Forex causes 52% rise in airfares

Due to energy price hikes and  lack of access to foreign exchange, the average airfare paid by passengers on specified routes for a single journey has increased by 52 per cent in the past 12 months.

The National Bureau of Statistics data have shown in a new report titled, “Transport Fare Watch (April 2022),” the NBS said airfares recorded a 19 per cent increase when gauged on a month-on-month basis.

An official in the Corporate Affairs Department of the Airline Operators of Nigeria, the umbrella body for local carriers, Mr. Ewos Iroro, described the factors behind the increase of airfares as obvious concerns which the operators had clamoured about over the past few months.

He said, “We know what has been happening in the sector in the last few months. The price of jet fuel has gone up. There are so many factors. All the factors are already out there. Airlines don’t determine most of the factors. Airlines are also operating in a system.”

The Chief Executive Officer, TopBrass Aviation, Captain Roland Iyayi, also blamed the inability of the government to solve certain fundamental challenges as the reason behind the spike in airfares in the last one year.

Iyayi said, “I think the solution is actually in the hands of the government. If for instance, our refineries were working, the cost of fuel would have been lower than what it is today. Fuel, for airlines constitute about 50 per cent of their direct operating cost. So, if you take that fuel increased from N150 to about N700; that’s about 400 per cent increase, but nobody is talking about that. If fuel increased by 400 per cent and airfares increased by 52%, and fuel comprises 50 per cent of the direct operating cost of an airline’s cost of production, then there is something very significantly wrong. I would assume that based on those numbers, airlines may not even be breaking even.”

Also speaking, an economic expert at the Pan-Atlantic University, Associate Professor Emeka Osuji described the hike as inevitable considering recent events in the aviation sector and the attendant economic consequences of these events.

He said, “Aviation fuel has gone up. I don’t blame the airlines. When aviation fuel goes up like it has done, you have to expect an increase. The politicians have taken all the dollars for their political activities. Everything about an aircraft is dollarised, now the dollar has gone up to N600. When that happens you don’t need anybody to tell you what it will give rise to.”

Osuji also said the economy had been badly managed and decried Nigeria’s continued inability to refine fuel for local consumption.

According to him, much of the energy crisis that has led to increased cost of production would have been tackled if the government had been alive to their responsibilities.