AS rising airfares continue to threaten passenger patronage at the nation’s airports, Director General of the Nigerian Civil Aviation Authority (NCAA), Captain Musa Nuhu, believes that forex scarcity, naira devaluation and high cost of aviation fuel have contributed in no small measure in plunging the aviation industry into serious financial crisis. He lamented that  domestic airlines are now contending with how to source forex, fuel for their operations, fuel and naira devaluation which has caused a depletion in passenger traffic and increase in flight tickets.

Presently, the lowest cost of economy air ticket is N65,000 for evening flights while on some routes, economy tickets can cost up to N100,000. Even at this rate, Chairman, United Nigeria Airlines (UNA), says in this interview with aviation reporters, that if airlines weren’t susbidsing air fares, minimum cost of economy tickets would have  hit N130, 000.

Price fixing allegations

Nigerian airlines have not fixed prices becaus    e only cartels do that and to become a cartel to fix price is when you have a monopoly of that service. We are just one of the participants in the transport sector. In the transport sector, you have those by road, those by train and you even have those by ‘Okada’ and ‘keke’. For instance, if you are a biker and coming to the airport, you discover that the price is too much, you can decide to travel from here to Benin on your bike. You might choose a luxury bus or choose any other type of transportation.

So, we couldn’t have come together to fix price. A typical cartel is when you are a monopolist, a monopolist of goods or services. So, we have to get it clear. What has happened is that the time I met you during our first anniversary, I think the aviation fuel was less than N400 per litre and it was already biting hard. After that, it came to N600. Again, these airlines are operating in the same market; they buy from the same suppliers. So, the cost of operations is similar. If there was this sudden increase, they felt the bench price could have changed and besides, this is a very competitive industry.

I know that the first responsibility or assignment of the commercial manager of every airline in the morning is to check what other airlines are offering, ticket-wise and all that. So, I think that since these expenses are common, similar and the same, it is possible that some people made their calculations and others followed suit. But, I don’t think there was anything like that. I think the Consumer Protection Unit has realised that whatever statement and position they took on that was based on wrong information. Besides, even as at that time, N50, 000 paid for a ticket is still undervalued.

As we speak, aviation fuel is selling for about N800. You may check it. From the time we spoke up till now, there has been an increase of over 100 per cent. It’s a tough market, and not only is there over 100  percent increase on aviation fuel; ground handlers have notified of a 300 percent increase of cost of handling.

Some airports have increased their charges by more than 100 percent. At the end of the day, you find out that the airline operators are just cashiers and the only way this money is realised is when tickets are sold and passengers buy the tickets and are able to utilise the tickets. When that is done, out of that meagre fare, you begin to distribute.

There are over 30 charges on every single ticket. So, if you have to really compute and make sure all those charges are captured, a typical ticket minimum for one hour flight in Nigeria should be over N130, 000 in Nigeria.

We, the operators, are very conscious of the fact that it would be a big burden to the travelers, considering the economic situation in Nigeria and that this will definitely have a very negative effect on economic activities. That is why we have been trying to engage relevant agencies of government and policy makers to look into this because we strongly believe that aviation industry is an essential service to our national development and that it should be treated so.

When people don’t buy tickets, it affects our operations. It affects our volume. This aviation business is not one that gives too much margin, but you rely on the volume and that volume can only come if there are many passengers who can buy the ticket. When the tickets are high, fewer people will fly; some of the operators have loans to pay. It has affected all the airlines across the board. We the scheduled operators and a lot of airlines are really feeling it. It is out of patriotism that a lot of airlines are still operating in the current situation. It has been difficult for airlines to hedge jet fuel because they do not have 100% control of the situation. We do not regulate these prices and do not supply. We have requested to be granted license and also for the government to grant us special allocation at controlled prices because at the end of the day, it will be to the benefit of the travelers. We feel that if a sector like agriculture can be supported, if other means of transportation can be subsidised this is one area of transport that needs special attention now. If something is not done and the situation goes beyond the control of the operators, it will not augur well. As you know, our roads are quite scary now to travel on.

Source: The Sun