Trapped Funds - Foreign Airlines' Airfare in Dollars Will Reduce Backlog - Analyst - VANGUARD
By Prince Okafor
As a move to address the foreign airlines' trapped funds in the country, indications have emerged that sale of air tickets in dollars would reduce the backlog.
The development according to aviation analysts would also put an end to trapped funds in the country and address the fear of foreign airlines reducing their frequencies in the country.
Vanguard Aviation World gathered that foreign airlines contribute over 70 per cent of aviation earnings in the country.
It was also gathered that due to the significant rise of their funds trapped in the country over the past one year, they are mulling massive reductions in their frequencies to Nigeria. For instance, foreign airlines collect Naira for their tickets to customers and exchange the same for foreign currencies for their operations. But they have been lamenting their inability to get the exchange executed through the official foreign exchange market due to the scarcity of foreign exchange resources.
A breakdown of the trapped fund's movement shows that as of December 2022, the fund stood at $549 million. The airlines' fund later rose to $662 million in January 2023 and is currently at $744 million, an increase of 11 per cent when compared to the previous month.
Following the development, United Arab Emirates, UAE, the flag carrier, Emirates Airline operating over 21 flights, suspended its operation indefinitely in Nigeria in October 2022.
But in a chat with the Director, Research, Zenith Travels Limited, Mr. Olumide Ohunayo, he stressed that the suspension of operations in\ Nigeria by Emirates Airlines has a spiral effect on the allied services in the country to the airline.
"Apart from the Maintenance Repair and Operate, MRO, firm, other allied organisations to Emirates like hotels, catering services, car hire, security, expatriates, fuelers and other backup companies would be affected by the decision of the airline to quit the Nigerian scene.
"The Federal Government should take a cue from the Zimbabwean government, which allowed the foreign airlines operating into its country to sell tickets in dollars.
"Rather than insisting on naira sales for the airlines, dollar sales would reduce the challenge of blocked funds currently being experienced by the foreign airlines.
"The Federal Government should also merge the black market rate with the official rate, this would reduce the challenge. By and large, we should find a way out of this crisis. Zimbabwe was also affected and it has told the airlines to sell tickets in dollars."
"Even, the fuel suppliers are feeling the pains. Now, the fuel suppliers that refused to collect naira from Emirates are now collecting zero naira and zero dollars.
"So, we are all feeling the pain. I think the Nigerian oil companies should have collected naira, rather than insisting in dollars from Emirates and today, everybody on that value chain that gained from the services of Emirates are all down without jobs."
Nigeria Air to launch in late 2Q23 as court bid drags on - CH-AVIATION
Nigeria's Aviation Minister Hadi Sirika has reiterated that Nigeria Air (NWB, Lagos) will begin operations before the end of the current administration on May 29, 2023, while the Abuja division of the Federal High Court has dismissed an attempt by the Airline Operators of Nigeria (AON) to have their case against the establishment of the new national carrier to be heard in Lagos.
Briefing media after a Federal Executive Council (FEC) meeting in Abuja on April 26, Sirika echoed statements he made in March when he said the carrier would fly before the new federal administration takes office under the ruling All Progressives Congress (APC) on May 29.
"Nigeria Air Limited, I did say that we will get it going before the end of this administration and I have not withdrawn my words. We have everything in place; the aircraft are in place, the offices, operational centres, the staffing and everything that we need to have in place. We're doing the last-minute checks and waiting for the issuance of the AOC [air operator's certificate], and it will fly. It will fly, and it will be for the benefit of this country, for the size of the population, the travelling public and what it does to the economy, especially to tourism, to African integration and for the AU Agenda 2063. It's a very important project, and I must say it will happen before the end of our tenure in the next four weeks and two days," reported Premium Times newspaper.
Meanwhile, The Sun newspaper reports on April 25, the Abuja division of the Federal High Court dismissed an attempt by the AON to stop an order by Chief Justice John Tsoho directing the transfer from Lagos to Abuja of the case in which the private airline organisation is challenging the establishment of Nigeria Air, the federal government's new joint venture with a consortium led by Ethiopian Airlines (ET, Addis Ababa).
In his judgement, Abuja Federal High Court judge James Omotosho dismissed the AON's attempt as "frivolous [and] unreasonable as it disclosed no cause of action". He awarded NAD1.5 million naira (USD2,172) in favour of the Chief Judge of the Federal High Court for having been "humiliated and harassed" in the course of his duties. "The plaintiffs cannot bring an action against the discretionary powers of the chief judge to transfer a case and re-assign the same. The chief judge acted in his judicial and administrative capacity and cannot be sued for his action. The action of the plaintiffs has not disclosed any reasonable cause of action. [...] This suit is frivolous, unreasonable and brought to humiliate and harass a public officer. I, hereby, award a cost of NAD1.5 million against the plaintiffs in favour of the chief judge," Omotosho said.
In November 2022, the Nigerian Federal High Court in Lagos granted the AON an interim injunction that prevents Sirika, the Federal Ministry of Aviation, Nigerian Attorney-General Abubakar Malami, and other defendants from continuing with the launch of the new national carrier. This followed a court application filed on November 11 by the registered trustees of the AON, including Azman Air, Air Peace, MaxAir (Nigeria), TopBrass Aviation and United Nigeria Airlines to have Nigeria Air's Air Transport License (ATL) revoked on the grounds that the carrier would be anti-competitive and damaging to domestic airlines.
2,000 vessels shun Nigeria over 70% freight rate increase - NEW TELEGRAPH
More than 2, 500 merchant vessels or 50 per cent of foreign ships trading in Nigeria have exited the country’s waters in the last 16 months. Nigerian Chamber of Shipping (NCS) said freight rate increase to 70 per cent was responsible for the sudden development in the last one year. It was learnt that in order to compensate the increased transit times, carriers are adding additional vessels to selected services, which in turn has led to increase in the operational and cargo transport to West African ports.
Findings revealed that the in- crease in freight rate started in 2021 when Tilbury to Tincan/ Apapa ports was moved from 2,050 pounds to 2,670 pounds for 40 feet container and $5,310. Also, freight rate from Antwerp/Rotterdam port to Tincan/ Apapa was increased from €2,575 to €4,200. The President of the chamber, Aminu Umar, linked the development to the prevailing challenges in Nigeria’s shipping industry, saying insecurity and unfavourable policies were responsible for exiting foreign vessels from Nigeria waters.
He noted that the development had led to scarcity of ships in West African region, shooting up the freight rate. Umar said in Lagos that there was a more robust market for vessels in Europe than Africa due to the ongoing Russia-Ukraine war. The President noted that between 40 per cent and 50 per cent of vessels plying the Nigerian waters had returned to Europe from 2022 till date, stressing that 40 per cent of the capacity had moved back to Europe.
Umar noted: “The truth is that these are foreign-owned vessels trading within the West African sub-region, which includes Nigeria. “So what it means is that it has created scarcity which will increase the freight rate. So the freight rate has gone up by almost 70 per cent due to this. There is a 70 per cent increase in freight rate, which went up to 100 per cent before but has reduced to 70 per cent.”
It would be recalled that be- tween December 2020 and 2021, United Nations Conference on Trade and Development (UNCTAD) said that spot freight rates surged across routes in developing regions, explaining that on the Shanghai to South Africa (Durban) route, the rate per 20-foot-equivalent unit (TEU) increased from $2,521 to $6,450 , while on the Shanghai to West Africa (Lagos Port) route the freight rate increased from $5,291 to $7,452. It added that in Africa, between July 2020 and July 2021 average capacity fell by 6.5 per cent, leading to the increase in container freight rates, with one-way China-to-Africa rates increasing from $2,000–$2,500 to $4,000–$5,000 per TEU.
For Asia to Cameroon, the rate for 20-foot containers increased by 340 per cent and for 40-foot containers by 244 per cent. As regards to performance in cargo handling involving Very Large Crude Carriers (VLCC), UNCTAD explained that Nigeria and Ghana had low performances, while other West African economies like Angola, Cameroun, Gabon and Equatorial Guinea showed average or higher performances.
It noted: “Between the third quarter of 2020 and the second quarter of 2022, the Liner Shipping Connectivity Index (LSCI) for Africa declined from 18.8 to 17.6. As shipping lines reassigned ships to the China-US routes, some states in Africa lost deployed capacity.”
EU calls on Nigeria to tighten security at seaports - THE GUARDIAN
The European Union (EU) has advised Nigeria to tighten security architecture at the seaports to help reduce its vulnerabilities and risks. The call was made at the closing ceremony of the Western and Central Africa Port Security (WeCAPS) first mission training in Nigeria for ports in Lagos.
The mission, which started in August 2022, was sponsored by EU and driven by Expertise France (EF) with the collaboration of the Nigerian Ports Authority (NPA) and the Nigerian Maritime Administration and Safety Agency (NIMASA).
The team leader of WeCAPS, Nico Vertogen, said strengthening the security and safety of the West and Central African ports would help reduce vulnerabilities and risks, thereby increasing skills and vigilance.
Vertogen called for perimeter fencing of the ports, installation of CCTVs and access badges among others as a means to tighten the nation’s port security.
He explained that the WeCAPS project is a partner project with expertise giving their opinion on safety and security accompanied by training.
The Managing Director, NPA, Mohammed Bello-Koko, commended the EU for the WeCAPS training mission to strengthen security and safety of ports in the West and Central African region. He said the training mission in Nigeria came at a time when the authority is prioritising safety and security to achieve a hub status within the region.
This commitment, Bello-Koko said is in line with the authority’s vision to be the maritime logistics hub for sustainable port services in Africa, which also prioritises the delivery of efficient port services in a safe, secure and customer-friendly environment.
Also speaking, the General Manager, Security, NPA, Mohammed Khalil, said ports are part of a nation’s critical national infrastructure and assets. He said the ports are also gateways to the nation’s economy as they serve as transportation hubs connecting and facilitating movement of goods to support businesses for wealth creation and economic growth.
Khalil noted that, as an integral part of the global maritime logistics and supply chain, which controls over 80 per cent of world trade, the safety and security of the ports are of paramount importance to the wellbeing of the global economy. He said the safety and security of ports became a priority after the 9/11 attack by acts of terrorism in the United States and its aftermath that brought huge changes in global maritime and port security management.
Khalil said due to the impact of attack at the global level, the International Maritime Organisation (IMO) reviewed the International Convention for the Safety of Life at Sea (SOLAS) (1974) that gave rise to the International Ship and Port Facility Security (ISPS) Code.
According to him, the convention, which came to effect in July 2004, was to nip in the bud, the global threat of terrorism on international shipping and related supply chain infrastructure. He said Nigeria, being a signatory to the convention, has over the years worked tirelessly to ensure compliance with the code through the collaborative training with WeCAPs.
Speaking on the training by WeCAPS, Khalil said over 150 officers and staff of maritime agencies have been trained and have acquired sufficient professional knowledge and skills in various areas of needs and competencies. He said this cuts across security, fire, safety, environment, operations, harbours, legal, training and public-private partnership (PPP).
Khalil said the training was built around a detailed assessment report of ports in the Lagos Maritime Security Zone (LMSZ), which was conducted in April 2022, to strengthen the capacity of human capital in various areas of port operations, particularly in the areas of port security, safety and fire service.
Also speaking, the Head of the International Ship and Port Facility Security (ISPS) Unit, NIMASA, Mudi Isa, commended EU for its immense commitment to port safety and security within the shores of Nigeria and Africa.
He said despite the maritime security threats the world is confronted with today, taking the right actions and putting appropriate measures in place will ensure a safe and secure maritime environment, which is the bedrock for a thriving industry.
Isa said the maritime industry plays a fundamental role in boosting global trade and economic prosperity. He said the industry is a closely-knit community that security threats can migrate from a vulnerable port in one country to a seemingly less vulnerable one in another country using ships as a ‘conduit’ for this migration.
Isa noted that with the dynamic nature of maritime security threats, there is a need to take deliberate steps to ensure sustainability of achievements and reduction in port vulnerability to emerging threats through collaborations.
Why Flights Might Get Cheaper After a Busy Summer - BLOOMBERG
BY Bloomberg News,
The Bitcoin logo on the window of a cryptocurrency automated teller machine (ATM) kiosk in Antwerp, Belgium, on Monday, June 6, 2022. Bitcoin has been trading around the $30,000 level for weeks now, defying predictions of a potential further decline but also struggling to gain upward momentum as the broader US market has also taken a beating. Photographer: Valeria Mongelli/Bloomberg , Bloomberg
(Bloomberg) -- Bitcoin climbed Tuesday as renewed fears of stability in the US financial system bolstered the price of cryptocurrencies.
The largest digital asset by market value rose as much as 4.4% to $28,892 in New York trading hours, with Ether, the second largest token, also up 3.7%.
The gains come as US regional banks led a selloff in American equities following the collapse and sale of First Republic Bank, which has prompted calls on the Federal Reserve to pause further interest-rate hikes to shield the economy from lagging impacts.
“Ongoing stress associated with vulnerabilities in the banking sector have helped to put a positive spotlight on the value proposition of owning decentralized currencies that can be self-custodied,” Joel Kruger, a market strategist at LMAX Group, said.
Turmoil in the financial sector helps boost the case for a currency outside the purview of any one central bank, advocates say. In its fight against still-high rates of inflation, the US central bank is broadly expected to raise interest rates by a quarter point at its meeting Wednesday. However, traders continue to expect rate cuts by year-end.
“We’re seeing a wave of broad-based US dollar weakness on expectations the Fed will deliver a less hawkish communication at its upcoming meeting,” Kruger said. “This has resulted in yield differentials moving out of the buck’s favor, which in turn has perhaps helped to support crypto assets.”
Eventual cuts to interest rates should bolster risk assets including Bitcoin, which is fueling some of the recent gains in crypto. However, Noelle Acheson, author of the “Crypto Is Macro Now” newsletter, cautioned against expectations for rate cuts in the short term.
“Bringing down inflation has to continue to be a priority for as long as the market can stand it,” she said. “We’re seeing a boost to risk assets, but it might not last for long — a lot depends on the employment data this coming Friday.”
Passengers stranded as NLC grounds Owerri-bound flights - PUNCH
BY Funmi Fabunmi and Chidiebube Okeoma
The Imo State Government has kicked against the grounding of Owerri-bound flights at airports across the country especially Lagos by leaders of the Nigeria Labour Congress.
Many passengers were left stranded at airports across the country due to the disruption of flights by the NLC officials.
The labour union declared what they called “No Flight To Owerri” action at the Murtala Muhammed Airport in Lagos, which affected flights to and from Imo, as well as other destinations.
The action was in response to an alleged violent disruption of Workers’ Day celebrations in Imo State by suspected state government agents.
The airlines affected by the disruption expressed their displeasure over the development just as aviation industry analysts condemned the action.
The organised labour had resolved to embark on a comprehensive industrial action against the Imo State Government.
The declaration, which was contained in a letter sent to the Lagos State Council of the Labour Centre and signed by the NLC Secretary-General, Emmanuel Ugboaja, in Abuja, directed members in the aviation sector to paralyse flights to Imo State beginning from the midnight of Wednesday, May 3, 2023.
The communiqué read in part, “It was resolved that we embark on a comprehensive industrial action against the State Government beginning from Wednesday the 3rd day of May 2023. Consequently, as part of our effort to enforce compliance, you are kindly requested to work with the TUC and other affiliates especially those in the Aviation sector to ensure that no flight leaves the Lagos Airport to Owerri, Imo state starting from 12 midnight today.
“The government of Imo State has grossly violated the rules of engagement among the social partners in industrial relations in the country by using thugs to violently disrupt this year’s May Day in Imo State, that properties were vandalised and looted by the invading thugs of the government and that some workers sustained various degrees of injuries as a result of that attack.
Among the demands, the union said the state government must sign the agreement reached between it and workers in the month of March 2023.
In a swift reaction, the Imo State government accused the NLC National President, Joe Ajaero, of working for the enemies of the state government.
The state Commissioner for Information and Strategy, Declan Emelumba, in a statement , said, “It is to the glory of God that, contrary to the vain wishes of the President of Nigeria Labour Congress, Joe Ajaero, Imo workers and pensioners converged at Ndubuisi Kanu Square , Owerri, on May 1st, 2023, for yet another memorable May Day celebration. The smiles and clear expressions of joy on the faces of the thousands of workers who turned up for the historic event clearly showed that they were neither coerced nor intimidated to be present. They were simply there on their own accord.
“Yet, Ajaero, in his reckless press statements, claimed that the leaders of the 22 industrial unions of the NLC in the state who organised the Labour day celebration, were stooges of the state government. This is simply laughable because these union leaders were there long before Ajaero emerged the President of NLC. It is an open secret that the grouse Ajaero has with these leaders is that they refused to be recruited into his hate force to amplify his rabid hatred for the governor and the state government, fired purely by his selfish political and clannish interests.
“That was why he negated due process and quickly moved to install a Caretaker Committee for NLC in Imo State, and went on to appoint his classmate, friend and kinsman the chairman.”
‘We’ve overcome Passport challenges in Nigeria’ – FG - NAN
The Federal Government says it has overcome the challenges Nigerians encounter in obtaining passports.
This is contained in a statement issued by Mr Sola Fasure, the Media Adviser to the Minister of Interior, Mr Rauf Aregbesola, on Wednesday in Abuja.
Fasure said the minister made this known at the inauguration of the Front Desk Office in Oyo State.
He said the Oyo Passport Front Office was part of the long-term initiatives to make the process of data capturing, production and collection.
These, he said, were critical areas of the Passport process easier, all in a bid to address the growing concerns of Nigerians.
According to the minister, the Nigerian Immigration Service (NIS) has continued to meet up in spite of the skyrocketing demand for the citizenship-affirming document, while maintaining the highest standard and quality.
“The demand for Passports by Nigerians has skyrocketed in the past three years. Nigeria has a growing population. This means that in the past 30 years, more people are being born than are dying.
“More people have therefore grown to the age they will need the Passport to travel outside the country, for identification and for other purposes.
“All these shot up demand, more than our production capacity. But thankfully, we have addressed the challenge successfully and cleared the arrears.
“We are now producing on the schedule of six weeks after biometric data enrollment for fresh applications and three weeks for renewal.
“But we still have the challenge of the waiting period between application and biometric data capture. Depending on the location, sometimes, the waiting period can take up to two months.”
This, he said, was because there was a limit to the number of applicants that the existing Passport offices could attend to in a day, making it impossible to attend quickly to all the applicants.
“Which usually necessitated a long waiting period Front Desk is a facility for application completion and enrollment, where applicants will submit their biometric data.
“No judgment will be made here. But the application process will be completed and collated for processing and production. It is also where the applicant will collect the Passport when it is ready.
“In spite of the challenges we faced in 2022 alone, we produced 1.9 million Passports, against the 1 million produced in 2021. This is about 80 per cent increase and it is unprecedented.”
The minister added that the reform introduced to NIS led to the automated Passport issuance process which eliminated touts and racketeers in Passport administration.
He added further that the reform led to the introduction of E-border Management, MIDAS and the commencement of E-Passport across Passport Control Offices and Diplomatic Missions.
Aregbesola also said that as part of the long-term measures, the private sector would be engaged to provide lounges for a fee, with equipment and personnel provided by NIS to make the waiting period after application seamless.
“Getting the Passport is a right of all Nigerians and for those outside the country, it is a necessity.
“The Passport validates your person and existence and without it, you stand the risk of being classified as a stateless person outside the country.
“But our mandate is to provide the Passport for all Nigerians desirous of it seamlessly, without any stress. This is the essence of the citizenship integrity mandate President Muhammadu Buhari gave to Nigerians.
“That any Nigerian interfacing with the government in any area must not encounter any difficulty but rather do their business joyously.
“It goes without saying that the more of this office we have, the less the waiting period. Our long-term plan will be to involve private operators who will provide the lounge for a fee.
“But the equipment and personnel will be provided by NIS. With this, it is possible to cut the waiting period to a few days.”
Aregbesola said that the challenges the nation had in the Passport administration were the few corrupt officials undermining the federal government’s efforts to sanitise the process and bring integrity to the Passport administration.
He added that their main excuse for withholding an applicant’s Passport was that there was no booklet.
This, he said, was simply not true, adding that it is just an excuse for extortion when at a time there were more than enough booklets to satisfy the nation’s production schedule.
“They have remained on this ruinous path sadly because desperate applicants continue to patronise them. But I am appealing to Nigerians, as your patriotic duty, to stop patronising them and gratifying their lust for lucre.
“Make it a duty to report such solicitation for gratification to the office of the Comptroller-General of NISI or my office.”
Gov. Seyi Makinde of Oyo State, who was represented by his Special Adviser on Migration and Homeland Security, retired ACG Segun Adegoke, stated that the state government would continue to support NIS.
“We thank the minister for collaborating with the Oyo people in establishing this office here in Oyo to complement the one in Ibadan. It will in no small way help facilitate legal migration of our people,” he said.
Makinde, however, called on the minister and NIS to make haste in the domestication and eventual issuance of the AU Passports to Nigerians.
This, he said, would go a long way to assist in facilitating the legal migration of the people of the state to the 54 African countries visa-free.
He added that it would also in turn promote much-needed remittances vis-a-vis foreign direct investment from other African nations.
Earlier, the Acting Comptroller-General of NIS, DCG Abdulmumuni Haliru, said the newly inaugurated Passport front office would no doubt boost social and economic activities in the town.
Haliru, therefore, called on officers to be of good conduct and always be professional while discharging their civic responsibility.
He further extolled the person and character of the minister, saying that the NIS has never had it this good.
“Sir, you will recall that it is during your time that we launched several projects in the service, but your commitment to Passport reforms and easing access to this important travel document has been phenomenal.
“We in NIS have never had it this good. In a space of the last year alone, you have given seven additional Passport front offices to the country.
“As well as inaugurating the enhanced Passport in several stations and countries. We say thank you, we won’t disappoint Nigerians in rendering this service to them,” he promised.
Air France-KLM Prepares for Busy Summer as Bookings Come Back - BLOOMBERG
(Bloomberg) -- Air France-KLM left investors guessing about the strength of its recovery by abstaining from a full-year profit forecast and trimming its capacity prediction, providing a muted outlook that contrasts with IAG SA and its raised outlook for 2023.
The Franco-Dutch group’s stock fell as much as 4.7% in Paris trading on Friday after the company reported earnings. The first-quarter net loss narrowed to €344 million ($380 million) from to €552 million a year earlier, Air France-KLM said, while revenue surged 42% to €6.33 billion, slightly exceeding analyst expectations.
Air France-KLM issued a more cautious tone on its full-year capacity guidance, cutting back the outlook for the year to about 95% after previously saying it would reach as high as 100%. The company also said it would restores its equity first before resuming a dividend payout.
Air France-KLM “continued to show strong revenue growth as well as robust cash flow generation thanks to the very encouraging summer ticket sales,” Chief Executive Officer Ben Smith said in the statement, adding that “we now stand on our own feet” after repaying the remaining portion of state aid.
Smith said in February that the company had “turned the page” on the Covid-19 pandemic, which had prompted an unprecedented industry slump and forced a government bailout. The exit from state aid gives Air France-KLM flexibility to resume its growth path. The CEO has already signaled interest in taking a stake in Portuguese flag carrier TAP SA as the government in Lisbon seeks an industry backer for an airline it was forced to rescue during the health crisis.
The global aviation industry has enjoyed a robust comeback since most countries lifted their coronavirus restrictions and people resumed travel for business and leisure. Deutsche Lufthansa AG this week provided an upbeat preview of the early summer months — the crucial travel period for the aviation industry. Earlier today, British-Airways parent IAG reported a surprise operating profit in the first quarter as bookings for the summer came rushing in and the airline group benefited from lower fuel prices. It also raised its outlook.
Air France-KLM said it entered exclusive talks with Apollo Global Management for a €500 million equity financing into an affiliate owning engineering and maintenance assets as it continues to restore its balance sheet. It also received “several” non-binding offers on equity financing supported by its loyalty program, with talks continuing with potential investors.
(Updates with analyst comment in third paragraph, capacity guidance in seventh.)
JUST IN: Panic as plane crash-lands at Abuja airport - PUNCH
A Max Air aircraft reportedly conveying passengers from Adamawa State crash-landed upon getting to Nnamdi Azikiwe International Airport in Abuja on Sunday causing panic.
There was panic at the Abuja airport on Sunday when the Max Air aircraft crash-landed after the tyre reportedly burst into flames.
The Aerodrome Rescue and Fire-fighting Service operators at the airport were swiftly deployed to the scene to put off the fire.
Former President of the Nigeria Medical Association, Dr Mike Ogirima, who gave an account of the incident to Daily Trust, was quoted as saying that the tyre burst occurred after takeoff at Yola Airport.
However, the aircraft crash-landed in Abuja with emergency officials already on the ground to put off the fire before the passengers disembarked right at the runway.
Ogirima said, “We thank God. We are still on the runway and the pilot has reassured us. He has called for the stairs and we are now disembarking from the runway to be evacuated to the airport building at the arrival hall.
“We bless God because we have witnessed the pull out of the tyre right from the airport in Yola and we went into a prayer session.
“I never announced it as a surgeon so as not to cause any panic but we bless God,” he added.
Despite Increase in Airlines’ Capacity, Airfares Still High at Low Season - THISDAY
by Chinedu Eze
Low passenger traffic with accompanying low fares that follow the Christmas season in the previous years has not been witnessed this year, as the cost of tickets are still very high, despite increase in capacity by airlines.
With the increase in capacity, which makes more seats available for domestic air travel, industry observers are of the view that the relatively low demand should have pushed down the fares.
THISDAY investigations disclosed that the base fare for many airlines is still N50, 000, except the low cost carrier, Green Africa, whose fare starts from N35, 000 and Dana Air whose base fare is N41, 000, despite the fact that about three new airlines have received certification to begin schedule passenger service, yet operators are not persuaded by the stiff competition ahead to lower their fares.
“Base fare is dependent on when you buy your ticket. It starts from that N50, 000 and could rise to N96, 000 to N100, 000; while business class rises from N96, 000 to N150, 000 depending on demand by passengers. Passenger traffic is still high for such destinations as Asaba, Owerri, Uyo, Abuja, Akure, Enugu and even Anambra airport at Umueri, where Air Peace and United Nigeria Airlines operate three weekly flights to,” a travel protocol official told THISDAY.
Senior member of Airline Operators of Nigeria and the President/CEO of Top Brass Aviation Limited, Captain Roland Iyayi, told THISDAY on Wednesday that the reason why airfares are still high despite the low season is because of cost of operation, saying that aviation fuel is costing more.
“There is high cost of maintenance, there is high cost of aviation fuel and cost of foreign exchange is still very high; so, the airfares are reflective of what is in the market. Any airline that sells ticket at less cost is waiting for accident to happen. You cannot operate below your cost of operation. Although there are indications that there should be high capacity but the truth is that capacity has reduced. Azman Air has stopped flying due to maintenance issues, Air Peace has many of its aircraft due for maintenance or return to service from maintenance but because of scarcity of foreign exchange the aircraft are not ferried back to the country to start flying. These are factors that gave rise to the high cost of tickets,” Iyayi said.
He also remarked that the high cost of aircraft insurance contributes to the high fares, noting that Nigerian airlines are exploited by a cartel when it comes to insurance, a cartel that is made possible by the collusion between local and foreign insurers, so Nigerian carriers always insure their aircraft at high cost.
According to Iyayi, there are two insurance bodies where airlines must insure their aircraft; one is Russia, while the other is Lloyd. Due to global politics and current crisis in Ukraine, airlines cannot insure their equipment with Russia insurance firms, thus leaving Lloyd as the only choice.
The President and CEO of Top Brass Aviation also explained that Nigerian carriers pay more for insurance because Nigeria is designated as hostile environment for airline operations and suggested that the Nigeria Civil Aviation Authority (NCAA) should take it as a huge responsibility to counter such impression about Nigeria with data, which confirms that Nigeria airspace is safe. He said that this can be done by publishing how many aircraft fly in Nigeria’s airspace for certain period and the number of incidents that happened during such period, noting that Nigeria has maintained high standard of safety without major accident for a long time; therefore, it is wrong to still designate Nigerian environment as harsh for airline operation.
“Insurance companies milk us because of the assumed unsafe airspace, so NCAA should show insurance companies Nigeria safety data; not just talking but the data will show that there is low risk flying in Nigeria. In Nigeria insurance is a cartel, fuel supply is a cartel; airlines have to break this cartel for fares to come down,” he said.
On his part, the Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, told THISDAY that cost of operation has increased because of the cost of aviation fuel, forex and high insurance premium.
“Naira is about 750 to $1, aviation fuel costs about N600 to N700 per litre and these are subject to availability; so, cost of operation is still high. Airfares will continue to be high. It is not only that the cost of all these is high, another challenge is their availability. Aviation fuel may not be available because the importers do not have dollars to pay and import the product. The cost of insurance is going up, it is not coming down because our environment is still considered harsh for flight operations. These are the factors,” Sanusi said.
On the base fare, Sanusi said every company had its own financial module, which determines its operation, saying that a company may choose to own its aircraft or lease it but the major challenge is the cost of obtaining credit facility from the banks with interest rate of 25 per cent to 30 per cent.
“Even a short-term loan at 28 per cent, I can’t make money from such loan. These are some of the factors that make airline operation difficult and flight tickets high. We also have to consider the economy of the country. With high inflation, you expect everything in the economy to be affected,” he added.
In his views, airfares are driven up by certain realities and even low passenger traffic cannot bring down the fares despite competition.