Henry Boyo: How a weak Naira led to the #DanaCrash

by Henry Boyo

Dana aircraft

It is now clear that over 150 innocent souls died recently as a result of the Dana Air crash.  Nigerians commiserate with families and friends who have become bereaved as a result of wanton negligence, be it in the air, on our roads, our hospitals, or as a result of the laissez-faire indulgence of government’s regulators in the aviation, banking, pension, capital market and other sectors.  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, an accusing finger has been pointed toward the regulatory agency, the Nigerian Civil Aviation Authority, and the operators of Dana Air for the disaster.  The NCAA has already been widely castigated for allowing Nigerian airlines to operate with old aircraft, which, worse still, were not strictly subjected to the appropriate schedule of mandatory service checks.  In addition, critics have decried obsolete airport navigational and emergency rescue infrastructure and the poor local facilities for aircraft service and maintenance.

Dana Air, 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 aircraft.  In response to the current tragedy, the Aviation Minister, Stella Oduah, has set up a panel of experts to look at the maintenance practices of all domestic operators including Dana Air and the effectiveness of the NCAA’s oversight function of maintenance practices.  The panel would also examine the management and safety culture of all domestic airlines and thereafter make recommendations for the improvement of the safety of the Nigerian airspace.

Incidentally, these are broadly the same terms of reference of other government panels constituted 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, June 3’s tragic loss could have been avoided.

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, 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 ownership in Nigeria to explain the link between the value of the naira and the quality of our imports of machinery and equipment.  Most graduates from Nigerian universities in the 1970s and early 80s were able to buy brand new cars of their choice within six months of their employment.  The loans for these cars were provided by the employers and were renewable every 3 – 4 years.  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 brand new state of the art 504 GL 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 N7m.  As incomes became largely stagnated against the backdrop of a rapidly depreciating naira, it became impossible for most Nigerians to purchase new cars.  In recognition of 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.  Consequently, our roads became 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 such old defective poorly maintained cars “with tokunbo spare parts.”

Inevitably, as in the auto business, so also it is in the aviation subsector; a new plane, which cost, for example, $30m in 1975 could be bought by a Nigerian air transport operator for less than N25m.  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 per cent, while its payments for insurance and replacement parts will be denominated in dollars.  In the face of such economic reality, Nigerian airline operators had inevitably traded downwards; with the result that most aircraft in our domestic air space, as The PUNCH exclusively reported some time ago, have an average age of about 20 years.  Worse still, the domestic airline operators often find 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 charge premium fares!

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

This is not to say either, that affordability of “younger age” planes would totally eliminate air crashes, but there is no doubt that the rate of such disasters would be minimised if airlines could buy “younger age” planes and the appropriate regulatory agencies also provided state-of-the-art infrastructure and maintained optimal oversight function over the staff and quality of equipment of all airline operators.

Regrettably, with the severely depreciated purchasing value of all income earners, it may be difficult for either airline operator or indeed, the regulators to retain the best hands within the domestic aviation subsector. Also, government’s promise of a bail-out package will not be adequate to position the aviation subsector for optimal safety and best practices in service delivery.  A weaker naira will only make matters worse.

Editor’s note: Op-ed pieces and contributions are the opinions of the writers only and do not represent the opinions of Y!/YNaija.

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