The war between the United States/Israel and Iran has claimed its first hefty corporate victim. The spirit Airlines, one of America’s top airlines with a zero history of air mishap since it rebranded to Spirit Airlines and began passenger services in 1992, has folded. The airline was already in the waters before the US and Israel launched airstrikes against Iran in an all-out aggression. As you know, the initial surprise strikes resulted in the elimination of Ayatollah Ali Khamenei, Iran’s long-serving supreme leader and much of the top crust of the Iranian political and military leadership. The strategic analysts who advised the US to embark on the military adventure had wildly underestimated the resilience and preparedness of the Iranian regime. Iran traded strikes unweariedly with the US and Israel and showed no sign of blowing off steam.
A CNN investigation has now incontrovertibly shown that much of the US military bases throughout the Middle East are sacked and rendered inoperable. For reasons of serious media censorship and conventional wartime propaganda, the extent of destruction inflicted on Israel by relentless barrages of missile strikes from Iran is left to speculation and educated guesses. Iran of course took a heavy pummeling from a combined US and Israeli bombardment but with an almost heroic, even admirable equanimity.
The most significant incident of the war, one might say, is Iran’s effective closure of the Strait of Hormuz, a waterway critical to global navigation and commerce. Before the most recent hostilities, Iran had always threatened to close the strait in an event of aggression from the US. It is, for the country, a strategic geographical advantage.
The ripple effect of the closure of the strait, throughout the world, needs hardly stating. It has thrown the global economy into the greatest turbulence since the Great Depression. The implication is so dire that Europe has a few weeks of jet fuel left. In every corner of the planet, people are facing significant economic pressure and contending with higher prices. For the first time since Tinubu unleashed historically unparalleled hardship on Nigerians, he has something not entirely imaginary to blame for the worsening situation. He talked about the war with signature imprecision, declaring that he is helpless about it.
It is in the shadows of this ghastly affair that the Spirit Airlines reached a breaking point. It approached the US government for bailout but the administration has a bigger fish to fry. The war is leaving big holes in government spending while the citizens grow more restive, confronted with sky-high prices. The airline could not continue to hang in there. It declared bankruptcy and closed.
Now that is market logic. It is what you could call the operationalisation of textbook principles. In Nigeria, it is doubtful if the time-honored principles of economics have not been defied over and over again. That most businesses have continued as going concerns since President Tinubu took office is the stuff of a miracle. One can talk about Peace Mass Transport Limited and now Auto Star, two giants in the transportation industry, kissing the dust in the wake of insurmountable odds and the initial exodus of foreign enterprises, but the resilience of businesses and Nigerians remain astounding. It reminds one forcibly and irresistibly of Elijah and the widow with only a portion of oil left.
Take hotels in the South East as an illustration. They are tired of increasing the price of lodging. When done too much, they have realised, a hotel could price itself out of the market. The neoliberal overhaul of the Nigerian economy did not result in increased earning for Nigerians. If anything, it resulted in wholesale obliteration of incomes for many layers of the Nigerian society. It is therefore decidedly unadvisable to keep increasing prices when nobody has the money to pay.
The hotels now pay way more for electricity. Yet, the situation would be more tolerable if the high-cost electricity is even supplied. After waxing boastful about the wonders he would do with electricity, President Tinubu has so far delivered the most crisis-ridden and rudderless power sector since maybe 1999. Nigerians endure blackouts for days, sometimes weeks and months in some areas. Hotels are compelled to pay the insanely hiked price of diesel to keep their services stable. Then add increasing taxation. The president has earned the unflattering sobriquet of tax collector for a hellish tax regime and an aversion for humane, interventionist subsidies. Subnational government are implementing the federal template, resulting in multiple taxation.
Outside underpaying staff and whimsically surcharging them to reduce the pittance before the end of every month, hotels have no trick left in the book. By some miraculous oddity however, they continue to run. We have earned a uniqueness. Starting perhaps from Adam Smith or some earlier economic theorist to the most modern and quick-witted one in Princeton or Harvard today, Nigeria should be declared off the spectrum. We are a strange specimen in the global economic laboratory, being superhumanly cost-iron.
A Nigerian entrepreneur or survivalist, as I prefer to call them, would be laughing out loud at Spirit Airlines. The founders and managers must be unbelievers. They weren’t listening to any Pastor-motivational Speaker. They have allowed their village people to triumph and the wicked to rejoice. Trump should send emissaries to Nigeria. They need to come and see how we do it. He is a proud man and an arduous promoter of the myth of American exceptionalism but must swallow his pride this time. Like Queen Sheba, he ought to come and learn the wonders of Solomon. The emissaries will also learn, among other things, how to make Americans stop bothering their president over ordinary Strait of Hormuz.
