• Monday, April 22, 2024
businessday logo


Airport terminals scanty as airfares rise across local destinations

3cDeu-distribution-of-operating-costs-in-the-aviation-industry- (1)

Airfares across local destinations in Nigeria have continued to rise, leading to a drastic drop in the number of passengers at airport terminals.

Few passengers were being processed to travel during a recent visit by BusinessDay to the three busiest terminals in Nigeria — Murtala Muhammed Airport, Lagos; General Aviation Terminal, Lagos; and Abuja local airport terminal.

Most of the passengers were those who just arrived, with many airport workers decrying low patronage as a result of rising fares.

Read also: Domestic fuel supply unlikely to tame rising airfares

“The past two weeks have been like this. Once the first and second flights leave the airport, passengers become really scarce. Most times, we struggle to fill up the aircraft and even when we delay the flight for an hour or more, the passenger number will still be very low and discouraging,” an airline worker who declined to be identified told BusinessDay.

The worker also disclosed that in recent times, airlines have had to help one another airlift passengers going to the same destinations and share proceeds from the flight to avoid rising operational costs.

He said: “Aviation fuel is very expensive now and airlines sell tickets in naira but pay for spare parts and tickets in scarce dollars. It will be bad economics for an airline having an aircraft with 150 passenger capacity to carry just 50 passengers on the flight. It will only amount in losses.

“It only makes sense for the airline to partner with another to airlift passengers as long as they go to the same destinations. This will reduce costs and help save money.”

BusinessDay’s findings show that aviation fuel currently accounts for about 45 percent of operating cost; labour, 17 percent; aircraft rent and ownership, 8.5 percent; non-aircraft rents and ownership, 7 percent; professional services, 4.5 percent; landing fees, 2 percent; food and beverage, 1.5 percent; maintenance materials, 13 percent, and transport related, 1.5 percent.

It cost about $3,000 to operate a B737 aircraft on a one-hour flight when aviation fuel was less than N100 per litre about five years ago. When aviation fuel increased to N200 per litre, airlines operated a B737 aircraft at a cost of about $6,000.

BusinessDay’s findings show that with the current exchange rate and increase in aviation fuel price to about N1,300 per litre, airlines operate a B737 aircraft for over four times that amount.

BusinessDay’s findings show that a one-way economy class ticket from Lagos to Abuja that was sold for N55,000 few months ago now costs between N100,000 and N150,000 on Air Peace; N90,000-N160,000 on United Nigerian Airlines; N70,000-N130,000 on Dana Air and N170,000-N200,000 on Ibom Air.

A one-way economy class ticket from Lagos to Abuja which was sold for about N50,000 now costs N105,000-N160,000 on Air Peace, N95,000-N120,000 on United Nigeria Airlines, and N175,000-N200,000 on Ibom Air.

A one-way economy class ticket from Lagos to Port Harcourt sold for N55,000 now costs N105,000-N160,000 on Air Peace, N85,000-N100,000 on United Nigeria Airline, N65,000-N125,000 on Dana Air, N96,000-N130,000 on Ibom Air and N86,000-N170,000 on Arik Air.

Read also: Air Peace gets approval for international flights to New York JFK Airport

Mazi Osita Okonkwo, chief operating officer of United Nigeria Airlines, said: “Currently, aviation fuel has increased to N1,300 per litre or even more. Forex is over N1,000 for one dollar. So, if we are leasing aircraft, how do we pay for the aircraft, having paid for spare parts? In fact, the minimum cost of an airfare should be $100.

“So, I don’t even see how you can fly for less than N150,000 and you will make profit. Anybody who is telling you that he is making it is not telling you the truth. Once the cash runs out, you will start seeing operators parking their aircraft, and some have done that already.

“Today, we had other operators telling us they wanted to transfer their passengers into our aircraft because it doesn’t make sense to fly 50 passengers in a 150-seat capacity aircraft. People are burning cash.”

He urged Festus Keyamo, minister of aviation and aerospace development, to intervene.

He said local airlines need cheap loans, forex and lower country risk as lessors will charge more when operators are from Nigeria, whereas operators from other countries are getting cheaper insurance.

Ndukwe Ginika Ogechi, CEO of Geena Travels And Tours Ltd, told BusinessDay that the turnout of passengers on local destinations have been very low lately as a result of the costs of tickets.

“The aircraft on local destinations are barely full these days because people cannot afford the fares, yet these airlines have refused to reduce fares. I’m not even sure they make profit anymore as a result of low patronage,” Ginika said.