Operators explain why ticket prices in Nigeria are soaring

FOR some weeks now, air fares have soared to unprecedented heights and have become a cause for worry especially with the security situation on the roads.

Last week’s revelation that some airlines charged as high as N120, 000 for a one way trip from Abuja to Lagos has started generating questions over the reasons why ticket prices would skyrocket just like that but no other saner explanation sufficed but cost of operations, availability of foreign exchange and the usual challenges airline have grappled with for over two decades.

During the Easter celebrations airfares across Nigeria have increased by as much as 100% as ticket fares to cities like Port Harcourt from Lagos rose from N26, 000 to N60, 000 and that flights to the city were fully booked until April 12, 2021.

Some fares to Ilorin increased from N26, 000 to N56, 000 and air fares to Kano on a one-way flight from Lagos which was N35, 000 now cost between N56, 500 and N90, 000.

These increases is not unconnected to aviation operational costs; from acquisition of spare parts to a major maintenance all of which are dollar denominated in a terrain where the passengers are paying with a weaker denomination, the Naira. And this is coupled with the bottlenecks of even getting some of these spares through the Nigeria Customs.

Chairman of West Link Airlines, Captain Ibrahim Mshelia who spoke to NigerianFLIGHTDECK on the airfares said one way to ensure air fares are not overpriced is to speed up general aviation development to create options for the flying public especially when it seems like there is connivance among the available few.

He however stated that that does not take away the inherent challenges in the industry that cause the fares to soars, things that affect the airlines’ at the core and militate against their survival.

He said, “Well, the only way is to start General aviation, ease the process and allow more competition. That’s the most civil solution. If I have an airline flying for less, I will choose that cheaper one. But when there seem to be a gang up between the few available, then they can do what they want. You also cannot stop them. It’s a matter of choice and when a provider chooses to exploit or take advantage, then the client can choose to use alternatives available or cancel.

“More airlines are coming on stream, this will mitigate this problem. In defense of the airlines, there are many factors that affect ticket pricing in Nigeria. Aviation does not enjoy oil money anymore. The agencies have to employ people above what they need because there is pressure from all over. They also have to generate what they use to pay the staff, develop infrastructure and maintain them. Not only that, they have to contribute to the federation account some 25% of income or so…I am not sure of the figure but I think 25% or so.

“Airlines are faced sometimes fuel price increase like every other day also inconsistent fuel pricing, airlines paying duty for spares even when government has granted waivers etc. As I speak, I still pay duty for all parts I import to service our aircraft. I don’t even know if there is anything we produce locally that we use to operate our aircraft these days besides just catering. Depending on imports for everything and yet-duty waivers granted are still being collected from operators is part of what’s making the citizens and travelers pay more. Operators have to recover their investments. They are encouraged by same system to also recover their costs. Government therefore holds the final say on these, “ he said.

Chairman of United Nigerian Airlines, High Chief Obiora Okonkwo who also responded to questions with regards the fare increase also talked about inconsistent jet fuel price or unavailable jet fuel, lack of forex to enable the system move like clockwork.

He also proffered some solutions that may help stressing that airlines needed support to get forex.

On the increased prices in recent times, he said,” Honestly speaking, if you look at the cost of operations in this industry I say that they may not be so much amount paid that we can regard as too much. You will not like it. Maybe it was a peak time, we were not privileged to sell out ticket at that price, but how I wish we could (Laughs) but when that happens, it surely might be demand. You find out that when you go back to that airline again you might have the ticket bought at a lower price.

“Some seasons you might have to fly full and come back empty, and so you might have to find a way to cover the cost of the empty flights. So people should understand that operating these airlines takes a huge cost.

“In terms of the fuel price, it is a great thing of concern, we started this when fuel was about N160, we started operations at N160 and when you know that the cost component of aviation fuel is about 30% to 40% so when you move from N160 to N270+ within a space of two months then one ordinarily should expect that minimum ticket sales will increase at least 50% especially when the cost component is 30-40%.

“It is a great thing of concern I don’t know what led to that but I know a lot of things in Nigeria are going up. But surely for the industry to remain operational, I am not talking about viable, certain cost components have to be adjusted and the only way you take it is through the ticketing or cargo and courier if you are doing those. There is no other way, you cannot lose your aircraft part and sell to make money. You have to make sure the aircraft are serviceable.

“Foreign exchange is a big problem, even the timing. If you look at the rules and regulations of CBN today, they go to the official bidding and it is a bi-weekly thing, which means if you have to approach a bank, if they bid for you this week, if you don’t get it that means you need to wait for the next two weeks. As at last two weeks, the information we got from our bank is they have not gotten any $1 dollar allocation since February so imagine if you rely on that to make things happen. You just can’t fly.  It’s a big stress to the industry and in all these aircraft business you might take off all is well and land there is something that needs attention and any snag, you have to ground the aircraft until you find a solution.”

“The solution is spare parts and some of these things are not available locally, you have to source the money and get them. So I advocate continuously a special window for the aviation industry, this window can keep the airline and industry alive. I also think a support system beyond that window is required.”

Despite all the challenges, a school of thought is under the impression that the seemingly arbitrariness in air fare pricing may be regulated with more new entrants into the industry and because it is assumed now that the airlines are operating at a reduced capacity, so it is looking like passenger traffic has shot up but once the capacity returns, they (airlines) will start jousting to attract passengers with competitive fares.