Controversy over Cannibalisation of Arik Aircraft

Controversy over Cannibalisation of Arik Aircraft

Recently, reports indicated that Asset Management Corporation of Nigeria allowed the replacement of Aero aircraft’s faulty engine with engine taken from Arik airplane. Chinedu Eze examines the issues in relation to international practice

Last week there was an allegation that the Asset Management Corporation of Nigeria had allowed the canalisation of one of the aircraft belonging to Arik Air, from which an engine was taken and given to Aero Contractors to replace a faulty engine in the same aircraft type. AMCON has been in charge of Arik Air since it took over the airline on February 9 due to unserviceable debts owed by the airline.

Breakdown
The Aero aircraft had broken down a few weeks ago when it flew to Kaduna and was left at the airport as Aircraft on Ground (AOG), as one of the engines could not be repaired so that it could be flown back to Lagos. Sources from Arik disclosed that an engine of a Bombardier Dash 8, Q400, was taken away from the airline’s aircraft with registration 5N-BKV, and given to Aero to fix the same aircraft type abandoned at the Kaduna airport.
The plan was to get the Aero plane back to service while checks would be conducted on the bad engine with a view to getting it back to work. Chief Executive Officer of the airline, Captain Ado Sanusi, who acknowledged the transaction, said Aero and Arik signed an engine lease agreement with the notification of the Nigerian Civil Aviation Authority (NCAA), adding that Aero would be paying Arik $25,000 a month until the engine was returned.

Standard Practice
Sanusi further explained to THISDAY that what happened was a standard practice recognised all over the world. He said, “We have engine problem with our aircraft in Kaduna and we requested for engine lease from any part of the world. We wanted a short term lease for an engine and we would have gotten one from South Africa for $23,000 to $26, 000 monthly, but because we wanted to let the money be in Nigeria, we took that of Arik and we have done engine lease agreement. This is a normal industry practice.”

He also said, “We got the offer from South Africa and we made plans for the engine to be flown from South Africa but we now realised that Arik has the same aircraft type on AOG, which has not been flown for some time and we asked them if we could lease the engine of one of the aircraft. We agreed to pay $25, 000 a month, which is the standard industry practice all over the world, while our own engine goes for what we call shop visit (checks).
Sanusi stressed that Arik and Aero had done engine lease agreement with the notification of NCAA, saying the practice is normal “where airlines support one another; just the same way they exchange wheels and brakes and other parts.

“There is more collaboration between Aero and Arik because of AMCON. But this is industry practice worldwide. The era of operating in an island has since past because of the reality of the economy on ground.”

Messy Transaction
But sources inside Arik Air describe the transaction as untidy because both airlines do not maintain the same safety standard. A source, who preferred anonymity, said, “If Arik Air’s management that was recently disposed were there, it would not have allowed its aircraft to be balkanised. So this is in bad taste and AMCON does not have the technical experience in aviation to be taking such decisions.”
The source also alleged that besides the engine, other parts were removed from the same aircraft to repair that of Aero, adding that by taking such critical safety decision, AMCON has forgotten that its takeover of the airline’s management does not mean that the airline assets should be disposed of at whim. He said such action could jeopardise Arik’s safety standard.

Exploitation
Another source in Arik stated, “The agreement term that Aero agrees to pay $25,000 a month for the engine is exploitative and against the interest of Arik because in other parts of the world, when this lease arrangement is done, the airline pays for the engine per hour and should also pay for maintenance reserve for the engine, which were not done in the so-called lease between Arik and Aero.”

The source also noted that the aircraft from which the parts were cannibalised might have been destroyed because many parts were taken from the aircraft. He said, “You cannibalise Arik aircraft and give the parts to Aero. It is not only that engine that was taken away but other parts were also taken away. Since AMCON took over Aero five years ago, its debts have increased and its fleet depleted.

They talked about corporate governance but under that corporate governance Aero has not improved; rather its existence is being threatened. So how are we sure it has continued to maintain its well-known safety standard when most of its technical workers have been sacked?”

The source warns that the new management of Arik should not be given arbitrary powers to do whatever it likes with the airline’s equipment and aircraft fleet, “because the airline still employs over 2, 000 workers and that AMCON took over the airline does not mean that it should leave the airline in ruins, as it did to other companies it has taken over.
“The objective of AMCON is to rejuvenate companies in financial straits but what it has done so far is to provide quick death for these companies it has taken over; and that is what everybody who knows aviation well know will eventually happen to Arik. It has already happened to Aero and AMCON is now robbing Peter to pay Paul. When they kill Arik we will know what will happen to the aviation industry.”

Reaction
However, when THISDAY spoke to industry experts to appraise the action taken by Aero in acquiring aircraft parts from Arik Air, many acknowledged that it was a normal industry practice. But a source from the former management of Arik criticised AMCON for seeking to “decapitate” the aircraft in the airline’s fleet “because it really has nothing to lose. AMCON can give away all the Arik aircraft parts to rebuild Aero and may even take some of the aircraft and paint them in Aero livery because people have severely criticised the corporation for destroying Aero. Now, it wants to rebuild Aero with Arik assets; and then what will happen to Arik?”

But an aviator and airline operator with over 20 years’ experience as a pilot, who did not want to be named, told THISDAY that leasing aircraft between airlines was a long industry practice, which is not frowned on by the regulatory authority.
According to the industry expert, “Engine is an asset of its own and it is different from the aircraft.

Those who manufacture aircraft are different from those that manufacture engines. There is a kind of separation of powers. This was purposely done by the US Federal Aviation Administration (FAA) to ensure safety. So you can move aircraft engine and put it in another aircraft.

“I have leased engine before. I sent mine for overhaul. This is allowed in the industry. But the manufacturer of the engine is the only one that has the right to move an engine, but they have representatives. I have two of such in my company, so when I order for engine the manufacturer deals with those in my company whom they know by name. But before I employed them, the manufacturers used to come and install the engine themselves.
So there is really nothing wrong. It is called exchange.”

He noted, however, that there was an engine log card that reads the progress and the hours the engine has worked and records its performance, noting that when the engine is moved to the airframe of another aircraft, the log card ought to be there.
“There is nothing wrong in leasing engine as far as there is good documentation following it. The regulatory authority is only notified about it,” he added.

But some industry observers nurse fears about the future of Arik Air because “those who are running it may not have the best of intentions for the airline. We are losing hope everyday as the number of aircraft in the fleet continues to deplete,” as one observer put it.

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on Apr 18, 2017

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