Going by recent developments in the domestic airline business, intending air travellers may need to make provisions for unexpected fare increase at the airports. This is the fallout of the underground initiative by airlines to increase airfares without notice; a development that has been noticeable in the last three weeks. A one-way economy class ticket from Lagos to Abuja, which previously cost between N14, 000 and N16, 000, is now sold at N17, 500 and as high as N22, 000, depending on the timing. This situation has put a sizeable number of passengers in an unpleasant situation at the ticket counter of most airlines. For instance, Seun Oyeniran, a businessman, at the Nnamdi Azikiwe International Airport, Abuja, a fortnight ago, had to leave the Arik Air ticket desk, after being told that airfare to Lagos had been increased to N20, 000. Last Tuesday, at the Murtala Muhammed Airport 2, MMA2, IRS Airline, which earlier in the day sold its Lagos-Abuja ticket for N18, 000, by 2:30 pm same day increased its fare N20, 000.
But for Richard Ibilola, an architect, the indiscriminate increase in airfare was started by Aero Contractors. He explained that the airline was fond of arbitrarily increasing fares without genuine reasons, such that even when it advertises promotional fares, it is always a ruse. Ibilola recalled that on several occasions, he had to pay more than the fixed fare to fly the airline. “It is a common thing to get to Aero and while the person right in front of you buys a ticket for N16, 000, you are told it is now N19, 000, and the next person after pays N21, 000 for the same flight and same economy class; these are Shylock tendencies”, Ibilola explained. He is of the opinion that the inability of industry regulators to curb the trend may have given operators the confidence to exploit the situation unchallenged.
Even as industry regulators feign ignorance of the fare increase, their position may be understood since they have not been officially notified of the increase. Although statutorily, the regulation of fare is the responsibility of an airline operator; such operator must notify the Nigeria Civil Aviation Agency, NCAA, of its decision to increase fare, giving reasons for the decision. Mohammed Tukur, assistant general secretary, airline operators of Nigeria, AON, denied knowledge of any increase in airfare. He, however, hinted of a possible increase if the current fight against the payment of terminal navigational charge, TNC, being imposed on operators by the Nigerian Airspace Management Agency, NAMA, scaled through. As at the time of going to press, the AON was in a meeting with the aviation minister, Fidelia Njeze, on ways of solving the imbroglio over the TNC.
That the nation’s commercial airlines have been enmeshed in turbulent waters for sometime now would be stating the obvious. Several other reasons, apart from the fight against the TNC, may be responsible for the new fare regime being experienced at the moment.
According to a recent report of the Presidential Sub-Committee on Proffering solutions to challenges facing the airline industry in Nigeria, the high cost of aviation fuel is said to be a major factor for the problems. Aviation fuel accounts for up to 40 to 50 per cent of an airline’s direct operating cost; hence, the cost of fuel to an airline is a very significant factor to its survival. The panel identified that the challenge faced by airlines with regard to fuel price is the effect of a cartel of oil marketers, which has led to an exploitative pricing of the commodity. Since August 2009, airlines have witnessed a 50 per cent increase in the price of aviation fuel, due largely to activities of the cartel.
High operating costs arising from multiple charges by government agencies and service providers is also a factor influencing fare hike. Domestic airlines in the country currently operate in a very harsh economic environment with a suffocating tariff regime imposed by the service providers, aviation parastatals and regulatory agencies. These include, but not limited to the Federal Airports Authority of Nigeria, FAAN, charges on landing fees, parking fees, rental charges, service recovery charges, land lease charges, fuel surcharges, passenger service charges, PSC, cargo tariff and airport terminals fees; NAMA charges on en-route navigation charges, licensing charges, Certificate of Airworthiness charges, ticket sales charges and statutory fees as detailed in Schedule 13 of Nigerian Civil Aviation Regulations 2009. FAAN charges N1.60K on every litre of fuel used by an aircraft.
Beyond that, airline operators no longer enjoy credit facilities from suppliers of aviation fuel like OANDO, Texaco, African Petroleum, and Conoil. This stems from the fact that most of the oil marketers are indebted to banks and the current debt recovery drive has put them in a difficult financial situation which makes it unhealthy to continue to give the product out on credit.
Besides, investigations reveal t that operators have realised that to remain afloat in the business, it becomes imperative to increase fare. This argument is based on the thinking that with credit facility from banks drying up at an alarming rate due to the banking reforms, higher fares would generate more revenue for operators. But this strategy would only work positively for operators if the various charges and levies that are made to pay is drastically reduced or abolished.
The inability of government to bail out airlines is also said to have influenced the fare hike. Some operators want government to write off the debts they owe regulatory agencies to relieve their burden. Steve Mahonwu, chairman, AON, said even if government cannot write off all the debt owed agencies by its members, there should be at least 75 per cent debt forgiveness.
But, obviously overwhelmed by these problems, and in spite of the fare increase, air passengers are worried about the dwindling quality in service of airlines, especially the frequent cancellation and delays now being experienced. Kikelomo Dawodu, a chartered accountant, had planned a return trip from Lagos to Abuja, same day, last week. To her consternation, after buying an IRS ticket scheduled for 11:00 am, she, alongside her colleagues, had to ask for a refund at 2:30 pm as there was no sign of taking off. “The airline never offered us any explanation for the delay; and when we approached them for a refund, they wanted to surcharge us whereas they defaulted in agreement. I think IRS should pay us compensation for time wasted and making us miss our appointment in Abuja, after all, if a passenger did not show up they would have charged a no a appearance fee”, Dawodu said.
An official of AON warned last week that if the TNC was implemented, passengers should be prepared to pay as much as N30, 000 for a Lagos – Abuja trip. A timely warning indeed; but the high fare and poor service delivery would continue to be as long as there is no credible alternative to air travel, especially with the roads remaining a death trap.
Ibilola: Disapproves of airlines’ Shylock tendencies
Tukur: Denies knowledge of any increase in airfare
Fidelia Njeze, aviation minister |
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