Airlines set to adjust fares by 50% amid cut in load capacity

• Operators list carriers’ woes
• Fare hike incomprehensible- Sanusi, Olumide

Amid June 21, 2020 resumption of domestic flights, Dana has given an insight into what appears to be adjustment in air fare by at least 50 per cent for at least one hour trip.

Not a few believe that the policy of the Federal Government to domestic carriers as regards passenger reduction between 50 to 70 per cent, high cost of aviation fuel, depreciation of Naira by over 35 per cent against the United States Dollar may have given rise to the action.

The Federal Government had announced on June 2, 2020 that domestic flights would resume on June 21 and directed airlines to take between 50 and 70 per cent of passengers on any flight.

The Minister of Aviation, Hadi Sirika had said, “The modality of operations by airlines and the passenger numbers will certainly drop and the load factor will also drop.

“Only 50 to 70 per cent of the passengers should be taken. These are some of the things that we have been looking at.”

Dana yesterday gave a glimpse of what it fares would look like on resumption in its flight schedules and fares with the cheapest starting from N34, 500 (Economy Discount) for Economy Class while Business Class will go for  between N111, 600 and N162, 000 for (Business Flexible option)  to Abuja, Port-Harcourt and Owerri from Lagos.

There are also seats for N48, 000 (Economy Saver); N66, 000 for (Economy Flexible). These fares cover one hour trip and could double for routes that are over one hour. This new fare regime is to make up for inability to take more than the carriers’ 80 per cent load factor pre COVID-19.

The cheapest fares for a one hour trip on Dana before now oscillate between N22, 000 and N25, 000. Dana Air fares before now are among those said to be competitive in Nigeria’s aviation while Arik and Air Peace are considered too expensive by many.

It is not known yet when others would be publishing their readiness to resume flight operations including what the new fares would be and by how many per centage increase.

Managing Director of Aero Contractors, Capt. Ado Sanusi told Woleshadarenews that he doesn’t see the logic in air fare rise post COVID-19 because of the pain many airlines both domestically and globally are going through to win back the confidence of air travelers.

He however stated that the best way to justify adjustment in fares is if the regulators or the contracting states decide to impose physical distancing onboard airplanes or decide that airlines cannot carry up to a particular number of load factor.

His words, “There is no such thing as increase in air fares. If they do it, they will just find themselves with 20 per cent load factor.  I cannot see the logic of air fare to rise post COVID because most of the airlines globally even domestically will like to get the confidence of passengers back so that they can come in and fly.”

“The only thing that I see that might cause the air fares to go up is if the regulators or the contracting states decide to impose physical distancing inside the airplane or they decide to say you cannot carry up to a particular number of load factor, that you cannot carry up to 80 per cent full capacity, that is the only way that I can see that the airlines would say we will adjust the fares to accommodate that. I think we will see lower fares for now.”

Chief Executive Officer of Ropeways Limited and former Managing Director of Virgin Nigeria, Capt. Dapo Olumide described what is happening in the aviation industry as a jigsaw puzzle.

He said come June 21, 2020, only five airports are going to be re-opened, stressing that airlines route network had already been cut by 40 per cent and 40 per cent of revenue reduced.

“There is skepticism of the passenger to coming back. That fear will reduce your passenger even further. So, at the end of the day, no airline in my opinion will have more than 50 passengers in a B737. You have the passengers who are not willing to travel”, he added.

Olumide further disclosed that the only passengers who would fly on resumption of flights later this month are people he described as Visiting Friend Family (VFR) to see their families and friends they have not seen for months.

“The business community will not just fly yet because they know that the Ministries are not in full operations yet. So, there is no need for a business man to be flying to Abuja for a meeting. Don’t forget, the hotels are not opened properly yet. Business class will be empty.

“You only have economy passengers. Because of that category of VFR, it means that they are price sensitive and there are price sensitive for two reasons. Firstly, it is either they have all been laid off or their salaries have been reduced by 50 per cent and it becomes a luxury for economy passenger to travel even at N30, 000 a ticket.”

He painted a very bleak future for the carriers saying that the removal of over 36 charges and taxes by the government and granting of waiver are the only survival plans to save the airlines from collapse, lamenting that airlines’ costs remain the same.

“Jet fuel has not come down in comparison with PMS. Jet A1 is still going to account for about 40 per cent of their bills. They have to bring aircraft out of storage. That has a cost. You have to retrain your crew; your pilots have to go for re-currency training abroad. The airlines have been doing lease payment for the last three months.

“It is incomprehensible for you to increase your air fare. The only way out of this is if the NCAA, FAAN and the government first of all put a waiver on all the charges. All of that need to be put on hold. They cannot do that because that is the only way those Ministries generate IGR for payment of salaries and other things. They can’t reduce them; otherwise they will have to go to the government for the government to pay.”

Wole Shadare