As dollar value rises against the naira, coupled with inflation, it has emerged that
airfares may rise between N150, 000 and N250, 000 for one hour flight in domestic
destinations, which will amount to over 100 per cent price increase.
Currently average cost of flight is about N70, 000, however, it was learnt that this
may double, following domestic airlines claim that they have been subsidising
fares and recording losses in order to sustain air travel in Nigeria.
This week, the Spokesperson for Airline Operators of Nigeria (AON) and
Chairman of United Nigeria Airlines, Prof. Obiora Okonkwo, said the high cost of
operations, coupled with hike in aviation fuel, could lead to increase in the cost of
air tickets, such that air passengers could pay as much as N250, 000 for one hour
domestic flight.
He made this known during exclusive interview on Arise TV, the broadcast arm of
THISDAY Newspapers.
He disclosed that some airlines funds have been with banks because they are
seeking for foreign exchange to acquire aircraft and ferry their airplanes for
maintenance overseas.
The National Bureau of Statistics (NBS) had also said that airfares skyrocketed by
40 per cent from June 2022 to June 2023, but this could be even more, following
the recent projection of the cost of domestic flights by the Chairman of United
Nigeria Airlines.
The report indicated there was a month-on-month surge of 4.93 per cent in the
average fare paid by air passengers for specific routes and on year-on-year basis,
fares surged by 40.22 per cent compared to June 2022, when the average was
N56,082.64.
On a regional basis, NBS stated that the North-Eastern region experienced the
highest airfare in June 2023, with an average of N80,650.00, closely followed by
the South-South at N80,000.00.
But then the naira was exchanging N600/$1 to N700/$1 but now it hovers around
N850/$1 and airlines indicated they may not continue to subsidize the cost of
tickets because of enormous losses they incur, which may eventually drive them
out of the market.
Consequently, the airline operators are urging government to take some measures
to protect domestic airlines by providing them dollars for the maintenance and
acquisition of aircraft, disclosing that the operators have been finding it difficult
accessing foreign exchange, which is very critical in their type of business.
Okonkwo who warned that airfares would continue to be on the rise, said: “If you
think tickets are expensive, then you probably don’t appreciate the sacrifices made
by local operators. If we have to charge the fares, the way the costs are increasing
every day, we should be paying not less than N250,000 from Lagos to Abuja.”
Okonkwo called for special foreign exchange window for airlines and stressed the
need for domestic carriers to access foreign exchange through a designated
window facilitated by the Central Bank of Nigeria (CBN).
He also urged the newly appointed Aviation Minister, Festus Keyamo, to
collaborate with other governmental bodies to identify and rectify obstructive
elements within the system, especially currency speculators who artificially jerk up
the exchange rate.
“You have naira and you can’t convert it to the dollar. So, the solution to this is for
our Minister to understand that we need a special window with the CBN to access
foreign exchange,” he said.
He expressed concern over the unjustifiably high cost of aviation fuel, attributing
the excess charges to speculative practices. He called on the Nigerian National
Petroleum Corporation (NNPC) Limited to play its part in stabilising the industry
by curbing these practices, disclosing that even the fuel marketers are aghast at the
rising exchange rate, which is making it very difficult for them to source for dollars
and buy Jet A1.
“There is no reason, no matter the international price of crude oil that the aviation
fuel should be delivered to the pump for more than N500. Everything you see on
top of it is speculations and I am calling out on NNPC staff to set this country free.
The aviation sector should be designated an essential sector,” he further said.
Okonkwo therefore advocated for the designation of aviation as an essential sector
because of the critical role it plays as catalyst in economic development of Nigeria,
noting that without robust financing it would be difficult for airlines to sustain their
operation and insisted that government must have to step in and intervene at this
time.
Okonkwo also stated that without major maintenance facility in Nigeria it becomes
inevitable for Nigerian airlines to ferry their aircraft overseas for maintenance but
due to paucity of forex, airlines cannot take out their aircraft due for maintenance
and this has inevitably reduced capacity, which consequently increased fares, as
available aircraft seats cannot meet demand.
The Chairman and CEO of United Nigeria Airlines who commended the Nigeria
Civil Aviation Authority (NCAA), urged the new Minister not to interfere with
regulations, which is a critical area that determines air safety and also canvassed
for full autonomy of the regulatory authority, frowning at a situation where
workers of NCAA were recruited from the Ministry of Aviation.
He said that the minister should collaborate with other Ministers, especially the
Minister of Finance to find solution to currency speculation, which is spiraling the
exchange rate.
Drawing attention to the industry’s unique challenges, Okonkwo highlighted the
currency disparity that local operators grapple with. Earnings in naira must cover
significant dollar-denominated expenses, making the industry particularly
vulnerable to currency fluctuations.
“The current minister should not interfere with the regulations. We had a very
terrible past where the regulatory employees were given employment letters from
the Federal Ministry of Aviation. That’s absurd and unacceptable. So, let the
regulatory system remain. Also, look into the latest appointments that were made
before the end of the last administration,” Okonkwo said.
About two years ago airfares went up to N50, 000 as base fare when a litre of fuel
was increased from N180 per litre to N400. Currently a litre of aviation fuel is
from N700 per litre and there are indications it will continue to raise, as naira loses
value to the dollar.
There are also fears that if there is no intervention for these airlines, fares would
rise beyond the affordability of average air traveller, and this will also have a
counter effect on airlines, a situation that may force them to suspend operation.
THISDAY
