In the past two weeks, air travellers have been struggling to adjust to a major hike in the price of tickets introduced by domestic airline operators.
The hike, which is almost double the price of an average ticket, has left many wondering how to move from one destination to another.
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The situation is coming when many see air travel as the best option given the security challenges being faced on our roads.
“I was in Lagos. I spent almost a week there. I went to Lagos and returned with a return ticket of N50,000-N25,000, N25,000 each. Suddenly, to fly to Lagos and back is now N100,000. Just like that.
“I think we need a price control board. It shouldn’t just be for commodities, it should also be for services so that nobody would just wake up one day and increase price and it stands,” Mr Ben Shemang, Director of News, Voice of Nigeria, told Trust TV.
Except for the festive periods when prices of tickets on some routes went as much as N100,000 for one-way, the highest one could probably get if booking for a trip to be embarked upon in less than 24 hours would be between N35,000 and N40,000.
But with the recent increment, which is still generating uproar among members of the travelling public, the above fares are no longer available.
According to the new price regime, the minimum economy ticket on all the routes including even the relatively shorter routes – Lagos-Ilorin; Lagos-Akure; Lagos-Benin, is now N50,000 for a one-way ticket.
Currently, Air Peace, Overland and Arik Air for the Lagos-Ilorin; Ilorin-Lagos; Abuja-Ilorin and Ilorin-Abuja quote a minimum of N50,000 on their website.
As of the time of filing this report, a one-ticket for Abuja-Ilorin on Arik Air costs N52,000.
Only Green Africa Airways, a new start-up carrier known for its low-cost model has a minimum of N35,000 for their one-way economy ticket. Even at that, passengers could end up paying more than the N50,000 economy fare if they failed to take cognizance of the terms and conditions especially as they affect luggage.
The lowest fare on Green Africa as advertised only attracts one hand luggage of not more than seven kilogrammes while extra luggage is paid per kilo.
What this means is that the era of low fare is gone in the airline industry at least for now.
But how long can this last? This has continued to generate concern among stakeholders and members of the flying public. How many people can afford N110,000 to go to Abuja and return from Lagos? Or how many people can take a return flight to either Akure or Ilorin that is less than 35 minutes? Will this not push people to damn all consequences of insecurity and rather travel by road? A commentator, Vincent Okeke said while bandits have blocked the roads, “the airline operators have blocked the skies.”
How airfares skyrocket
Though the Airline Operators of Nigeria (AON), the umbrella body of domestic airline owners, denied meeting to fix prices of tickets, as being alleged, it tactically justified the increase citing the rising cost of operation as the main reason for the hike.
The AON particularly painted a worrisome scenario of the crisis ahead, if nothing is done to improve the financial standing of its members.
Apart from the general inflation which the country has experienced in recent years, with prices of virtually all commodities doubling, the airline operators listed other items that have made it practically impossible for them to break even, even if they should continue with the same price regime of N27,000 one-way economy ticket.
Over the years, operators have cried out over the fluctuation in the price of aviation fuel popularly known as Jet A1 in the market. Just as the nation imports refined premium motor spirit (PMS) known as petroleum, the Jet A1 is also imported into the country amidst what a source called, a “complex supply chain”.
It is said to be complex as, unlike in the 80s when aviation fuel was supplied into the airport through the Joint User Hydrant System from the depot, the fuel is now being transported through tankers. This imposes additional charges on the marketers who then build it into their cost.
Group Capt. John Ojikutu, an aviation analyst, said the price could be controlled if the damaged pipelines supplying fuel to the airport are repaired.
He said, “We can reduce the cost by repairing the damaged pipelines from the town depot to the airport depot; from the airport depot to the hydrants on the apron and by restoring the pumping stations along these axes.
“When these are done, you remove the cost of bridging the supply and contamination through trucking with tanks; you remove demurrage on the tanks for the period of waiting before discharge. All these are in addition to the cost of fuel and airlines operational costs.”
But the supply chain system for aviation fuel today is such that it has been deregulated with licensed marketers sourcing for dollars to import the product while selling at a cost-effective rate.
At the moment, the price of Jet A1 has risen to over N400 a litre from N110 it was sold six years ago.
Daily Trust reports that an average one-hour domestic flight gulps 2,500 litres of fuel on the Boeing 737 classics commonly used by the local airlines. This implies that at the rate of N400 per litre, an airline would be spending on average N1 million on fuel flying from Lagos to Abuja. This could be more when there is VIP movement forcing an aircraft to hover in the sky for up to 10 minutes before being cleared to land.
The Vice President of AON and Chairman of Air Peace, Mr. Allen Onyema, who explained the operational challenges faced by airlines, said in addition to the Jet A1 which has become an issue, “the ground handling companies have also increased their charges by 300 per cent.
“So, if the cost of my operation, all of a sudden, has gone up by 300 per cent, just from the ground handling services alone, what do I do?
“If the cost of aviation fuel has risen by over 200 per cent within a month, what should I do? If the cost of forex (foreign exchange) has risen from N340 to N585, what should I do? Gentlemen, don’t forget airline business is dollarized. Everything is in dollars. Do you want to fall out of the sky or fly safe in Nigeria?
“In 2000, the lowest fare in Nigeria was N2,200 which was equivalent to $100 then. Now 22 years down the line, Nigerian airlines are charging less than $30, $40.
“Do you need to look for reasons why airlines are closing shop in this country? Over 50 airlines have closed down in this country. Has anybody bothered to find out why?”
Before the increase in airfares, the Aviation Roundtable (ART), a group of industry thinktank, cautioned airlines over what it called excessively low charges.
President of ART, Dr. Gbenga Olowo, said any airline charging below $100 for a one-hour flight could be toying with safety.
“In 1994, one hour on a jet was going for $100 when NGN/USD was mere 22 and 28 years after I cannot understand which cost element has disappeared or revenue management principles or choice of fleet that will break even operations at this kind of tariff,” he said.
He was corroborated by the Secretary General of ART, Group Capt. John Ojikutu (rtd), who said, “I have said this many times too; precisely, tickets to Abuja and PH were between N3,800 to N4,000 ($100) at $/N40. For any airline to be charging less than $100 to these destinations now makes no economic sense to me in a depressed economy as we now have and a highly regulated sector.”
What options for passengers?
It is certainly a dicey situation for both airlines and passengers. The operators want to remain in business but the passengers whose incomes have not improved are depressed about the whole thing. As the fastest means of transportation and a business of freedom as IATA tags airline business, this could add to the cost of some services rendered through the airlines.
Already, findings show that logistics companies operating at domestic airports have been forced to increase their charges per kilogramme because of the recent hike in airfares. But as it is now, many Nigerians have been forced to return to road trips, damning the consequences of dilapidated roads and highways and insecurity.
Even as members of the flying public await the outcome of investigation by the Federal Competition and Consumer Protection Commission (FCCPC) in conjunction with the Nigeria Civil Aviation Authority (NCAA), the prices of tickets, for now, remain unchanged.
Will the operators choose to keep the price and fly virtually empty planes? Only time will tell.