How Dana sowed the seeds of recovery

Not many Nigerian airlines live to see their 10th anniversary. That Dana Air is able to celebrate that milestone this year is down to a combination of solid performance and passenger loyalty, according to chief operating officer (COO) Obi Mbanuzuo.
Not that the company hasn’t faced problems over the years. A 2012 crash of one of its MD-83s on approach to Lagos Airport after engine failure resulted in 163 deaths among passengers and people on the ground.
There were also two incidents in February this year that were still under investigation at the time of writing. In one, an emergency exit door detached from one of its MD-83s on landing at Abuja, while a sister-aircraft overran the runway at Port Harcourt when landing in heavy rain.
Dana Air has said that passenger action was responsible for the emergency door being opened and that similar incidents have occurred with other carriers, and that overruns in wet conditions were not unknown – it happened to a XiamenAir flight at Manila in August, for example.
There were no casualties from either incident. However, the Dana Air overrun led to another of the airline’s MD-83s being scrapped.
Interestingly, Mbanuzuo notes that no Nigerian airline has suffered a crash and survived the experience; the fact that Dana Air has continued in business is a testament to its strengths and the loyalty of its passengers.
The COO puts this down at least partly to Dana Air’s standards of service. And, if there is a complaint, the airline ensures that it is dealt with. “On-time performance is also a big, big thing” that helps distinguish Dana Air from its domestic competitors, he added. “From day one, we’ve had that as our main selling point; we’ll get you there on time, assuming everything is within our control.”
Many other Nigerian carriers have disappeared in the decade since Dana Air started operations. Part of the reason, said Mbanuzuo, was that the industry attracted people who had no aerospace experience: “Nigeria is not unique in that sense. Airlines are glamorous. If I’m a businessman who has made it in banking or another industry, airlines become ‘the next thing’ to get involved with. People just don’t know what they are doing.” New airlines tended to exist for three to five years before collapsing, he said.
Another factor in Nigeria has been a lack of governmental policy or direction for airlines.
“The government has never paid attention to the airline sector as a driver of the economy,” said Mbanuzuo. Rather, the government regarded the airline sector as being for the rich and something which it could tax heavily, while ignoring factors such as infrastructure, training and all the other facets necessary to create a healthy airline sector.
The appearance of Nigerian airports did not inspire confidence in the travelling public and runways were often not in good condition; one runway at Abuja had to be closed for several weeks a couple of years ago because it was becoming a safety hazard.
Additionally, he said, the airline sector was burdened by taxes on virtually every aspect of its business. Most items required by airlines had to be imported and were subject to tariffs, while Nigerian airlines felt that they were double-charged for air traffic control (ATC) services – once through a 5% charge on all tickets, of which just over one-fifth went to pay for the country’s ATC network, and then again directly when they used the service.
Airlines also had to cope with value-added tax on air travel, plus a ‘throughput charge’ when loading fuel.
In a nation of 200 million people, just 15 million used air travel. “The only way to get more people to fly is if aircraft can compete against roads and rivers,” said the COO.
Historically, Nigeria had a national carrier, Nigeria Airways, which collapsed in the mid-1980s. This was a substantial airline with more than 20 aircraft, including McDonnell DC-10 wide-bodies for long-haul routes. In many ways it had been a good airline, said Mbanuzuo, but it was inefficient.
Plans were announced at July’s Farnborough International Airshow for a new national carrier, Nigeria Air.
Since the announcement, Nigeria’s airlines have been trying to find out what a new national airline could mean for them and their businesses. “We don’t have a problem with it, so long as the government provides whatever incentives or benefits for the national airline to everyone. As long as it’s a level playing field, that’s fine,” said Mbanuzuo.
“If a new Nigeria Airways means we’ll get better runways and airports, fine; we’re quite happy. The worrying thing is, we haven’t had a clear message yet. I personally don’t think there’s been much serious thought put into it.”
Dana Air now operates three MD-83s and an MD-82. The aircraft have both advantages and problems, said Mbanuzuo. On the plus side, the rear-engined aircraft are popular with passengers, partly due to their quietness inside the cabin and smooth flying qualities.
On the negative side, “in Nigeria, the 737 is king”, noted Mbanuzuo. Most other Nigerian airlines operated the Boeing twin-jet and this meant that it was more difficult for Dana Air to find new pilots and cabin crew.
However, there was no problem in continuing to source spares for the McDonnell Douglas design – major US carriers such as Delta still operate the type – and Dana Air had built up a high degree of engineering expertise on the type. Dispatch reliability is around 97%. “We will keep flying the MD until we’re unable to keep the aircraft flying, or until economically they don’t make sense anymore.”
Having said that, said Mbanuzuo, the company was working on a plan to renew the fleet and it anticipated bringing in new aircraft in 2019. No firm decisions on type have yet been made.
At present, Dana Air operates a purely domestic route network, flying between Lagos, Abuja, Port Harcourt, Owerri and Uyo. Any expansion in the near term is likely to take place within the country rather than internationally.
This is partly because of the considerable untapped potential of the country, whose economy is by some measures now reckoned to be larger than that of South Africa, for many years the continent’s economic leader. However, that brings Mbanuzuo back to the problem on realising that potential when the country’s government does not realise how much aviation contributes to the economy.
Dana Air is being held back by that lack of governmental policy to encourage the airline sector, together with a lack of investment in airports – most of which only operate from dawn to dusk because of a lack of landing aids. This, in turn, means that Dana Air and its competitors are flying for sub-optimal periods, which pushes up costs and ticket prices, thus choking demand.
The carrier operates with a load factor of around 60%. The airline would like to offer cheap fares to encourage people to fly and fill its empty seats, but high taxes mean this is impossible.
Dana Air is part of the Dana Group of organisations, one of which is a charitable foundation, and the airline makes on-board collections to help fund the foundation’s work, which includes a home for disadvantaged or homeless children. It also picks an annual charitable cause – this year’s is the fight against sickle cell anaemia – and in July, Nigeria’s League of Airport and Aviation Correspondents named it the country’s most socially responsible airline.
Perhaps it is this type of action that helps engender that loyalty among Dana Air’s customers.