Market News

Passengers shift to air transport as road fares rise - BUSINESSDAY

JUNE 07, 2023

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Passengers travelling by road from Lagos to various destinations, including Abuja, Owerri, Onitsha, Port Harcourt, Kaduna and Kano, among others, are now opting for flight as road fares rise following the fuel subsidy removal.

During his inauguration speech on May 29, President Bola Tinubu had said ‘fuel subsidy is gone.’

The president’s pronouncement led to a resurfacing of long queues at filling stations and a hike in the pump price of petrol across the country.

The fuel price hike has forced several transport companies to increase fares by 50 to 100 percent, making passengers opt to fly on low-cost carriers and book tickets ahead to reduce costs.

BusinessDay visited top road transport companies such as The Young, ABC Bus Transport, Chisco and Liberal Motors.

Checks by BusinessDay show that since the subsidy removal, transport fares from Lagos to other destinations which cost between N10,000 and N15,000 now cost between N18,000 and N30,000 depending on the transport company and the kind of vehicle used to convey passengers.

For instance, while transport fares using Hiace buses cost about N18,000 to N23,000, Sienna and Hummer buses cost between N23,000 and N30,0000.

The increase in fares has seen low-cost carriers like Green Africa and Dana Air, which cost between N35,000 and N50,000 increase ticket sales, while some routes from Monday till two weeks’ time are fully booked.

“Our tickets cost between N40,000 and N50,000 as long as passengers book ahead. In the last one week, ticket sales have been so good for us, even though we cannot categorically link this increase in sales to subsidy removal,” Kingsley Ezenwa, head, corporate communications, Dana Airlines Ltd, told BusinessDay.

Ezenwa said Dana Air’s ticket prices have been affordable and an average Nigerian will always go for airlines that are affordable.

“Air fares on Dana and Green Africa have been quite competitive to that of road transport costs when you book ahead. I didn’t know this secret until the fuel subsidy removal. I found out that when you book ahead, you can get air fares as low as N35,000 to N45,000. This, for me, is the best option at the moment,” Nkechi Udoka, an air passenger told BusinessDay.

Udoka said while airfares are still more expensive than transport fares, the comfort that comes with flying outweighs the extra N10,000 she would have saved travelling by road.

Chuka Ugochukwu, another air transporter, told BusinessDay that with the high level of insecurity on the roads, it is only reasonable to add a little money to buy a flight ticket.

“Two years ago, my uncle was kidnapped in the Benin-Ore road and we paid so much for ransom. If I can get a fair deal to fly for N40,000 or N45,000 from Lagos to Owerri, it is safer and better than paying N28,000 and spending all day on the road and safety is not even guaranteed,” Ugochukwu said.

Obiukwu Mbanuzuo, former chief commercial officer, Green Africa said that airline fares will be competitive against road transportation and could positively impact demand for airlines such as Green Africa.

BuisnessDay’s investigations show that the price of aviation fuel has also dropped since the fuel subsidy removal.

From over N800, aviation fuel prices crashed to N650 in Lagos and N680 in Abuja from June 1, while slightly higher in Kano and Maiduguri and Port Harcourt.

Jet A1 was sold at N620 in Lagos; N660 in Abuja and N680 in Kano.

The aviation fuel crisis which began in late February 2022 and deteriorated further through the months of March to May, threatened the ability of airlines to continue operations with the price of JetA1 rising from N200 in December 2021 to over N400 per litre in February and to N800 in May 2022 and N1,000 in December 2022.

The situation had forced airlines to raise base fares from an average of N28,000 to N50,000 and to as much as N100,000.

With the drop in aviation fuel price, airlines are expected to reduce fares soon, as Dana and Green Africa have reviewed prices downward.


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