in Air Transport / Features

Dana patches up its strategy

Posted 11 September 2020 · Add Comment

Dana Air COO, Obi Mbanuzuo, is no stranger to Nigerian aviation. Over the past two decades he has also held senior roles with Air Nigeria and Virgin Nigeria. Against the backdrop of Covid-19, Mbanuzuo revealed to Victoria Moores how the airline’s strategic plans have been affected by the crisis.

Lagos-based Dana Air is anticipating a slow post-coronavirus traffic pick-up, starting from around June, delaying the airline’s growth plans by around six months.


Despite Nigeria being the first sub-Saharan African country with a confirmed coronavirus case, it has not been as hard-hit as others on the continent.
At the time of going to press, Dana Air COO, Obi Mbanuzuo, said there were “no huge changes” to the airline’s strategic plan.


“We will just be looking at a slow return of traffic when the crisis is over, so will probably have a similar [strategic] plan, but with a six-month delay. As a domestic carrier, we are hopeful for a prompt restart of operations and we should be back to pre-coronavirus demand levels by around December.”


When the first case was reported, Dana saw an immediate 10% drop in forward bookings, because foreign airlines were flying “half empty”, which had an impact on onward travel within Nigeria. By early May, the country was beginning to ease its lockdown, but restrictions remained.


Going into the crisis, Dana operated interconnecting flights between five Nigerian cities – Abuja, Lagos, Port Harcourt, Owerri and Uyo – with one Boeing MD82, three MD83s and two 737-300s.


In fact, the 737-300s entered commercial service with Dana in mid-February 2020, just as the world went into lockdown.


“We’re using them to add frequencies on routes we already fly,” Mbanuzuo said. “They’re just additions; they’re not replacing anything yet.”
The 737s may, ultimately, be used to add more destinations within Nigeria. Mbanuzuo named Calabar, Enugu and Kano as potentials, but stressed that these were in no particular order.


“We’re still focused on Nigeria. I don’t think we are prepared to go outside the country,” he said.


Dana experimented with flying from Lagos to Accra (Ghana) in 2016, but the route was “very short-lived”. It was suspended after three months because of fuel scarcity, poor schedule reliability, and not having the right aircraft type.


“I don’t think we’ll do that again for another couple of years, until we have a good, complete Nigeria network. We’re only doing five cities now. I suspect we will have about four or five [more domestic destinations] to go before we’re happy,” he said.


During 2020, management are looking to come up with the next stage of Dana’s strategic plan. This could see a shift to 737NGs and the introduction of a smaller aircraft type.


“We’re probably still going to fly the MDs until they get to their heaviest checks – D checks,” said Mbanuzuo. “The earliest will be due in a couple of years. Then we’ll start phasing them out and the idea is to replace them. By then, the market should have settled down enough for us to be able to get our hands on some reasonable NGs.”


Another option would be E-Jets, operating either alongside the 737s, or as a standalone replacement if the offer and financing was right.
“We’ve always wanted to keep one type of aircraft, but now we’ve got two, so I don’t think there’s anything wrong with two in future. That could be an idea to get a slightly smaller aircraft,” said Mbanuzuo.


The NGs would replace Dana’s existing six aircraft progressively from 2021 on a one-for-one basis. If Dana decides to operate E-Jets alongside the 737s, Mbanuzuo would be looking at up to four aircraft, with all variants in contention.


“One thing we’ve always said is we’re very conservative, so we’re not going to take an expensive asset at the wrong price or on the wrong terms,” he added.


Privately owned Dana was founded in November 2008 and carried 720,000 passengers in 2019. Before the crisis, that figure was set to hit one million in 2020. Mbanuzuo describes Dana’s approach as very patient and deliberate. “We take our time.”


The company hit breakeven in 2009, generated a small profit in 2010 and was “fully profitable” in 2011. However, in mid-2012, a Dana Boeing MD-83 crashed on approach to Lagos, killing all 153 on board and 10 people on the ground. Two related groundings – six months in 2012 and three months in 2013 – pushed Dana into the red. The business returned to breakeven in 2014 and has been profitable since 2015.


One element of Dana’s new strategic plan will be re-securing the International Air Transport Association (IATA) operational safety audit (IOSA) registration. Dana originally became IOSA registered in 2016 – the year it launched in Ghana – partly to regain customer confidence after the crash. However, it then reverted to all-domestic operations, so management decided not to renew the approval.


Two years on, Dana is now back in touch with IATA and going through the audit process. “We already follow the processes and we’ve done it before, so it’s not like it’s entirely new to us. The day we didn’t renew IOSA, did we start doing things differently? No.”


Once Dana is recertified, it will be able to attract more corporates – including western embassies and oil companies. “A lot of them [corporates] come to us and say, ‘We’re kind of dissatisfied with the current people we’re using; we’d like to use you, because we’ve heard about what you’re doing, but you haven’t got IOSA’.”


While Dana’s ownership is unlikely to change, IOSA will also open the door to airline partnerships. Dana does not currently have any interline or codeshares, but is in discussions with two Gulf carriers and is open to talks with “anyone and everyone”, offering feeder flights within Nigeria, to help boost its domestic traffic.


Dana is also planning to build a maintenance, repair and overhaul (MRO) subsidiary over the next couple of years, performing in-house and third-party work. “We want to have a full MRO that can do basically everything,” Mbanuzuo said.


Land has been secured for a hangar, where Dana will perform heavy maintenance, along with component repairs, avionics, wheels, brakes and sheet-metal work.


“We always have a wish-list and just keep looking at what’s happening in the environment to see where we go next. We need to stay flexible,” Mbanuzuo concluded.
 

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