, it is another way of increasing the channels of bribery and corruption, which we can do without.

State Transport Corporation is now on a life support, perhaps, already dead I am not sure. State Fishing Corporation is now a distant memory. Abosso Glass Factory and Bonsa Tyres drew their last breath God knows when, and the catalogue is endless. Their demise can be aggressively be defended by a skilful debater on the premise that all those SOEs operated in a dysfunctional economy. But the question that won’t go away will be why was the economy dysfunctional? Nobody should have any illusions about this. What happened to the SOEs in Ghana does happen in the West as well. And don’t get me wrong private companies collapse, but they don’t collapse and create a vacuum. They are always usurped by an upstart company, which means when the economy loses on one hand it gains with the other. So please, let us not repeat this. Once the government goes into this all the vices that strangled Ghana Airways will be repeated and we will be back on the torturing rack once again.

Philip Kobina Baidoo Jnr.



Columnist: Baidoo, Philip Kobina