Home Aviation Local MROs Will Reduce Aircraft Maintenance Cost By 50% – Dana COO

Local MROs Will Reduce Aircraft Maintenance Cost By 50% – Dana COO

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Mr. Obi Mbanuzo is the Chief Operating Officer/Accountable Manager of Dana Air, in this interview with Pearl Ngwama he harped on the need to establish Maintenance, Repair, Overhaul (MRO) facilities in Nigeria, saying that local MROs would take off 50 per cent cost of maintaining aircraft abroad from domestic carriers. Among other things he urged the Anambra State Government to make good its promise of making the newly built Anambra Cargo International Airport viable. He also refuted the allegation that Nigerian airlines seem not interested in tourism.

 

Excerpts

 

Anambra Cargo International Airport (soon to commence operations) is the latest in the list of state airports in the country. How viable do you think this airport would be looking at other already existing busy airports in the South East?

 

I believe both the governors and people of the State did some preliminary work before they built an airport because you wonder why Anambra State will decide to go in the way of building an airport. In their analysis they were saying that they have some amount of viability so everything will now depend on actual implementation of whatever they have on paper so as an airline we’re open.

To be honest to you, for us the airlines the closer to our populace (the passengers) the better for everybody rather than travelling like we have in the Nigerian context 200 km to get on a plane, it works for us the airlines and the customers. But now the question of viability is something we’ll look at and see what the State Government plans for the Airport. Everything depends on the quality of the airport; it’s not just putting a structure down.

We have in this part of the world the harmattan haze that happens every year; do you have the correct equipment for the airlines’ safety to operate, do you have radio navigational aids; what you have put down, something that allows the airline to fly in? Example of Dana Air, we would have to do an analysis of every airport before we fly into the place, we have specialists for that check of what they have on ground, how easy it is to do an operation; the landing – is the runway long enough. Safety side of it is the first thing we look at. Then the customer facilitation point of view also.

So viability is not something we have to see but we’re happy that they have put something in place and we hope that they are going to work on runway lighting because one thing we suffer in Nigeria is that airports shut very early reducing our operational hours.

 

What economic/social impact do you think the airport would make looking at Nnewi and Onitsha commercial cities?

 

That is the same thing I’m saying that it depends on what the state government does. We have Asaba Airport there. I got a phone call from Asaba this morning that they have got some private companies involved. So what does Anambra have to do; it has to look at who is your customer; Anambra has Nnewi and we know what Nnewi is; a manufacturing hub as such. Nnoson is based in Nnewi and he has an assembly plant. The Onitsha market is the biggest in West Africa. Asaba Airport is just across the river from Onitsha market and now you’re fighting for me, so what happens? Competition, competition is good; it’s good for the customers, it’s good for the airlines. So let’s see what Anambra State comes up with.

 

Do you advise them to go into any form of partnership?

 

I will be honest with you, I’ll say yes only for the reason that the government should not be involved in business that is the only reason. I’ve not seen anything that says it’s wrong but in my personal experience in my almost 30 years of working life is that the government should not be involved in business. Get private businesses run businesses so I don’t see any reason Anambra State will not go into a kind of arrangement to get an airport operator to run the Airport.

 

Recently there have been a number of bird strikes in the Country, what impact do you think it has on the airlines financially?

 

Bird strikes actually for us number one is a safety event; I just want to draw your mind back to a few years ago in New York, they call it the miracle of the Hudson, the airplane that survived a bird strike after it lost both engines. It had to ditch in a river but luckily nobody lost his life and everything came out very well.

But this bird strike from the safety point of view is something we have to take into account, they always come around this season in Nigeria, the  rainy season, when the grass is growing on fields and all kinds of things are packed there and one actually wonders what it is.  We have struck out domestic measures but we can only do so much. For example our pilots are advised if it’s bird activity don’t take off or if you’re going to lift up be conscious birds are out there.

If a bird is ingested into the engine or hits a part of the airplane it is a very costly event not to talk of the safety aspect. Birds have taken out engines and grounded airplanes.

Normally the airport operator should have insurance to cover things like that but in Nigeria unfortunately it doesn’t happen but we always make sure that we bring it to the airport authorities’ or airport operator’s knowledge. We have statistics of how often this happens.

If you’re lucky it hits a part of the aircraft where you just need to do a metal repair but if it goes to the engine of the aircraft which is the most expensive part of the airplane it’s going to cost you a million and half dollars with the airplane grounded and that is if during the takeoff or landing it’s going to be a very serious safety event. So it’s very worrisome but it’s not unique to Nigeria it happens everywhere in the world. Everywhere in the world people try to put in mitigative actions; just make sure that with the grass growing you moan the grass a bit more often, like I saw in the news FAAN procuring some anti-bird equipment, some airports use loud noises, some airports actually have other birds that prey on whatever the bird in your area is. Just something that will mitigate and make it as low as possible for the safety of airlines to operate.

 

Is it true airlines source their foreign exchange from the black market?

 

A simple answer is that we don’t get enough allocations from our banks and they in turn get their allocation from the Central Bank. Nigeria currently has a debt of foreign exchange; it’s not enough to go round so the Central Bank therefore limits availability.

Well normal economics will work which is supply and demand; if supply is low and demand high then price will drive but aviation is not the only industry. A lot of manufacturing in Nigeria is not core manufacturing; it is driven by imports; we have to import the raw materials so we’re in competition with manufacturers and other people that handle goods and so aviation is going to stand on a queue so we don’t get enough for the work we require to do.

Sometimes when we require it you go to your bank to get evidence in Naira but your spares are coming you need to pay, you have supplies to pay for now, today, tomorrow. Fortunately, everything about this business is foreign denominated, we don’t produce spare parts. In a short word, yes we source forex outside the banks. Every airline has its own way or sources of forex. For Dana Air we source our currency from wherever it is but very rarely from the Central Bank because it is not enough.

 

Is the Nigeria Customs Service complying with the federal government’s regime on zero tariff on spare parts and are there still delays?

 

Yes, there were a lot of delays but things are getting better; there are certain parts, in the airline part called AOG where your airplane is actually grounded it’s not flying. But there are parts that require change, maybe a day or two or three days the aircraft is still fine; still making money, carrying passengers but you know you have to change the part.

But there are parts that are so critical; you drop the aircraft when they damage, you have to park the aircraft. I think Customs has proven the integrity of releasing parts on time. Yes, there’s zero tariff but to me there’s a new charge I didn’t know existed because of a kind of leveragic effect we thought we would get  on the import tariff on spares. Last time when I saw the charge on one of my spares I was very surprised though not as much as it should be when the tariff was in place but then it was quite reasonable. I even said, oh is this a new charge they have brought in and they said no and I said what’s this? To give you an example,  there was a part I thought we would pay N100,000 but we paid and I saw N600,000 and I said you just charged me N6000,000, how come?

 

There are plans to set up Maintenance Repair and Overhaul (MRO) facilities in the Country, what financial impact would this make to airlines and do you think we have enough technical personnel to handle these MROs?

 

In fact the meeting we’re about to have now is to discuss Dana’s plan to open a MRO; initially we had MRO for our own aircraft. For technical expertise I will say 100 per cent; in Nigerian we have the technical expertise to carry out heavy checks of aircraft. As I speak with you today Dana Air can carry out a ‘C’ check on our aircraft, we can; we have expertise, we have the staff, we have knowledgeable people, a lot of engineers have previously worked in MROs around the world. We don’t have the MRO present but we have the knowledge and capability to do it which is why we now work towards establishing our own MRO.

So the question of capability is yes, we do have that. Right now we fly our aircraft abroad; just flying the aircraft abroad one way costs about $15,000 and flight charges may be about $2,000 and the airplane goes there for a month, six weeks or eight weeks in some cases, then the technician abroad earns four to five times what somebody in Nigeria will earn so manpower cost is the main thing that makes the charge is high.

But if we domicile all that here in Nigeria, yes the technicians will be here in Nigeria but the manpower cost is lower. You remember how China became the workshop of the world through lower cost of manpower. So the biggest thing that will reduce cost here for Nigerian airlines is the fact that we won’t be spending money the more flying the aircraft up and down there because just flying the aircraft there cost within $20,000 and bringing it back cost $20,000, then the cost of that heavy (‘C’) check is greatly reduced because manpower has left.

The spare parts they will change over there and the spare parts that will be changed here are the same, the cost will be very similar, no problem but then a lot of the work in a ‘C’ check is the cost of the engineer going there and doing some things on tightening and bolting and testing things. It’ll reduce half the cost by having it done here.

 

Assuming airlines are to do 70 per cent of their maintenance here in Nigeria, how much do you think they’ll be saving?

 

There are different kinds of ‘C’ checks, let’s assume my aircraft is new, after two years it will do first of all a one ‘C’ which is a very simple ‘C’ check. After another two years it does a two ‘C’ which is a real check, then it goes that way up to maybe 15 years when it does the real heavy one called the ‘D’ check. Each of those checks increasingly gets more complex and therefore more hours are spent and more time; more hours, man hours are spent and that is the cost. So, a ‘D’ check is far more expensive than one ‘C’ check.

For instance, my B737 has just done one ‘C’ check which is a very simple check just about a month ago and it may cost $700,000 to $800,000 just for the MRO excluding the cost of flying up and down and everything else. But if you do it in Nigeria it’ll be about half of that; like I explained a lot of the ‘C’ check cost is manpower; for instance out of the $700,000 to $800,000 we only spent $200,000 on the spare part we changed the rest was manpower.

 

Does Dana Air has any plans to expand its fleet any time soon?

 

We’re constantly looking at that because of our status in the market, customers like our services; the demand for our service is high. Most of our flights are full so we’re constantly looking to expand the fleet even if it’s to the same routes we already fly. We can put in a second flight.

For example our operations to Owerri people phone me to say the flight is full but what do I do other than to put a second flight maybe in another terminal or something. Frequency gives customers more credibility and it also helps you realise you’re serving more.

The only thing that delays is because we’re looking for the best financial model, very rare airlines go out and buy aircraft with cash, in Nigeria we do that at times but generally most times aircraft are bought with a mixture of debt and different kinds of financing; dry lease, finance leasing and support.  We’re constantly looking at what we can do to our fleet both to increase capacity and sometimes to modernise the fleet because we want a more efficient aircraft, we want aircraft that may have better avionics.

It might not be a different brand but newer types, for instance in Dana Air we fly the B737 Classics and right now we are looking at B737 New Gens so it’ll be a newer aircraft but the same brand.

 

You seem to be doing well locally, any plan for regional operations now?

 

I think we want to first be the master of our domain. In 2016 we went to Accra but one thing with that was that on the average all our aircraft operate on 140-seaters so if you fly a 140-seater aircraft to a market where on the average you don’t have 80 to 90 passengers flying each way you’ll find out that each flight you’re going to have empty seats.

Then you have a competitor that flies a 40-seater airplane, so right now I don’t think we have the right airplane for regional operations. We’re thinking more on our domestic expansion; let’s get the domestic done even if it’s gradual. Dana Air went to fly to Enugu Airport 2008/2009 and when they reopened Enugu Airport we resumed last year.

 

So how are you doing on that route?

 

Excellent!

 

Some frequent flyers rated Dana Air as their best airline both pre and post COVID-19 Pandemic. What do you think gave you that rating?

 

Well, we do everything for the customer; we’re here because of the customer and if the customer is happy we will make money. That’s why we have been here for 13 years. When they say the best I don’t want to blow our own trumpet or else we blow our trumpet.

COVID shut down the industry, July 2020 we started and there was a whole list of things that the Nigerian Civil Aviation Authority (NCAA) required from the airlines from COVID health corridor for keeping flight safety and we made sure that every item was ticked properly. In fact when we started the NCAA was sending other airlines to go and see how Dana does it. Probably that’s what the customers were saying.

 

There’s this allegation that Nigerian airlines are not interested in tourism. What’s your take on that?

 

I will refute that and I will say this in my defense. We’re an airline and we prefer to focus on our main core business which is being an airline moving passengers from point A to point B where we said we’ll take them and where they said they want to go.

Now there are tourist companies who in essence put together a mixture of different things.  We’re interested in tourism in the sense of we want people to travel from point A to B anywhere but you see we’re an airline we’re not going to go into the business of setting up a hotel, or try to consider getting something agreed with the hotel in order to get passengers; that’s not our core business.

Now in terms of tourist sites there was something that was running at some point, I’m sure you’re aware of Naija 7wonders, if you go and meet Mr. Uko he’ll tell you we worked very well with them. So these people can package something with a good proposition. You also have to remember as an airline we have a lot of cost to bear, I can’t carry a passenger for free.

Take for example I have to pay FAAN N5000 for passenger charge on this side of the journey then when you’re coming back the same thing already with zero profit to the airline and I already have certain costs to bear.  So we’re very interested and we’re quite ready to work with the tour operators but they also have to be realistic of what to expect from the airline.

The synergy is this for me, Dana Air for example. We have some time when there is very high demand so it will be very difficult for me to provide a tour operator capacity when I have high demand. So what we would like for them to do is they come with a proposal and say you have this when you have low demand. What can we do? At least let me go to the market and propose this to customers. So we’re quite open to working with them.

 

Picture caption:

Obi Mbanuzo, Dana Air Accountable Manager

 

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