23

Mar

THE ROLE OF A WEAK NAIRA IN DANA AIR CRASH 11062012

2012-06-11

THE ROLE OF A WEAK NAIRA IN DANA AIR CRASH
BY LES LEBA

It is now clear that over 150 innocent souls perished last Sunday as a result of the Dana air crash.  These unfortunate souls may have since been joined by many more, who have tragically lost their lives nationwide as a result of the inertia in one government agency or the other.  Nigerians commiserate with families and friends who have become bereaved as a result of wanton negligence, be it in the air, our roads, our hospitals or indeed, as a result of the laissez-faire   indulgence of government’s regulators in the aviation, banking, pension, and capital market subsectors.  May the souls of these unfortunate fellow Nigerians rest in perfect peace and may the good Lord grant their families and friends the fortitude to carry on.

Now, some readers may wonder what a weak naira has got to do with an air crash after all; the regulatory agency, Nigerian Civil Aviation Authority (NCAA) and the operators of Dana Airline have been fingered as villains of this disaster.  The NCAA has already been widely castigated for allowing Nigerian airlines to operate with old aircrafts, which, worse still were not strictly subjected to the appropriate schedule of mandatory service checks.  In addition, critics have also decried the obsolete airport navigational infrastructure and local facilities for aircraft service and maintenance.

Dana Airlines, on the other hand, is accused of running its service with old planes, which run more schedules than are appropriate for the age of such aircrafts.  In response to the current tragedy, the Minister of Aviation has set up a panel of notable experts to look at the maintenance practices of all domestic operators including Dana Airline and the effectiveness of NCAA’s oversight of maintenance practices.  The Panel would also examine the management and safety culture of all domestic airlines and thereafter make ‘bold’ recommendations for the improvement of the safety of the Nigerian airspace. 

Incidentally, these are broadly the same terms of reference of other government panels instituted in the past in response to airline crashes.  It is likely that if earlier recommendations of the various panels set up in the last 30 years had been properly considered and implemented; perhaps, Sunday’s tragic loss could have been avoided.  

However, in view of the historical antecedents, of such investigative/administrative panels, the likelihood is that the observations of the Aviation Minister’s panel 2012 would ultimately find a place alongside the dusty shelves carrying earlier reports of investigations of similar catastrophes.

In the event that the blame for this air disaster has been squarely placed at the doorstep of the airline operators and the related regulatory agency, NCCA, one may ask again, what has a weak naira got to do with air safety?  

To answer this question, maybe it would be appropriate to draw from the example of car usage in Nigeria to explain the link between the value of the naira and the quality of our imports.  Most graduates from Nigerian universities in the 1970s and early 80s will recall that the car allowances, which they were invariably paid, six months or so, after their employment was largely adequate to purchase brand new  (tear rubber) cars of their choice.  In addition, most establishments provided allowances that would repay the value of the car loans within three to four years, and thereafter also provide a fresh loan for another new automobile.  For this reason, it was unusual to see second-hand car lots in any part of the country.  This culture, however, began to rapidly change as the naira value was gradually officially devalued from less than N1=$1 to the current level of N160=$1.

Thus, a state of the art 504 GL with leather upholstery, air-conditioner, tainted glasses, etc, sold for less than N7,000, while today, that amount cannot even buy one used tyre.  A new car of similar quality today, will cost in excess of N7,000,000.  In the event that incomes were largely stagnated against the backdrop of a rapidly depreciating naira, it became impossible for most Nigerians to purchase new cars.  In response to this reality, the government allowed importation ‘for sale’ of cars that were not more than five years old!  However, as government’s deliberate naira devaluation continued, this age limit was extended to 10 years and subsequently, 15 years old cars were ultimately admitted for importation.  In other words, since Nigerians could not afford brand new models, our roads were flooded with those cars, whose usage had become a liability for their owners abroad.  God knows how many Nigerians have sadly lost their lives as a result of driving poorly maintained, well used old car imports.

Inevitably, as in the auto business, so also it is in the aviation subsector; a new plane, which costs, say, $30 million in 1975 could be bought by a Nigerian air transport operator for less than N25 million.  Today, such a plane could cost about N4.5bn, and, if the purchase loan for the aircraft was funded domestically, the airline may have to pay interest at over 20%.  In the face of such economic reality, Nigerian airline operators had inevitably traded downwards; with the result that most aircrafts in our domestic air space have an average age of about 20 years (Arik Air appears to be the main exception).  Worse still, the domestic airline operator often finds that the weak value of the naira has similarly affected their incomes, as the abject level of poverty in the country not only reduces the volume of passengers, but also makes it difficult to make premium charges for their tickets.

Nonetheless, the airline operators are constrained to pay close to the international dollar benchmark price for their aviation fuel!  Consequently, the airline business has become a cutthroat, dog-eat-dog enterprise with minimal margins and eternally rising costs.  The net product of the above market mix would expectedly be a diligent attempt by operators to reduce cost in every manner.  To this end, they would buy cheap aircrafts that are over 20 years old; delay the service schedule of their planes, and possibly even run an exhaustive schedule so as to get the maximum return on each plane!  

So far, there is nothing to suggest that the quality of pilots and technical crew flying the Nigerian air space is less than optimal.  So, we may safely discount this factor as a major cause of air crashes in Nigeria.  This is not to say either that affordability of young age planes would totally eliminate air crashes, but there is no doubt that the rate of such disasters would be minimized if government and the appropriate regulatory agencies also provided state-of-the-art infrastructure and maintain optimal oversight function over the staff and quality of equipment of all airline operators.

SAVE THE NAIRA, SAVE NIGERIANS!