Nigerian Airlines Hike Fares as Aviation Fuel Rises to N420 Per Litre

Less than 10 days after domestic airlines lamented that oil marketers have increased price of Jet A1 (aviation fuel) to N400 per litre, the price of the product has increased to N420 per litre in Lagos and N450 per litre at other airports outside Lagos and Abuja.
This has prompted domestic airlines to increase base fare to over N50, 000 per flight.

THISDAY learnt the price of aviation fuel increased to N420 per litre on Sunday, as against the N400 per litre it was on Thursday, without prior notice to the airlines.

But depending on the city where the airport is located, the price hovers around N420 and N450 per litre, especially in northern part of the country, where it is predicted that the price could rise to N500 per litre in few days.

THISDAY also learnt that as the price is now subject to the exchange rate of the naira against the dollars, until when the country begins to refine the product locally.

“As at today (Sunday), a litre of fuel goes for N420 in Lagos and it is between N430 and N450 in some northern states. The fact is that the price of the product may go higher as aviation fuel is scarce in the country.

“About three weeks ago, the product was scarce in all the airports in the country and this contributed to some of the delayed flights we experienced at that period. The government needs to arrest the situation before it goes out of hand,” a source told THISDAY.

Defending the increase in airfares, a spokesman of one of the major domestic airlines told THISDAY that the new fares were a response to the increase in the price of aviation fuel, the increase in the cost of handling rates by aviation handling companies and also the exchange rate.
The official said airlines had to increase fares in order to survive, insisting that without that, most of the airlines would not continue to operate in the next three months, adding that until now, airlines have been subsidizing the base fare.

“We increase fare in reaction to the cost of aviation fuel, which is increasing daily without prior warning to airlines. We sell tickets at lower price but we airlift passengers at the new aviation fuel prices, which means we are incurring heavy losses. If we do not increase fares, many of us will not last three months.
“We are batting with poor infrastructure, exchange rate depreciation, high price of aviation fuel and increase in the price of handing by aviation handling companies. If you go to market to buy to resell and find out that prices have suddenly gone up will you sell at the same old price? No! We are feeling the economic pinch together.

“We should put the blame where it should be and these are forex, aviation fuel, which is biggest reason for the hike,” the spokesman said.
But reacting to the increased fares by airlines, the former CEO of Aero Contractors and former Managing Director of the Nigerian Airspace Management Agency (NAMA), Capt Ado Sanusi, condemned the decision of Airline Operators of Nigeria (AON) to increase fares, saying that such decision was against free economy and against anti-trust laws.

“I am not against the increase in airfares in response to high cost of operation, increase in the price of aviation fuel, but AON cannot come out and fix prices of tickets. That is against the law and against free economy.

“Every airline should look at its own costs and decide the fares. When you fix fares, some airlines will be affected negatively and it could lead to them going under because airlines have different financial models and so should fix their own fares,” he said.

Another spokesman of one of the airlines, however, told THISDAY that AON did not fix fares for the airlines; rather, each airline recognising its operational challenges in terms of finance, decided to increase fares, disclosing that it was not every airline that pegged its base fare to N50, 000.
Also, a top official of AON told THISDAY that he was not aware that the association fixed fares for airlines, stressing that airlines fixed the fares by themselves.

According to the operators, aviation fuel takes between 35 to 40 per cent of total cost of airlines and some of the stakeholders are concerned that some of the operators may be compelled to shut operations if the challenges in the sub-sector were no urgent intervention by government.
About two weeks ago, the Chairman, United Nigeria Airlines (UNA), Dr. Obiora Okonkwo had raised the alarm that the price of aviation fuel rose by over 100 per cent in the last one year.

He had emphasised that the exchange rate had also depreciated from N340 to N570 to a dollar within the same period, stressing that it was pertinent for the government to look critically into the development of the industry in order to arrest collapse.

Chinedu Eze

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