Lessons from Dana Air’s Travails

The ongoing audit of Dana Air by the Nigeria Civil Aviation Authority and the airline’s disengagement of most of its staff have fueled uncertainty about its future, casting light on the short life span of Nigerian carriers. Chinedu Eze writes that the government should review its policies on air transport and remove the hindrances to the growth of domestic airlines

Last week, Dana Air announced the disengagement of most of its workforce, as the Nigeria Civil Aviation Authority (NCAA), in the ongoing audit of the airline urged that it must add more aircraft to its fleet and do away with its MD83 and 83 aircraft.

 NCAA in the last week of April grounded the operations of the airline after one of its aircraft suffered a runway excursion on Tuesday, April 23.

 Issues concerning Dana Air have generated controversies with analysts alleging that certain government’s policies, lack of stability in foreign exchange, and difficulty in obtaining credit facilities, exacerbated by the high-interest rate are slowing down aviation industry’s growth. 

THISDAY also learnt that out of the businesses owned by the Dana Group, only Dana Air is not making major returns, while it gulps huge resources. This may explain why the owner of the airline acquired relatively few aircraft since it started operation on November 10, 2008.

According to an industry insider, the primary disincentive in the airline industry is that airlines are not profitable, and some are hesitant to commit more capital to the firm, which is known for low profit margins even at the best of circumstances.

Executive Interference 

Industry analyst and the Secretary General of Aviation Round Table (ART), Olu Ohunayo, said that the negative impact of executive interference was what played out in the Dana Air problem, using the cover of safety issues of the past, which had been cleared.

He said Dana Air had been punished for its compromise on safety in the past; so, using that as a reason to now direct the regulator to go ahead and suspend the operation of Dana Air “was very, very wrong.”

 “Glossing it with the past incident and accident, which they had been punished and certified to have returned to operation, was not fair. And I think it is also an indictment on the NCAA itself by the action of the Minister. That was wrong. We (ART) asked for an apology and I think that apology is yet to come, and rather than see that apology we have seen another horrible directive to the helicopter operators. The Minister was alleged to have written directly to them with an undated letter, writing to even operators, not even to agency heads who was supposed to implement it. And then sending it on social media before it got to the helicopter operators.

“That is where we have found ourselves. We have taken a decision now, almost a thousand Nigerians have lost their jobs with Dana Air coming down. What could have been better managed, rather than taking that knee-jerk action? Today, a thousand Nigerians have lost their jobs in this harsh biting economy. And with Dana Air out, you can be sure that there will be capacity issues and seat supply on the Abuja route, Owerri route, and Port Harcourt route, where Dana Air has strength. You will see a spike in fares and Nigerians would now have to pay more to travel because there are less number of seats on those routes now with the suspicion of Dana Air operations,” he said.

Ohunayo believed the issue was not properly handled, and it can never be justified by the action taken. 

“Because we have seen cases of nosewheel collapse in other climes. We have seen nosewheel collapse even within Nigeria airspace this year from scheduled and non-scheduled operators. None of them was punished like Dana Air. And I think that was not fair. A form of compensation must be made to Dana Air to see how they can mitigate these losses that have come from aircraft leases that they have to return and pay. It has come from refunds of tickets. I personally have two passengers who have been owed close to over 700,000 in ticket refunds by the action of the government. That is how painful it is. And none of those people have gotten their refunds back. And I think they should not only go out stopping Dana Air, they must also ensure that Nigerian passengers that they claim to be protecting get their refunds in full. But so many tickets are hanging there in Dana Air today, and the money is not being refunded,” he said.

 Sack of workers 

Ohunayo also defended Dana Air for the disengagement of its workers, saying that the airline might have become financially distressed due to economic hardship that has eroded business organisations and individuals in the country.

“I also find it very ridiculous for anybody to blame Dana Air for sacking their staff, saying that for them to have stopped staff salaries and asking them to go shows that they were not financially strong. Every sector of the economy apart from the banks is currently bleeding due to the inflationary trend, the astronomical fall in the value of the naira and the removal of subsidy. All these have affected every organisation that runs on daily basis, using market forces and Dana Air is not an exception. So when the cash flow is bad and you are not asking them to stop operations, what do you expect them to do? To keep staff? It is not possible, they cannot keep staff. And I think they are taking the best decision to mitigate their losses, to mitigate their pains, which are both in naira and in foreign currency. Sadly. It was a knee-jerk decision. It was a harsh decision that was taken rather than manage the crisis with Dana Air, they would rather sacrifice Dana Air,” he also said.

Unfavourable Government Policies

Member of Airline Operators of Nigeria (AON) and President of Topbrass Aviation Limited, Captain Roland Iyayi, told THISDAY that Dana Air problem is multi-faceted which include unfavourable government policies and punitive taxes, including forex challenges, scarcity of spares, which forced them to cannibalise one of their aircraft to use the spares to repair others just to keep them flying.

He said that if the ‘NCAA felt that Dana Air’s MD82/83 aircraft were not safe, it could have grounded them and they could continue operating the existing Boeing 737 in their fleet and then amend their schedule and continue to fly.

“They can give the excuse that it is due to safety that they grounded the airline but it is a trend that has been on for a while. In 2022 they grounded Dana Air for three months. The government was supposed to resurface the runway at the Lagos airport. The runway has been having aquaplaning. Several years ago, Captain Tito (one of Nigeria’s pioneer pilots) had a similar incident on the runway due to the inoperative reverse gear thrust of his Airbus aircraft.

“Dana Air problem is caused by several problems. So, what NCAA is asking for (insisting that the airline must acquire two more Boeing 737 aircraft) is not what they can accomplish in a short time,” he said.

Captain Iyayi also noted that one of the aviation industry’s biggest issues is government meddling, particularly with agencies. The foreign exchange problem is exacerbated by the naira’s continued depreciation and the forex market’s instability. He also points out that there is a scarcity of suitable aircraft spares, forcing Dana Air and probably other airlines to cannibalise one aircraft to fix another.

At a recent MRO (maintenance, repair) and Overhaul) Conference in Addis Ababa, organized by Nick Fadugba’s African Aviation Services, experts noted that since the COVID-19 lockdown, aircraft spares have been scarce and costly; so, there is a delay in supply and even aircraft maintenance has also been difficult because there is surge at maintenance facilities across the world. This, they said, was caused by the fact that some factories producing these spares diverted their facilities to producing medical equipment to battle the pandemic and they did not envisage that aviation would bounce back as soon as it did. However, aviation has not only bounced back to pre-COVID-19 levels but is exceeding it and that calls for higher demand of aircraft, spares and others.

This prevalent reality has put Nigerian carriers in a quandary because they have to deal with forex uncertainty, depreciating naira, lack of maintenance facility in the country and poor profitability. These, industry stakeholders observed, are at the foundation of Dana Air’s problem.