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Domestic airlines to increase air fares

By on September 2, 2013

Rattled by sundry government’s charges and soaring aviation fuel price, domestic airlines are planning to raise their airfares to avert going bankrupt, airlines sources have said.

The accounts of virtually all the domestic airlines are currently in red, a situation some industry chief executive officers have attributed to harsh operating environment and the rising cost of operation.

They said the airlines were left with no option than to increase their airfares in order not to go under.

A top official of a domestic carrier, who spoke under condition of anonymity, said, “We are looking at how to jerk up the airfares without necessarily scaring our passengers away. It is a big challenge for us. We don’t know how to go about it but the way forward is really to increase airfares, which we must do if we must remain in business. How it will go, I don’t know now. But each airline will design how it wants to go about it.

“We are flying at a loss. No domestic airline flying in this country is doing so at a profit; neither can we say the airfares any airline is charging now are appropriate.”

Currently, one-hour flight, such as between Lagos and Abuja, goes for N20,000 to N35,000 in the economy class, depending on how early a prospective passenger buys the ticket.

Although the airline source did not give the percentage increase of the planned airfare hike, he stressed that it was not likely to be too high in order to make it affordable.

According to the source, the proposed increase is to enable the airlines to remain in business and not necessarily imposing airfares that will lead to a major profit.

“The airfares being charged currently by airlines are a far cry from what could make them to breakeven.

The Assistant General Secretary, Airline Operators of Nigeria, Alhaji Muhammed Tukur, also said the association was planning to advise members to reach a consensus on a little increase they would make on their airfares.

The increase, he said, would help the airlines to pay part of the charges being demanded by the government, including the navigational and passenger service charges.

“Our airlines are dying gradually. The only option is for us to come together and agree on a little increase they could make on their various fares.

“It is good for them to compete among themselves; nothing is bad about that. But I think that going by the current situation, there is the need for them to come together and agree on a little increase to make on their airfares,” he stated.

The AON scribe noted that the high cost of aviation fuel was another issue the carriers were battling with.

He said airlines must devise means to survive the harsh operating environment, until the plan to build a refinery in the country by Dangote Industries would work out.

“I believe if we have a refinery in the country where aviation fuel could be refined locally, the airfares will come down. The cost of aviation fuel at the moment is too high. And this is due to the fact that the commodity is being imported,” he added.

A former Executive Director of the defunct Bellview Airlines, Mr. Gbenga Olowo, however said the airfares that airlines were charging could not make them to break even.

He said there was the need for them to charge what he described as ‘economic tariff’, which would make them to break even and make profit.

Olowo also said government needed to assist the airlines with the huge revenue being generated from airport taxes.

He said, “Nigerian passenger tariff is loaded with too many taxes. The airlines have become revenue collectors for government agencies without pay.

“Government never comes to the aid of its airlines nor is there bankruptcy window where businesses can be prevented from dying as it is in developed economies. There are no government’s guarantees of any kind. When businesses are not nurtured by government, the economy can never thrive.”

Olowo further said that if government would not provide the infrastructure, which was the essential thing needed by the airlines, it should grant debt relief on their outstanding indebtedness to aviation agencies, fuel marketers and ground handlers.

 

 

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