• Sunday, July 14, 2024
businessday logo

BusinessDay

Airlines pay over 30 charges on an air ticket – Okonkwo

Airlines pay over 30 charges on an air ticket – Okonkwo

Obiora Okonkwo is the Chairman, United Nigeria Airlines (UNA). In this interview with IFEOMA OKEKE-KORIEOCHA, he speaks on challenges currently faced by airlines and measures to cushion the effects.

What extent has the agreement between United Nigeria Airlines and Air Peace gone?

It is already concluded. It is in actualisation and more airlines indicated interest to join in that alliance, which gave birth to Spring Alliance. So, we have over six airlines that have signed to the Spring Alliance. What it means is that within these six airlines, we will always be there to swap passengers and then support each other when the need arises. That agreement signed, is already in practice and that is what is now known as Spring Alliance.

Most stakeholders say the alliance does not have a clearing house, terms and conditions and measures to sanction defaulting member alliance, how do you intend to tackle these in order to make the alliance work?

Well, I don’t think the terms and conditions are for public consumption. It is for the members who have signed up to it and the documents are clear. I do not really see any punitive thing there because it is a voluntary alliance and the practice is very simple. So, it is not anything that is very complex in nature. There is nothing to default. There is no punishment attached to it and the terms and conditions are there for all the members to see.

Alliance was to help address the issues of flight delays, but this still persists. Airlines are still flying a Boeing 737 with 29 passengers; wouldn’t the alliance take care of that?

It does work. It depends if it is going out of Lagos or coming into Lagos. If it is going from Abuja to Lagos, it is possible that the outbound flight from Abuja to Lagos may have more passengers. So, they may choose to take 29 passengers going and 100 coming. But I think that works when you add up.

But again, that is a typical scenario the average airlines are going through. The passenger loads might not be as encouraging as it should be but the alliance works to my understanding because it is voluntary. It is a decision. There is no binding law within the contract or the agreement that you must transfer. What the alliance provides is that there is room for such discussion and negotiation.

I know for sure that there has been such understanding in the past and it worked. It is just an economic decision for that airline to know if they have to hand over 29 passengers or not, but the only thing we know is that if they chose to transfer and we have the space, we are bound to carry.

The Federal Competition and Consumer Protection Commission (FCCPC) accused the airline operators of colluding on airfares, which your umbrella body, Airline Operators of Nigeria (AON) came out to debunk, but up till now, the airfares are still there. What is your reaction to this development?

Surely, there was no fixing of prices. Only cartels can fix prices. And to become a cartel to fix prices is when you have a monopoly of that service. We are just one of the participants in the transport sector. In the transport sector, you have those by road, those by train and you even have those by ‘Okada’ and ‘keke’. For instance, if you are a biker and coming to the airport, you discover that the price is too much, you can decide to travel from here to Benin on your bike. You might choose a luxury bus or choose any other type of transportation. So, we couldn’t have come together to fix the price. A typical cartel is when you are a monopolist, a monopolist of goods or services. So, we have to get it clear.

Read also: Despite fewer aircraft, airlines suffer low patronage as fare hits N80,000

What has happened is that the time I met you during our one year anniversary, what happened was that we raised some issues and at that point, I think the aviation fuel was less than N400 per litre and it was already biting hard. After that, it came to N600. Again, these airlines are operating in the same market; they buy from the same suppliers. So, the cost of operations is similar. If there was this sudden increase, they felt the bench price could have changed and besides, this is a very competitive industry.

I know that the first responsibility or assignment of the commercial manager of every airline in the morning is to check what other airlines are offering, ticket-wise and all that. So, I think that since these expenses are common, similar and the same, it is possible that some people made their calculations and others followed suit. But, I don’t think there was anything like that. I think the Consumer Protection Unit has realised that whatever statement and position they took on that was based on wrong information. Besides, even as at that time, N50, 000 paid for a ticket was still undervalued.

From the time we spoke up till now, there has been an increase of over 100 per cent in aviation fuel. It’s a tough market, and not only is there over 100 percent increase on aviation fuel; ground handlers have notified of an increase of cost of handling by 300 percent.

Some airports have increased their charges by more than 100 percent. At the end of the day, you find out that the airline operators are just cashiers and the only way this money is realised is when tickets are sold and passengers buy the tickets and are able to use the tickets. When that is done, out of that meagre fare, you begin to distribute.

There are over 30 charges on every single ticket. So, if you have to really compute and make sure all those charges are captured, a typical ticket minimum for one hour flight in Nigeria should be over N130, 000 in Nigeria.

And we, the operators, are very conscious of the fact that it would be a big burden to the travellers, considering the economic situation in Nigeria and that this will definitely have a very negative effect on economic activities. That is why we have been trying to engage relevant agencies of government and policy makers to look into this because we strongly believe that the aviation industry is an essential service to our national development and that it should be treated so.

How far has your airline gone with the establishment of a Maintenance Repair and Overhaul (MRO) facility with regards to land space, partnership and others?

For now, we are ready for the MRO, but as it is today, we have not got all the necessary allocations and approvals that are required from other related agencies like the Federal Airports Authority of Nigeria (FAAN) and all that. It is quite unfortunate, but we are doing everything possible to see if it can be resolved as soon as possible. However, if it goes through anytime, hopefully soonest, our maintenance facility will focus on its first phase, which is our own type of aircraft, ERJ. It will be for us and others who have that similar aircraft within our airspace or in Africa. Also, we will have provision for our MRO for wide-body aircraft; we are working out some technical partnerships with some foreign organisations which will soon be made known to the public.

Are you going to look beyond just the ERJ aircraft to add more aircraft to your fleet?

To ERJ 145, we will soon be adding ERJ 195 aircraft. We want to stick to the ERJ so that we will continue to have the same line of maintenance and also crew, which will be only a few certifications and that is our strategic plan for the next year.