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Airfares spike over aviation fuel scarcity concerns

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THERE seems no end to sharp increases in the fares of domestic flights as the scarcity of aviation fuel persists and the overall operational cost in the aviation business soars.

Air fares have virtually doubled between January this year, when it ranged from N25,000-N45,000 for a 50-minute flight, and the prevailing range of between N65,000 and N100,000 – and even above in some instances –  for the same distance.

The situation is coming as aviation fuel marketers have abandoned the sale of fuel to airlines, due to the latter’s indebtedness.

The Director-General of the Nigerian Civil Aviation Authority (NCAA), Captain Musa Nuhu, confirmed the development in his state of the aviation industry address at the Murtala Muhammed Airport, Lagos, on August 3, 2022.

Nuhu said, “Some of the airlines have outstanding debts and the oil marketers want cash from them. As a result of that, they have to go and look for money. That is what has caused most of the delays and flight cancellations you are seeing. I agree that Jet A1 (aviation fuel) is expensive, and scarce in some places.”

He expressed his concern over the rising cost of the fuel, attributing the skyrocketing price of the commodity to the Russia-Ukraine conflict, coupled with the scarcity of foreign exchange that has hampered the importation of the fuel.

NCAA DG, Musa Nuhu
NCAA DG, Musa Nuhu. Photo Credit: Premium Times

A Lagos flight to Jos on Arik Air went as high as N112,024 on Thursday, August 4, 2022, but will be dropping to N93,452 on Friday, August 5, 2022, and will later surge to N115,833 on Saturday, August 6, 2022.

A Lagos flight to Jos on Arik Air went as high as N112,024. Credit: Arik Air/ Joseph Olaoluwa

Also, a Lagos flight to Owerri on Air Peace went for N100,000 on Thursday, August 4, 2022, but will rise to N150,000 on Friday, August, 5, 2022 and later drop to N82,000 on Saturday, August 6, 2022.

Air Peace flight from Lagos to Owerri.Credit: AirPeace/ Joseph Olaoluwa
A late evening Lagos-Abuja flight on Arik Air on Wednesday, August 3, 2022 going between N80,000 and N112,000. Credit: Arik Air/Joseph Olaoluwa

An Ibom Air Lagos to Abuja flight starting from Thursday, August, 4, 2022 is at N78,000 till Saturday.

Air
Ibom Air Lagos to Abuja flight starting from Thursday, August, 4, 2022 is at N78,000. Credit: Ibom Air/Joseph Olaoluwa
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United Nigeria Airlines Lagos to Abuja flights went for N78,000 on August 3, 2022. However, checks showed that from August 4, 2022 till August 6, 2022, it will be a constant sum of N68,750.

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United Nigeria Airlines Lagos to Abuja flights showed a constant of N68,750. Credit: United Nigeria Airlines/Joseph Olaoluwa

AirPeace Lagos to Abuja flights were priced at N82,000 on August 3, 2022 but fluctuated between N75,000 and N70,000 on August 4, 2022. However, an 8:40am flight to Abuja went as high as N100,000 on August 5, 2022, as observed in the screenshot below.

An 8:40am flight to Abuja went as high as N100,000 on AirPeace. Credit: AirPeace/Joseph Olaoluwa

A Lagos to Abuja flight on Arik Air was as high as N80,000 on Wednesday, August 3, 2022. On Thursday, those flights fluctuated between N66,310 and N71,071.

On Friday, flights for Lagos to Abuja by 6:50am were N66,310 for economy and N123,452 for business.

That same flight went up to N71,071 for economy at 12:05pm. The economy ticket went up to N75,833 at 2:40pm while retaining N123,452 for business class.

Air
Friday flights from Lagos to Abuja. Credit: Arik Air/Joseph Olaoluwa

On August 4, 2022, a Green Airways 5am flight from Lagos to Abuja cost N81,500; it cost N61,500 for the same route at 5:10pm.

Air
On August 4, 2022, A Green Airways 5am flight from Lagos to Abuja cost N81,500. Credit: Green Africa/Joseph Olaoluwa

Arik Air spokesman, Banji Ola, told our correspondent that the price movements were simply conforming with the demand and supply factor. When asked what the airline was doing to make every passenger fly, he said, “this is a question for the government and aviation authorities to answer.”

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Arise Business Analyst, Chika Mbonu, noted that air passengers may not be able to afford travel as they used to.

Mbonu said, “When the crescendo for security was on the highest, a lot of people flocked to aviation. It helped their load factors. What happened was that as people were getting used to N25,000 fare for a 45-minute flight, it was doubled.

“That chased several people away. The inflation in the environment and challenges in the industry that have to do with aviation fuel have made things worse. The issue is that the industry is crying for consolidation. There were 10 airlines, now eight are remaining.”

Aviation consultant, Mr Olumide Ohunayo, said that hikes in airfares have come to stay.

“Until the aviation fuel price begins to come down and the exchange rate of the naira begins to go down, I doubt if the price of ticketing will go down. You know that passengers will fly, knowing that their alternatives are not security compliant,” Ohunayo said.

The president of the Aviation RoundTable (ART), Dr Gbenga Olowo, advised airlines to stop operating empty seats in the name of competition.

Awolowo said, “This is the time spring alliance should come alive. Make sure you operate a harmonised schedule. The seat that is not sold is perishable. Every seat must be sold at whatever tariff you fix. If Azman is operating this flight, all of you fill that aircraft, same for Air Peace.

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“This would make the flight regular and safe. This is compared to stand-alone operations where everyone is carrying 40 or 50 passengers per airline.”

President of the Aviation RoundTable (ART), Dr Gbenga Olowo

The Chief Operating Officer, Ibom Air, George Uriesi, said at the 26th annual conference of the League of Airport and Aviation Correspondents (LAAC) held on July 28, 2022, that Nigeria’s aviation system was designed to frustrate airlines.

Uresi said airlines in Nigeria were operating in an environment that was limiting their productivity.

He said, “You are operating within a systematic limiting environment that makes it harder to be as productive as your colleagues in Europe, Asia and so on, who fly their class C aeroplanes (737s and A320s).

“At the end of the day, the system is set up to threaten the survivability of airlines in Nigeria. There is no way to it. You will buy aeroplanes more expensive, and pay expensive insurance costs. You will continue to sell in naira and maintain your aeroplane in dollars. On top of it, when it’s harmattan you can’t fly the aeroplane.”

Ibom Air’s CRJ 900

Just recently, airline operators warned the travelling public to expect flight disruptions nationwide due to the scarcity of aviation fuel.

The statement, signed by the Secretary of the Airline Operators of Nigeria (AON), Professor Obiora Okonkwo, told air passengers to expect delays and cancellations from now on.

Presently, only eight domestic airlines fly Nigeria’s airspace. They are Green Africa, Arik Air, Air Peace, Overland, Ibom Air, United Nigeria Airlines, Max Air and Azman.

Dana Air and Aero Contractors have already been grounded.

Dana-Air’s McDonnell Douglas MD 83. Credit: Nairametrics

Speaking on the suspension of Dana Air and the voluntary suspension of Aero Contractors operations by the management of the airline, Nuhu said the decision to ground Dana over safety issues was done to forestall accidents.

He said, “We have conducted economic and financial audits on Aero Contractors. When Aero Contractors’ management came to us, they told us that they planned to suspend their operations voluntarily. We are not here to kill any airline as we commend Aero Contractors for trying to restructure and re-organise the airline. We did a technical audit with Aero Contractors and they had no issue with us but had financial issues. They are reorganizing. We are fully supporting all airlines and other ancillary services. We commend Aero Contractors for that.

“For Dana Airlines, they underwent an economic audit and it was not good. We saw a series of violations that were of great concern to us. The audits are ongoing; we have not concluded. I participated in the meetings and discussions on Dana. We are still talking with Dana. When we are done, we will give you the report. For now, they will remain grounded until they resolve their issue.”

Acknowledging the precarious situation of the airlines that are not seeing a return on investment, the NCAA boss stressed that he would rather shut them down “than allow them to continue to operate dangerously.”

Meanwhile, the Director, Centre for International Advanced and Professional Studies (CIAPS), Professor Anthony Kila, has canvassed the creation of a special bank dedicated to the funding of aviation infrastructure and for the carriers, which are going through turbulent times.

Kila, who spoke at the LAAC event, said it was necessary to make airlines have easier access to foreign exchange since airlines can no longer access aviation funds from the government, or from aviation desks in commercial banks anymore.

Author profile

Experienced Business reporter seeking the truth and upholding justice. Covered capital markets, aviation, maritime, road and rail, as well as economy. Email tips to jolaoluwa@icirnigeria.org. Follow on Twitter @theminentmuyiwa and on Instagram @Hollumuyiwah.

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