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Viewing cable 08LAGOS100, NIGERIA COMMERCIAL AVIATION UPDATE

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Reference ID Created Released Classification Origin
08LAGOS100 2008-03-13 13:34 2011-08-25 00:00 UNCLASSIFIED//FOR OFFICIAL USE ONLY Consulate Lagos
VZCZCXRO3924
PP RUEHMA RUEHPA
DE RUEHOS #0100/01 0731334
ZNR UUUUU ZZH
P 131334Z MAR 08
FM AMCONSUL LAGOS
TO RUEHC/SECSTATE WASHDC PRIORITY 9809
INFO RUEHZK/ECOWAS COLLECTIVE PRIORITY
RUEHUJA/AMEMBASSY ABUJA PRIORITY 9534
RUEHBS/AMEMBASSY BRUSSELS PRIORITY 0486
RUEHDK/AMEMBASSY DAKAR PRIORITY 0892
RUEHRO/AMEMBASSY ROME PRIORITY 1316
RULSDMK/DEPT OF TRANSPORTATION WASHDC PRIORITY
UNCLAS SECTION 01 OF 02 LAGOS 000100 
 
SIPDIS 
 
SENSITIVE 
SIPDIS 
 
STATE PASS TO FAA (AHARRIS), 
TRANSPORTATION TO KEVIN SAMPLE AND FAA 
STATE PASS TO OPIC; 
DAKAR PASS TO FAA (MOIRA KEANE) 
ROME PASS TO TSA REP JOHN HALINSKI 
 
E.O. 12958: N/A 
TAGS: EAIR ECON EINV NI
SUBJECT: NIGERIA COMMERCIAL AVIATION UPDATE 
 
 
1. (SBU) Summary:  U.S. carrier North American Airlines 
announced it will cease all scheduled passenger service, 
leaving Delta Airlines as the sole air carrier connecting the 
United States and Nigeria.  A dispute between local airlines 
and the airport authorities over use of the new domestic 
terminal has widened with the Federal Attorney General 
reportedly taking interest.  While the dispute may cause some 
confusion in the Nigerian domestic aviation sector, it is not 
likely to impact ongoing efforts to achieve International 
Aviation Safety Assessment (IASA) Category One status.  End 
Summary. 
 
--------------------------------------------- -- 
North American Airlines Ends Service to Nigeria 
--------------------------------------------- -- 
 
2. (U) In a move that surprised Nigeria, North American 
Airlines (NAA) announced it will cease scheduled service to 
West Africa on May 19.  The airline's local manager told 
Econoff that rising fuel costs were to blame.  A corporate 
press release also noted a change in strategy.  NAA was 
recently purchased by Global Aero Logisitics and the new 
owners say they want to focus on NAA's core military charter 
business.  Until the arrival of Delta Airlines in December 
2007, NAA had been the only scheduled carrier connecting the 
United States and Nigeria. 
 
--------------------------------------------- --- 
Terminal Dispute Pits GON Against Local Airlines 
--------------------------------------------- --- 
 
3. (U) An ongoing dispute between two local airlines, the 
Federal Airports Authority of Nigeria (FAAN), and the private 
operator of the new domestic terminal at the Lagos 
International Airport, Bi-Courtney Intl, has reached a 
fevered pitch in recent days.  The FAAN had ordered Virgin 
Nigeria and Arik Air to relocate their operations from the 
international terminal to the new domestic terminal.  Virgin 
resisted, claiming it had an agreement with the GON that 
permitted it to operate from the international terminal. 
Virgin Nigeria also complains that its business model relies 
on passengers connecting internationally, but there is no way 
for passengers to transfer between the two terminals.  (Note: 
The terminals are on opposite sides of the airport with no 
shuttle bus or other connection between them. End Note.) 
Both airlines contend that the aircraft parking ramp at the 
new terminal is too small and does not meet International Air 
Transportation Association (IATA) standards.  As a 
consequence, the airlines say they are having difficulties in 
obtaining insurance for aircraft using that terminal. The 
FAAN denies the safety allegations and says the IATA has 
never performed an inspection of the airport.  Bi-Courtney, 
owned by a well-known and well-connected local lawyer and 
businessman, says the airlines are stalling to avoid paying 
fees. 
 
4. (U) In recent days the dispute has widened, with the 
Federal Attorney General reportedly getting involved. 
According to press reports and Post contacts, Bi-Courtney is 
increasingly concerned about low utilization rates at its 
terminal.  On February 18, Arik Air moved from the 
international terminal to the old domestic terminal, a small 
ramshackle building that had been given over to general 
aviation operations after the new domestic terminal opened in 
September 2007.  Bi-Courtney complained that Arik was 
avoiding the new terminal and argued Arik should be forced to 
use (and of course pay for) their facilities, citing a 
non-compete agreement Bi-Courtney signed with the FAAN 
prohibiting construction of another domestic terminal in 
Lagos for thirty-six years.  The FAAN countered the old 
domestic terminal was excluded from that agreement and the 
FAAN was free to assign airlines there if it choose to do so. 
 (Note:  Virgin may have long-term plans to open it own 
terminal at Lagos airport.  It isn't clear why Arik moved to 
the old terminal.  End Note.)  The Attorney General 
reportedly wants to give Bi-Courtney control of the old 
domestic terminal or force Arik to move once again, this time 
to the new domestic terminal. 
 
5. (U) Virgin Nigeria received a temporary injunction barring 
 
LAGOS 00000100  002 OF 002 
 
 
the FAAN from enforcing the decree, but the court later 
voided that injunction, saying Virgin had to use the 
alternative dispute resolution mechanism outlined in an 
agreement it signed with the GON prior to starting 
operations.  Virgin Nigeria has been the most vocal of the 
two airlines in opposition to the forced relocation, and it 
and the FAAN have taken out ads in local papers attacking 
each other's positions.  For its part, Arik threatened to 
cease operations in Nigeria and move its headquarters to 
Ghana or Cameroon. 
 
6. (SBU) Comment:  As a local newspaper noted, this 
controversy is likely the result of double dealing done under 
the previous Presidential administration.  Virgin and Arik 
probably do have agreements that allow them to operate out of 
the international wing and Bi-Courtney probably does have an 
agreement that says all domestic flights from Lagos must use 
its terminal.  Unfortunately for the new administration, 
these conflicting agreements collided on their watch.  One 
positive development was the initial instinct of both sides 
to use the court system to resolve the matter.  However, a 
political solution will probably be necessary.  This issue 
should not distract the Nigerian Civil Aviation Authority 
from its efforts to achieve FAA IASA Category One status nor 
do we anticipate it will negatively impact FAA assistance 
efforts.  End Comment. 
BLAIR