High airfares charged in Nigeria by international airlines could be traced to the lopsided Bilateral Air Service Agreements that was signed by the federal government, which does not protect Nigerian carriers and travellers.
It has become a cliché to say that Nigerian travellers pay the highest airfares to international destinations in West Africa and one of the highest in the world for any country that is not at war.
Recently, many observers linked the high fares to trapped fund of foreign airlines in Nigeria, which may have risen to $1 billion, but Nigerians have been paying relatively high fares since the last 20 years.
In November 2011, reports indicated that Nigeria fined British Airways $135 million and Virgin Atlantic Airways $100 million respectively for charging Nigerians outrageous fares. The former Director General of the Nigeria Civil Aviation Authority (NCAA), Dr. Harold Demuren, alleged that the airlines were guilty of ‘abuse of a dominant position, fixing prices, abusing fuel surcharges and taking advantage of passengers’.
He said an investigation was carried out for several months, and it was found that the Lagos to London route had the highest ‘yield’ in the world.
“Many Nigerians have always felt exploited by British Airways and Virgin Atlantic and the then Director General of the NCAA stated it in clear terms accusing the airlines of “exploitation, “he said.
Of course, the two airlines resisted and defended themselves. In fact, they argued then that it was market forced that determined the fares they charged Nigerian travellers. The matter was later resolved and the two British airlines continued to operate to Nigeria.
Market Forces
Many travel agents will tell you that the high fares are determined by market forces, and that fares in Ghana, Togo, Benin Republic and Cameroon are far cheaper than Nigeria because more Nigerians travel and the situation is a matter of supply and demand. The agents will also say that due to the trapped funds, all the foreign airlines have removed their low inventories and now sell their high inventories; that is, for those that still sell tickets in naira because many of them sell in dollars. But it would have been a different situation if foreign airlines used to sell tickets at low fares to Nigerians in the past, but fares in Nigeria have always been higher than what could be obtained in neighbouring countries.
The BASA conundrum
Talking about demand and supply determining the fares, it is obvious that if Nigerian airlines are operating to Nigeria’s favourite destinations as well as the international carriers that come from those countries, fares charged on those destination would be competitive. They are high because those airlines have monopoly of direct flights to the destinations. Authoritative source told THISDAY that when Arik Air was operating to London as well as British Airways and Virgin Atlantic, Nigerians were paying relatively lower fares and the fares rose by 40 per cent immediately Arik Air stopped flying to Heathrow, London.
Whenever Bilateral Air Service Agreement (BASA) is discussed, many Nigerians tend to blame airlines and the countries that sign the agreement on behalf of their airlines, but travel expert and the organiser of Akwaaba African Travel Market, Ambassador Ikechi Uko, told THISDAY that BASA remained open discussion and negotiation between two nations; that you don’t hold the other country responsible for your own failure. In other words, if you fail to negotiate well for your country and the other country took advantage of it, you don’t blame anyone but yourself.
THISDAY learnt that in negotiating for BASA and commercial agreements between a country and its airline (s), some countries, including African nations insist that foreign carriers can only operate to one destination and any multi-designation must involve partnership with indigenous airlines. Some would insist that increase in frequency would require that fares charged on a percentage of the seats should be paid to indigenous carriers or in the principle of reciprocity, if, for example, British Airways comes to Nigeria, a Nigerian carrier must also operate to the UK and the frequencies will also be agreed on.
But there is no indication that Nigeria gives any of these conditions while negotiating for BASA. In fact, what is obtainable, as narrated by inside sources, is a situation where foreign airlines come to Nigeria, operate a monopoly to their destination and increase their frequencies by meeting with officials at the Ministry of Aviation.
Uko said: “You cannot blame people when you fail to articulate your position. You have to decide what is important to you. What is our need? What do we want to achieve with aviation?”
Nigeria has the highest indigenous travellers in Africa but the country has not taken advantage of it. Last year, about 16 million people travelled in Nigeria. Out of that number, over four million who travelled were on in-bound and outbound international destinations. According to aviation experts, over 90 per cent of those travellers were indigenous Nigerians. This is not common in Africa, but the federal government has not taken advantage of that.
Protecting Nigerian Travellers, Airlines
Based on the lopesided bilateral agreements, foreign airlines determine fares and with high passenger movement, the airlines charge outrageous prices for their tickets. And because there are no clauses to enforce effective participation of local airlines in the bilateral agreements signed by Nigeria, they are sidelined in the scheme of things.
Recently the Chairman of Kings Airlines, Senator Musa Abebe and the Chairman and CEO of Air Peace, Allen Onyema, called for review of BASA by the federal government.
“They say Nigerian airlines do not have capacity; how will they have capacity when they are being decimated through government policies? So, the first reform will be to address the issue of BASA. We need to revisit BASA. We need to ban multi-city hopping of foreign airlines. That needs to stop with immediate effect. I am the vice president of AON (Airline Operators of Nigeria). We feel so discouraged that we are not being supported. At times you come and start comparing us to people who are receiving their loan with two percent interest and easily given. So, we call on government to support the indigenous carriers genuinely and they will make this country very proud,” Onyema said.
Former President of the National Association of Nigeria Travel Agencies (NANTA) and the Group Managing Director and CEO of Finchglow Holdings Limited, Bankole Bernard, told THISDAY that government needs to commit itself to the welfare of the citizens in terms of air travel because currently “government does not care whether price of tickets go up or not.
“In what ways have we positioned ourselves to benefit from our high passenger traffic? No local airline checkmates the high charges by foreign airlines through competition. For now, our problem has no solution,” Bernard said.
Inside source also told THISDAY that there was lack of commitment and patriotism among top officials of the Ministry of Aviation who negotiate bilateral and commercial agreements and who also designate frequencies and destinations for Nigerian carriers.
“Those who negotiate on our behalf do so with personal interest in mind. You will hear something like this: “If we allow you to fly two times daily and seven times a week, it will cost you and my boss likes your airline and he goes to Germany regularly. So, he will like it if you reserve business class seats for him and myself too. On our side, we will look at your request and do the needful,” the source told THISDAY.
Commitment
Seasoned industry consultant and the Managing Director of Flight and Logistics Solutions Limited, Mr. Amos Akpan said Nigerian government has to re-strategise her entire aviation development program, which will include reviewing bilateral air services agreements. He stressed that currently, it is not clear whose interest is served by the existing BASA arrangements, observing that Nigeria signs agreements that permit foreign airlines to carry passengers and cargo directly into and out of Port Harcourt, Lagos, Enugu, Abuja, Kaduna and Kano on scheduled flights.
Akpan disclosed that some foreign airlines operate seven to 14 frequencies per week to some of these airports without reprocity from Nigerian airlines, adding that these foreign airlines even carry passengers and cargo in between Nigerian domestic routes namely: Abuja-Kano, Lagos-Abuja, Abuja-Portharcourt.
“When other countries designate their airlines to Nigeria, our government institutions give them permit as required by existing agreements between the two countries. It behoves on the other countries to reciprocate when a Nigerian airline is designated to them. If they don’t, Nigerian institutions should respond with same measure. We are aware that some countries use regulatory agencies to create barriers for Nigerian airlines. For example, their airport authority may declare unavailable slots in the high traffic airport with connection flights. This sort of backdoor protectionism should be reciprocated by Nigerian agencies.
I am in support of free trade and free movement of people; and moreso, serving the international travel needs of the Nigerian public. But do not say Nigerian airlines have no capacity so you tilt policies in favour of foreign airlines against our own. Where would we be in domestic air travels if private investors did not choose to establish and operate airlines?
“If the global yardstick to determine safety and quality of operations as set by ICAO (International Civil Aviation Organisation) for airlines is IOSA (IATA Operational Safety Audit), the major airlines in Nigeria have successfully completed the IOSA program. Our airlines like Air Peace, Ibom Air, Max Air, have demonstrated capacity.
“What Nigeria needs now is atleast one hub airport. Passengers and cargo need air links beyond Lagos and Abuja to other destinations. That is what Dubai, Heathrow, Doha, Bole, Schipol are offering. The numerous frequencies and the high traffic that foreign airlines are carrying is because passengers and cargo can connect other destinations through their home airport. Nigerian airlines need such infrastructure to build their capacity,” Akpan said.
Investment
He also explained that Nigerian airlines need investment funding at rates that will enable the management breathe financially while they continue to operate to repay. There must be monitoring to ensure compliance with required corporate financial practices.
“Most importantly, we need to build/acquire information technology packages to link our systems with other airline operators in the world. It is safe to conclude that Nigerian airlines are safe and operationally in tandem with standard acceptable practices, but the government policies do not favour them as business competitors with their foreign counterparts. For example, there is no reason the Nigerian mission in Cote d’voire should allow Air Peace be denied, by delay tactics, permission to operate Lagos – Abidjan – Lagos route, whereas Air Ivoire has been operating that traffic. The Chairman and Chief Executive Officer of Air Peace had to bring this to public notice in February this year. I hope this anomaly has been addressed.
“My point is that designation of airlines to use BASA is part of a deliberate strategic action to implement a country’s national economic agenda. It is not the protection or the projection of a partisan political interest, nor an ethnic religious interest. Nigerian government must see the designation of any Nigerian airline to another country as the exhibition of the Nigerian brand to the outside world. The relevant ministries and agencies must keep our national interest in perspective during negotiations and through the implementation of the operations. The airlines from your country, is as visible as your national team in international arena. That is how Emirates is to UAE, same applies to Ethiopian Airlines, British Airways, Delta Air Lines, Qatar Airways,” Akpan said.
According to him, within Nigeria, Ibom Air is a classic show of Akwa Ibom state government’s brand in Nigeria, adding that Akwa Ibom State Government projects Ibom Air in and outside Uyo.
“Nigeria should not wait for Nigeria Air to be properly established before we designate some currently existing airlines and back them to compete on the international routes. When we designate an airline, Ministry of Foreign Affairs should see that the airline is accorded the rights and privileges contained in the existing BASA. Currently, we expect that there is a desk in Nigeria mission in Saudi, China, India, UAE, South Africa, overseeing the affairs of Max Air in Saudi and Air Peace in the rest,” Akpan said.
So, government holds the key to redressing the lopesided bilateral agreements that facilitated the rip-off of Nigerian travellers and failure of Nigerian carriers to effectively compete on international routes.
