Airfares may rise in 2020 as a result of declining number of airline operators, which has resulted to steady decrease in the number of aircraft operating in Nigeria.
BusinessDay’s checks show that five years after Air Peace commenced scheduled operations in Nigeria, no other scheduled operator has been able to set up an airline or a leasing company, rather the number of operators has kept reducing steadily.
Between 2015 and now, about five airlines operating scheduled flights have closed shop. These include Discovery Air, First Nation Airways, and more recently Medview Airline, IRS Airlines and Associated Aviation.
BusinessDay’s checks show that Nigeria’s commercial airlines, which altogether had over 80 aircraft on their fleet in 2015, are currently struggling with about 47 aircraft, thereby causing passenger glut.
Air Peace currently operates 23 aircraft, Arik Air operates seven aircraft, Azman has five aircraft, Aero has four aircraft, Max Air has two aircraft, Dana Air has four aircraft, and Overland has seven aircraft.
Experts in the aviation industry say the implication of this is that with fewer operation and fewer aircraft, the demand will be greater than supply, thereby resulting in an increase in airfares.
Ado Sanusi, CEO, Aero Contractors, who confirmed the development, says there are so many factors responsible for airlines not springing up in the country, and part of the reason is that investors are sceptical of investing in the aviation industry, given what happened to Arik Air, Aero Contractors, Afrijet, Discovery and First Nation.
“Investors usually gravitate to where their investment returns are high and not where they have seen that the industry has resulted in failures. They are sceptical about investing in the industry, but I think with the right business model, the right attitude and good corporate governance, aviation is one of the best investment frontiers in Nigeria and in West Africa,” Sanusi states.
He says the industry has not seen any huge orders for aircraft for scheduled operations in the last few years.
He explains that while the number of passengers is steadily growing, the number of operating aircrafts are steadily shrinking and this development will likely lead to increase in fares.
“This has to do with the economic theory of demand and supply. When the demand is high and the supply is low, the prices will go up to cover the gap. The demand will keep increasing but the capacity of the aircraft will not have significant increase in the year.
“This will mean the airline will just close the price range that is low and then the high price range will be open for passengers to see. This has happened when Nigeria Airways was liquidated and when Cabo and Okada came in, because they couldn’t satisfy the market, people were on tarmacs struggling to board flights. There was a lot of racketing, touts were selling boarding passes and it was chaotic to board.
“This will not happen now because things have changed, infrastructures have improved and processes and procedures have changed. The struggle will be done at the pricing. Prices will be high, so the highest bidder will be the ones to buy the tickets. This is what will happen as regards the supply and demand,” Sanusi tells BusinessDay.
Sam Adurogboye, general manager, public affairs, Nigerian Civil Aviation Authority (NCAA), tells BusinessDay that over the years, several operators have applied for Air Operating Certificates (AOC) to commence airline business in Nigeria but many of not fulfilled the requirements of NCAA.
Industry experts say as passenger number increases, there should be adequate equipment to meet up demand or else the industry may not able to manage.
Air passenger traffic in Nigeria rose by 12 percent to 8,487,698 as of the end of June, 2019, up from the 7,569,695 recorded in the comparable period of 2018.
According data from the Federal Airports Authority of Nigeria (FAAN), passenger traffic in 2018 rose to 16, 371, 674. The 2019 figures, which are being expected, have been projected to surpass the 2018 level, because passenger traffic in the second part of the year is usually higher than the first half due to the yuletide celebration.
IFEOMA OKEKE
