ARIK AIR - POLITICS TAKES WINGS

C O N F I D E N T I A L SECTION 01 OF 02 LAGOS 000962

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STATE PASS FAA FOR ACONLEY,
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DAKAR PLEASE PASS TO FAA REP ED JONES;ROME PLEASE PASS TO
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E.O. 12958: DECL: 07/10/2016
TAGS: EAIR EINV PREL NI
SUBJECT: ARIK AIR - POLITICS TAKES WINGS


Classified By: Consul General Brian L. Browne
for reasons 1.4 (D).


1. (C) Summary. Arik Air, financed by Rivers State Governor
Peter Odili, is set to begin regional and international
operations July 29. Aviation Ministry officials and
competitor private airline executives claim the airline has
the political and financial clout to become Nigeria's second
national carrier. Arik apparently has Obasanjo's blessing
and has linked with capable technical partners necessary to
turn it into a leading domestic airline. End summary.


2. (C) Arik Air Chairman Joseph Arumemi-Johnson is a close
friend to Rivers State Governor Peter Odili, and the owner of
Rockson Engineering, the engineering procurement and
construction company that built the Omoku Power Plant in
Rivers State. Arumemi-Johnson is a major customer of General
Electric (GE) Nigeria, having purchased several turbines for
Rivers State Government Power Plants Project in TransAmadi,
Eleme, and Omoku. Arik was able to purchase the dormant
Lagos facilities of the moribund Nigerian Airways through the
support of the Obasanjo administration, according to GE
representatives. Industry experts claim Arik has invested
between USD 60-100 million in its airline venture and is
expected to invest more as the airline begins full
operations.


3. (C) Boeing Representatives who recently visited Arik
facilities said current investment in the airline could
easily exceed USD 200 million. Boeing Nigeria Field Service
Representative Jeffrey Richards said Arumemi-Johson visited
Boeing in Seattle, Washington two weeks ago to discuss
leasing Boeing 747-400s and Boeing 787s, airplanes that can
cost USD 500,000 per month per carrier to lease. GE Nigeria
Managing Director Adewale Audifferen told Econoff on July 5
that the airline was financed by various investors in Rivers
State, including the state governor. Ojemai Investments in
Port Harcourt, Rockson International in British Virgin
Islands, and Hansworth Limited in the UK, are the various
private investment arms Johnson controls and is using to
finance his venture.


4. (C) Audifferen told Econoff on July 5 that Governor Odili
had approached him last year about starting a new airline.
Since then, Arik has acquired the assets of Nigerian Airways,
established check-in counters in Lagos, Abuja, and Port
Harcourt airports, purchased two Bombardier CRJ900s, three
CRJ200s, and two Boeing 737s. In the initial phase of
operations, the airline planned to have daily flights from
Lagos for regional and international destinations. Arik has
scheduled to fly daily domestic flights to Abuja, Port
Harcourt, Enugu, Benin, Kaduna, Kano, Maiduguri, and Jos.
For its international operations, it planned to fly twice
daily to Accra, and once daily to Dakar and Malabo. Arik was
completing an aircraft hangar in Lagos capable of enclosing
an Airbus A380, according to aviation officials.


5. (C) Arik could become Nigeria's second national air
carrier after Virgin Nigeria (VN) because it has the
requisite capital base and more importantly, the political
blessing of the current Administration according to Nigerian
Civil Aviation Authority (NCAA) Director General Harold
Demuren. Arik had an Air Operating Certificate (AOC),a
prerequisite to begin flight operations, and has partnered
with Canadian company Bombardier for technical support. The
Canadians recently established a Consulate in Port Harcourt
in anticipation of more Canadians in the area due to Arik's
partnership with Bombardier, according to a non-voting
executive board member of Virgin Nigeria.


6. (C) Nigerian Airspace Management Agency (NAMA) Roland
Iyayi confirmed Arik would begin flights July 29. He claimed
Arik still needed to train staff and hire qualified managers,
but that it was hiring international partners to manage the
company. Iyayi believed that because the Obasanjo
Administration supported Arik, the airline company would not
encounter the same fate as Slok Airlines owned by Abia State
Governor Kalu Orji or Albarka Airlines owned by former Lagos
State Military Administrator Brigadier-General Mohamed Marwa.
Slok had is license revoked two years ago while Albarka has

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been grounded indefinitely.


7. (C) Comment. Although it has not had its maiden voyage,
Arik already is creating turbulence among the domestic
airline companies. Its ability to navigate the bureaucratic
process so quickly can be attributed to Governor Odili's
closeness to the President. But the aviation environment in
Nigeria requires more than political will and financial
capital. Arumemi-Johnson has no experience running an
airline, and questions remain regarding Arik management's
ability to steer the company toward air safety and
profitability. Despite the advantageous positioning of the
airline, it is too early to predict this will become a
successful airline venture. End comment.
BROWNE