THE federal government is expected to be meeting with airline operators in Nigeria now to resolve the aviation fuel price logjam after the operators rescinded its decision to suspend domestic flights.
The operators, on the platform of the Airlines Operators of Nigeria (AON), had threatened on May 6, 2022 to discontinue their services from Monday, May 9, 2022 owing to the high cost of aviation fuel.
The price of the fuel had spiralled to N700 a litre from N500, a situation airline operators cried would dangerously eat into their profit margins and could drive them out of business.
In a letter to the Minister of Aviation, Hadi Sirika, signed by its president, Abdulmunaf Yunusa Sarina, the AON declared that the airlines could no longer absorb the shocks of subsidising fuel for Nigerians.
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The letter, endorsed by the chief executives of most of the domestic airlines, said the current cost of aviation fuel was affecting airlines’ profitability to the tune of 95 per cent.
The AON, however, called off the planned flights suspension on May, 8, 2022, to allow for fresh rounds of dialogue with the federal government in the hope of reaching an amicable solution.
Before the call-off, Ibom Air and Dana Airline had expressed their decision not to comply with the AON resolve to ground flights.
The ICIR checks observed that Ibom Air had scheduled a one-way Lagos to Abuja economy flight for 11am today, but at a well surged fare of N95,000. The trip had hitherto attracted the neighbourhood of N50,000 for all the airlines, while for most business class tickets, the general cost wound around N80,000.
Before economy fares even rose to N50,000, one-way tickets were priced at N23,000 to N28,000, depending on how soon one could book.
Checks by The ICIR on the websites of United Nigeria Airlines, Azman Air and Dana Air showed that one-way ticket prices from Lagos to Abuja were still being priced at around N50,000 across economy packages, while Air Peace fares shot up between N60,000 and N70,000.
Arik Air, on its part, sold its economy tickets between N47,700 and N52,000 as observed by our correspondent, in the screenshots below.
Airfares breakdown
Our correspondent, who checked the Ibom Air site this morning, noticed that besides the Lagos-Abuja 11am flight that went for N95,000, subsequent 4pm and 6:15pm flights for the day were estimated at a lower N71,000 fare. Flights for Tuesday also began from N71,000.
For Arik Air, economy flights for 9am on May 9 were pegged at N52,024, while economy flights for 4:30 pm and 5:25pm were pegged at N47,738. On the business class site, the flights were pegged at N101,071 for all flights.
For Dana Air, economy discount flights for 4:25pm and 8:20pm, were between N50,000 and N53,100, while business flexible flight tickets were sold for N86,400 on May 9. For May 10, the situation would be the same, with economy flights selling for N50,000, Business Saver N81,000 and Business Flexible N86,400.
For Air Peace, flights of 10am and 10:30am for today, May 9, were put at N60,000, while flights of 1:45pm were pegged at N70,000 on May 9. Prices were, however, lowered to N50,000 for May 10 flights.
For United Nigeria Airlines, Lagos to Abuja May 9 and May 10 one-way tickets went for N50,000. Azman Air was also on N50,000 per flight for its May 9 Lagos to Kano flights.
Responding to The ICIR‘s inquiry on what informed the high fare of N95,000 for its 11am one-way economy flight, the Group Manager, Marketing and Communication, Ibom Air, Annie Essienette, said the airline would never sell an economy ticket for that much to rip off passengers.
She said, “We have prices for various categories of tickets. If you go to our booking portal now and find a N95,000 ticket, that is the price at the time because that is the available ticket. We never sell economy tickets for that much. It is for those that can afford it and those whose taste and preference is for premium economy tickets. Anywhere in the world, they have categories of flights.
“There are first class, business class and economy, and none of those prices are the same. If you go to buy a British Airways ticket today, and the only thing you find is a premium economy ticket, they would not sell it to you for economy just because you showed up. The price you see today is the available ticket as at the time you went to book your ticket. Lower cost tickets have already been sold out as reflected on the portal.”
Why Dana pulled out of the planned strike
The Chairman of Air Peace, Allen Onyema, who spoke on a television programme late in the evening of May 8, 2022, feared that aviation fuel price might spike to N1,000 per litre. He also offered an explanation why Dana Air pulled out of the agreement, saying that the planned strike was in the hope of ending fuel price racketeering.
He said, “Now, an airline took advantage of the situation to charge N95,000. If you were patriotic, you would remain on the N50,000. Dana pulled out of the move because one airline was making money out of the situation. Those who really wanted to fight for this country would remain steadfast. If the government calls us, we answer the government. We are amenable; we want to see the end of the fuel racket.”
He explained that the aviation business was not elitist but a catalyst for economic development. He revealed that Air Peace had been spending over a billion naira weekly since the price hike started and about N6 billion on fuel alone monthly. He also explained that the AON was not asking for subsidy, but only wanted the government to look seriously into the cost of acquisition of the product.
He said, “When crude oil globally rose to $120 per barrel, the marketers used it to increase price to N440. Now, it is coming down to $90 and we are rising to N700 per litre. When they got it from Duke Oil, which belongs to the government, at N335, why were they selling it to us at N550, N570 per litre?”
Onyema said that the airlines had been subsidizing the price of flying for passengers in the last three months at N700 per litre, but can no longer do so.
He said, “Let’s take, for instance, the Boeing 737, which is the most popular aircraft Nigerian airlines use. It burns about 4,365 litres of fuel for a 50-minute flight to Abuja. Multiply that one alone by N700 and you are almost getting N50,000 alone on fuel. How about insurance, C-checks, and taxes?
“If you fly to Asaba, you pay N5,000 as passenger service charge to the airport. The Nigerian Civil Aviation Authority (NCAA) will take five per cent of ticket fare, and you also pay charges to the Nigerian Meteorological Agency (NiMet) and Nigeria Airspace Management Agency (NAMA), while also paying staff salaries. We just don’t have the money.”
Speaking in a similar interview on Monday, May 9, 2022 on an Arise Television programme, the Aero Contractors Chief Executive Officer (CEO), Abdullahi Mahmood, said the airline operators would meet the federal government at 2pm in the afternoon.
He added that the AON members remained united. “There was no division, we all agreed and then later we called it off. But for Ibom, they were the first to disagree. They explained why they took their decision. Maybe they might have some funding somewhere, but if you don’t have any source of funding, there is no way you can continue. We stand by it, there is no division,” he said.
He explained the strike was inevitable because of the way the Nigerian National Petroleum Corporation (NNPC) handled the matter regarding the purchase of aviation fuel.
He said, “The agreement was that NNPC would bring the product. We were promised 25,000 metric tonnes, on the grounds that we select certain marketers and NNPC would give them allocation. The price was slated for N500 per litre. When the product came in, they gave the product to some other people.
“Four days ago, the marketers said there was a price review. If we continue operations, with the new hike, the minimum fare would be more than N120,000-N150,000 per passenger. What we want is not to push the burden to the passengers.”
Mahmood said the logical thing would be to increase the air fare but that was not something the operators had in mind. He explained the operators needed to involve the government, which they argued should naturally protect the citizens.
He stressed that failure to take the conversation further could blow back on the airlines, forcing them to shut down due to affordability issues.
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.