Airfares fly sky-high amid high operational costs and charges
With the current high operational costs skewed against the indigenous airlines, airfares would continue to skyrocket in the domestic scene, while there are fears that some of the carriers may shut down operations any moment from now.
Investigation also gathered by Daily Independent indicated that Asaba International Airport has increased charges on extension of hours to indigenous airlines by 133 percent to N350,000 from N150,000 per hour, while it currently charges N8,000 as Passenger Service Charge (PSC) from the same airlines. For the airports under the control of the Federal Airports Authority of Nigeria (FAAN), the airlines pay N150,000 per hour for extension. N50,000 out of this sum goes to the Nigerian Airspace Management Agency (NAMA).
This is as the aircraft fleet of the indigenous airlines have reduced to about 45 from over 100 barely a year ago.
However, further information gathered by Daily Independent revealed that apart from the depletion in aircraft fleet, several other challenges ranging from high cost of Jet A1 (aviation fuel), increased levy on PSC, 5 percent Ticket Sales Charge (TSC) to the Nigeria Civil Aviation Authority (NCAA), and increased handling rates by over 100 percent by handling companies are responsible for the high airfares in the domestic market.
Also, despite the commencement of operations by Dangote Refinery a few months ago and the assurances by the management of the company that the prices of Jet A1 and other petroleum products would drop, the reverse was still the case.
All the above go to show that the challenges confronting indigenous airlines are multifacet and go beyond the capacity depletion as claimed by some experts in the industry.
Experts spoken to by our correspondent on Tuesday on the numerous challenges bedeviling the operators in Nigeria, insisted that any airline selling air tickets at less than N200,000 one-way was doing so at a loss.
They also expressed the fear that the airfares may increase unless the government addressed the current challenges facing businesses in the country.
Mr. Hazmat Bukar, United Nigeria, General Managers, Operations, United Nigeria, confirmed the recent rise in cost of operations on the airlines.
Bukar in an interview with Daily Independent, lamented that the airlines were bleeding and struggling to remain in the air.
Bukar dismissed the notion, which limited the problem of the operators to inadequate capacity alone, maintaining that with increased aircraft fleet and the non-addressed of the current challenges, the problems would continue.
For instance, he explained that the price of Jet A1 had continued to increase in the domestic market despite the launch of Dangote Refinery.
According to him, Jet A1 costs N1,200 per litre in Lagos from MRS Oil, while the product is sold at N1,500 per litre at Sokoto and Maiduguri airports, while the product is sold at N1,550 per litre at Bayelsa International Airport.
Apart from this, he explained that airlines pay N8,000 as PSC at Murtala Muhammed Airport Two (MMA2) and Asaba International Airport, while they also pay N2,000 as PSC at the Federal Airports Authority of Nigeria (FAAN) owned airports.
He also told our correspondent that handling rates for airlines by handling companies had increased in recent months.
Bukar also mentioned foreign exchange instability as another challenge facing the airlines, stressing that the airlines could not plan with the current situation. He said, “The problem of domestic scheduled airlines is more than that capacity deficiency as claimed by some people. You can have one million aircraft, but will that change the operation costs?
“The cheapest fuel out of Lagos is from MRS and it goes for N1,200 per litre in Lagos. Outside Lagos, the price varies and oscillates from N1,350 and N1,500 in places like Maiduguri and Sokoto; Bayelsa is N1,550. Even if you check that price of N1,200 per litre and you take 6,000 litres, that is about N7.2 million million. So, you will need 66 passengers for a 130-seater aircraft for you to just fly for an hour.
“That is apart from landing and parking fees, en route charges, 5 per cent TSC, PSC; FAAN charges N2,000 per passenger and MMA2 and Bayelsa charge N8,000 for the same PSC.
“All scheduled operators are bleeding. The airlines are still there because the debts are already on their neck. For instance, the aircraft are taken on debts, including the brand-new ones that are on dry lease. So, the debts are already there and you cannot just discontinue operations. All these things are incorporated in the tickets. So, if these things don’t reduce, how will the airlines survive? The operational costs have to be reduced before you get cheap fares. If you like, get one million aircraft and the operations remain the same, the fares will not reduce.”
Bukar also added that an average airfare on any domestic route would not be cheaper than N200,000 one-way ticket. Mr. Simon Tumba, aviation analyst, in a recent interview with our correspondent, attributed the major challenges confronting the airlines to the forex crisis and the continuous rise on importation levy by the Central Bank of Nigeria (CBN).
According to Tumba, the current sordid situation had made fleet retainer by airlines impossible, while depletion had continued non-stop.
Tumba also lamented that the forex scarcity and the unstable economy that had virtually collapsed every business organisation in the country, while the government seemed helpless in addressing the challenges.
He said, “The forex issue has affected the airlines not only in fleet expansion, but also in fleet retention. Most of the airlines can no longer retain their fleets. This is difficult and I am not sure if anyone can maintain his or her current fleets, not to talk of fleet expansion.
“It is a macro issue and not just a sectorial challenge. Every sector of the country is affected and the only people probably smiling to the banks are the banks themselves. Whether you are talking about the petroleum and gas sector, manufacturing, agriculture and others, everyone is bleeding. Unfortunately, for agriculture, the security challenge has further compounded it. The government is helpless, the airlines are helpless.
“Government cannot do much for the aviation sector, even the public sector players are crying because the value of naira is decreasing every day. You can look at the value of the dollar yesterday and see the value again today. It changes daily.”
Recalled that Capt. Chris Najomo, the Acting Director-General, Civil Aviation, had last week in Abuja in an interaction with the officials of the National Association of Nigeria Travel Agencies (NANTA), attributed inadequate aircraft fleet as one of the major reasons airfares had continued to go up in the domestic scene.
Najomo, observed that the growing traffic of passengers desiring domestic air services operations in Nigeria had exposed worrisome gaps to meet these obligations. Najomo explained that there was an urgent need to bridge these gaps, bring down the fares and encourage best global services operations by encouraging more investors and investments in the domestic airline market.
