International fares rise, domestic charges static

It is an irony of some sorts that while domestic fares are as low as N12,000 and N15,000; tickets on international routes are on the rise.

The Nigerian Civil Aviation Authority (NCAA) has even made the matter worse for the domestic carriers, warning any airline that embarks on add-on charges, sub-charges or other malicious charges on ticket payment will be seriously penalised.

The NCAA said it has come to its notice that airlines now arbitrarily increase fares, without recourse to the Nigerian Civil Aviation regulations.

General Manger, Public Relations, NCAA, Sam Adurogboye, said that request for fare increase should be as a result of some indicators such as prices in aviation fuel and ensuring that additional fuel cost burn by the airline operators during the corresponding period must be on short time basis not exceeding a period of two months in such instance.

The NCAA therefore warned operators who charge passengers extra amount without approval to stop forthwith.

The low passenger traffic on the domestic scene coupled with about eight airlines offering scheduled operations make the local travel market over saturated as they contend with just less than seven million passengers annually.

This is a far cry for a population of over 160 million people.

The same cannot be said of foreign airlines, especially European carriers that have dominated Nigeria’s aviation market.

The situation is not helped by lack of national carrier that probably may have taken a bite out of the huge aviation market in Nigeria.

It must be said that Nigerian flag carrier airlines such as Medview and Arik, have done so well for themselves to remain in business, especially on the lucrative Lagos-London route, but they do not have the capacity to match the likes of British Airways and Virgin Atlantic Airways in route expansion and technology.

The two British carriers share 21 frequencies amongst themselves while the two Nigerian airlines have less than 14 frequencies between them, which already shows sharp imbalance. This is also the case for American airlines, which operate into Nigeria under the ‘Open Skies’ policy.

Only Arik operate from Nigeria, a far cry from the services provided by Delta and United Airlines – two airlines regarded as some of the biggest airlines in the world.

Experts believe that because of inability to break the monopoly or duopoly of these European, American and Gulf carriers, prices can be fixed, which appears to be the case, as virtually all of them charge the same astronomical fares including blocking of seats.

Despite the fact that it is low season, most international airlines, especially BA and Virgin are said to charge over N400,000 for economy class ticket, while First Class ticket goes for as high as N3 million from N1.5 million.

Aside the depreciation of naira against the United States dollar, these airlines, because of their preference by Nigerian travellers, have decided to hike fares on the route.

Even Arik was accused by travel operators of charging almost the same fares, as these other foreign airlines at a time they said they should lower their fares to get good load factor.

Stakeholders in the travel industry under the aegis of the National Association of Nigeria Travel Agencies (NANTA) have faulted the astronomical cost of air tickets by foreign airlines.

The group at its just concluded 40th Annual General Meeting (AGM) held in Ibadan, Oyo State, at the weekend, stated that a situation where taxes that go to the airlines are higher than base fares is not accepted.

They have, however, petitioned the Federal Government through the Ministry of Aviation to call foreign airlines to order over what they termed sharp practices.

Consumers are often shocked by the difference between an advertised airfare and the price they ultimately pay for the airline ticket.

The reason for the discrepancy is that the amount advertised is usually the airline’s “base” airfare on which many surcharges and taxes are levied at the time of purchase.

Publicity Secretary of NANTA, Mrs. Ngozi Ngoka, said that the cumulative effect of taxes and surcharges generates a final price to the consumer that can be as much as double the advertised airfare for a short-haul flight.

Airlines, she reiterated, make available on their website fares, which are much cheaper than those available on the agency booking platforms.

Ngoka faulted this as unfair competition, saying that it is running a lot of agencies out of business. We have documented evidence about this practice from Emirates airlines and KLM.

She stated that the group had made its position known to the aviation regulatory body, the NCAA, stressing that regulation on it has not been helpful.

“Our position is that we want a unit to be set up that will look into fare structure of airlines.

Fares are padded. A former Director-General of NCAA, Dr. Harold Demuren, was very helpful and fiercely fought to stop the fleecing of Nigerians. In other climes, aviation regulators look at fare structures.

Taxes are higher than base fares,” he had said. Ngoka decried the astronomical cost of air ticket, for example, to London from Lagos or Abuja, stressing that a situation where air fares to London costs between N400,000 and N450,000 for economic class ticket from between N150,000 and N200,000 simply cannot be justified, notwithstanding falling value of the naira against the dollar.

from He equally stated that First Class ticket on British carriers and other European airlines has gone up between N1,million and N1.5 million to N3 million, describing it as “ludicrous.”

Speaking on other burning issues, she equally lambasted the sale of airline tickets by Nigerian banks, adding that the lenders in Nigeria have become “jack of all trades” and are gradually and consistently encroaching on all businesses, including specialised areas such as theirs.

She said the banks are not licensed to act as airline agents. To her, travel agents undergo a rigorous accreditation process before they are allowed to sell airline tickets. “Why are airlines colluding with banks to sell tickets by offering banks commission and offering agents none?

Ngooka noted that recently, the public had been inundated with adverts by lenders in the country making “ridiculous offers to the general public for the purchase of air tickets from such banks.

This growing trend portrays a dangerous situation whereby the banks have abandoned their core business of providing financial services to the public and delving into a business venture that they are not legally licensed to perform.”

A series of industry developments have put airlines firmly in control of prices, in a way they haven’t been in perhaps a generation. As a result, fares may be rise even more.

Fortunately, that doesn’t mean travelers have to overpay for their tickets. Historically, air fares have been tied to the price of energy. Fuel accounts for roughly one-quarter to onethird of an airline’s operating cost. But that dynamic is quietly changing.

A study by the airfare Web site Hopper.com found that last month, jet fuel prices fell 12 per cent, while fares only came down one per cent.

In fact, airline costs and fares aren’t that closely linked anymore. Since last December, fares have increased 3.6 times faster than airline operating expenses from fuel costs, according to the site.

So, will prices come down anytime soon? No one — not even the analysts, the airlines or the travel industry’s soothsayers — know for sure.

But most of them suspect fares will remain high, if not climb higher, as the prevailing winds favour the airlines.

“If customer demand is strong — and relative to capacity, that’s true for airlines today — then falling costs will mean higher profits, not lower prices,” says Edward Shelswell-White, who runs LexVolo, an aviation consultancy firm in Dallas. It would probably take a recession to reduce demand for fares, resulting in lower prices.

Experts predict that until the economy falters, fares will stay at their current levels. “Airfares aren’t coming down anytime soon,” says Frank Werner, an associate professor of finance at Fordham University’s business school.

Furthermore, the airline industry isn’t concerned about making its product affordable to passengers like Oakman, he says.

“As for people who can’t afford to fly, the airlines really are not interested any more than Daimler-Benz is worried that many people cannot afford to purchase a Mercedes.” Passengers aren’t out of options.

Technology could help travelers find the lowest available fare. A site like Hopper.com can tell you if you’ve found a deal and disclose the best time to fly for a low fare.