The business travel cost of six (6) Nigerian banks surged 138 percent in the first half (H1) of 2024 compared to a year earlier on increased fares, analysis by BusinessDay shows.
According to the latest financial statements of the banks, their combined business travel expenses and accommodation costs rose to N21.05 billion in H1 from N8.89 billion in the same period of last year.
The lenders, which are listed on the Nigerian Exchange Limited, are FCMB Group Plc, Sterling Financial Holdings Company Plc, FBN Holdings Plc, Zenith Bank, Guaranty Trust Holding Company (GTCO) Plc and Stanbic IBTC Holdings Plc.
Travel expenses covered local and international travel, hotel, and related expenditures.
During the period under review, FBN Holdings reported the highest amount spent on business travel costs of N10.5 billion, from N4.2 billion. It is followed by Zenith Bank with N5.3 billion from N2.04 billion and Stanbic IBTC with N1.6 billion from N856 million.
Others included: FCMB Group with N1.6 billion from N853 million, GTCO spent N1.2 billion compared to N471 million, and Sterling Holdco with N851 million from N472 million.
BusinessDay focused on transport-related costs such as domestic and foreign travel and accommodation expenses for this analysis.
This considerable expenditure highlights the rise in road and air travel fares in the first half of 2024, as foreign exchange depreciation and the rise in fuel expenses (following the subsidy removal) affected costs.
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According to the National Bureau of Statistics (NBS) Transport Fare Watch report, the average fare paid by commuters for bus journey intercity per drop was N7,117.17 in July 2024, indicating an increase of 0.35 percent on a month-on-month basis compared to N7,092.03 in June 2024.
On a year-on-year basis, the fare rose by 20.23 percent from N5,919.49 in July 2023.
The increase is linked to the sharp rise in fuel prices, with diesel prices rising by 73.63 percent to N1,379.48 per litre in July this year, compared to N794.48 per litre in July 2023.
On the other hand, petrol prices also climbed to N770.54 per litre, indicating a 28.35 percent increase from N600.35 in the corresponding month of the previous year.
The report also revealed that Air travel saw a rise in costs, with the average fare for a single journey on specified routes increasing by 9.65 percent to N98,561.74 in July 2024, up from N89,921.15 in June 2024. Compared to July 2023, this represents a significant 25.12 percent increase from N78,775.74.
Last year, the naira depreciation caused by the FX reforms led to a steep rise in the International Air Transport Association (IATA) rate for ticket sales.
According to data released by IATA for July 2024, international demand rose 10.1 percent compared to July 2023. Capacity was up 10.5 percent year-on-year and the load factor fell to 85.9 percent (-0.3ppt compared to July 2023).
Domestic demand rose 4.8 percent compared to July 2023. Capacity was up 2.8 percent year-on-year and the load factor was 86.1 percent (+1.7ppt compared to July 2023).
“July was another positive month. In fact, passenger demand hit an all-time high for the industry and in all regions except Africa, despite significant disruption caused by the CrowdStrike IT outage,” it said.
In the last few months, a few aircraft have had to feed several passengers on domestic routes as Nigerian airlines struggle with fleet reduction due to the high maintenance cost.
Airlines that have sent their aircraft on maintenance are unable to return them as a result of the skyrocketing costs as a result of the foreign exchange scarcity.
Travel experts say the reduction in aircraft has made travel exclusively for the rich and made some airlines a monopoly on certain routes.
“If you walk up to any counter at the domestic airport terminals, if you don’t have a minimum of N200,000, you may not get a seat,” Olumide Ohunayo, industry analyst and Director, Research, Zenith Travels told BusinessDay.
“Surprisingly, some of the airlines now tell you that they are selling premium economy to you, whereas there is nothing like premium economy. They sell you Business Class and when you get onboard the aircraft, you’ll see that it is an economy class that has been sold to you,” he added.
