Travel News

Chinedu Eze 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.