Local flight tickets may rocket to N100K on fuel price hike
By Jeph Ajobaju, Chief Copy Editor
Economy flight tickets on local routes may rocket to N100,00 due to a combination of jet fuel price hike, foreign exchange (forex) scarcity, and high operational costs, airlines have reiterated, saying recent ticket price rises are mere test runs.
Airline operators and stakeholders who justified the looming increase and gave the latest warning include
- Local airlines spokesperson and United Airlines Chairman Obiora Okonkwo
- Ibom Air Chief Operating Officer George Uriesi
- Centurion Aviation Safety and Consult Chief Executive Officer John Ojikutu
- Former Associated Airlines Managing Director Alex Nwuba
- Former IRS Airlines Director of Operations Kenneth Wemambu
Obiora Okonkwo
Besides the lingering aviation price hike, Okonwo said, airline operators are compelled to source forex from the parallel market at high rates due to inadequate supply from the Central bank of Nigeria (CBN) through commercial banks.
“Obviously, it [ticket price rise] is inevitable. I can tell you that all the airline operators, in the last three months, have been losing money, a huge amount of money. There is too much stress on the operational fronts for them to break even.
“Even if the aviation fuel is made available, there must be a review to reflect the minimal operational cost.
“We are offering patriotic services to the nation and understand the essential part of it. We are part of this economic development process in Nigeria but it is coming at a very huge sacrifice.
“Nothing less than N100,000 – between N100,000 and N120,000 base price – even with Jet A1 fuel at between N400 and N500. That is what it is.”
Okonkwo disclosed that meetings with the CBN are yet to yield any positive result in the provision of adequate forex.
He stressed the need for the aviation industry to be seen as an essential service that should have special consideration in financial matters.
He insisted that airline operators derive no joy from increasing fares but it has become necessary for them to avoid shutting down and running out of business.
“In the industry, it is expected that you will gain some here and lose some there, but the biggest challenge indigenous operators are having is that the cost of everything is high.
“You source money from commercial banks. You source money from the black market. No moratorium for your loans and the banks and AMCON are quick to jump on you.”
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George Uriesi
“Local airlines have reached a point in operational costs whereby something has to give in.
“It’s either the prices of fuel come down or the prices of airfares go up from where they are. So far, the airlines have tried very much to work within the airfares as they are.
“All sides of the divide are aware that the airlines have done the best that they can do,” Uriesi told The PUNCH, which conducted the survey.
“I don’t know what tomorrow holds but at some point, if an airline doesn’t survive, it goes down, to the detriment of everybody – the people who work for the airline, the people who fly on the airline, the country’s economy, everything goes down.
“So, airlines are just trying to be stable and patriotic. That’s where we are.”
Uriesi, who is also former Federal Airports Authority of Nigeria (FAA) Managing Director, explained that it is difficult to tell how long local carriers will be able to continue with high costs.
“It’s very hard to say, we are watching the business every day, we’re watching a number of parameters.
“We’re watching the load factor, we’re watching the yield per passenger, we are watching the cost of operating at the price we’re paying every day which keeps going up every few days.
“So, the truth from this is that, when it becomes clear that you will not be able to sustain yourself, then you’ll have to adjust some of your indices, always taking into consideration the ability of the passenger to pay because you can’t just raise prices just because fuel [price] has gone up.
“If you issue what they can’t pay, then you will not carry anybody, you would have committed suicide.”
John Ojikutu
“This is not a good sign for the domestic airline industry. We should ask ourselves why the four refineries have not been working for the past 20 years.
“If you have refineries and crude oil, and you are refining, there should be no reason for the type of increase in aviation fuel price we’re having.
“Even when this fuel gets back to this country, we transport them by fuel tankers when in other countries they transfer them through pipelines.”
Alex Nwuba
“We didn’t die when flights couldn’t operate during COVID-19, people adapted so people will adapt.
“They [travellers] may just have to forfeit some trips that are not important and focus on trips that are important. They could also decide to choose alternative methods of travel when the fares are too high.”
Kenneth Wemambu
“Airlines have been losing money. As a business person, if the cost of operation increases by over 200 per cent, you will need to avoid running the business. This is why the possibility of an airfare hike can’t be ruled out.”