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There has been a 70% increase in domestic airfares, across the country and airlines say the weakling exchange rate is responsible.
NewsWireNGR gathered that economy class tickets that sold between N20, 000 (about $52) and N30, 000 (about 78) in July have now increased to between N60, 000 ($105) and N70, 000 (about $184).
Business class tickets that sold for N50, 000 (about $131) now cost between N70, 000 ($184) and N80,000 (about $210).
As the festive season draws near, there is a possibility that these fares would increase and that aircrafts may not meet demand.
The Chief Executive Officer of Aero Contractors, Captain Ado Sanusi in an interview with ThisDay, says that this scarcity and increase in the fares is the side effect of the dollar scarcity and the negative impact of COVID-19.
“The exchange rate of the dollar has a big impact on the aviation industry because everything we do has a dollar component, because spares are acquired with foreign exchange; we pay for insurance in dollars because local insurance companies do not have the capacity to insure aircraft fully, so it is expected that tickets will be very expensive.
“As we move on, there will come a time when there will be no aircraft seats because fewer aircraft will be flying.
“So currently there is a high demand but low capacity; obviously, the basic law of supply and demand will apply.
“The price of tickets will also increase because of the high foreign exchange as the dollar is now being exchanged for N500, so we expect a disproportionate increase in the price of tickets.
“Also insurance premium will continue to rise in Nigeria because after the global rise occasioned by the two Boeing MAX crashes in Ethiopia and Indonesia, the lockdown brought down the cost but it will continue to increase in Nigeria because the local market is not strong enough so we have to go outside the country to insure and we pay in dollars.
“We sell our tickets in naira and we buy dollars to pay for insurance. We have a big elephant in the room and that is the exchange rate issue; the earlier it is solved the better for the economy of this country,” Sanusi added.
The Chief Operating Officer of Ibom Air, George Uriesi, also said the airlines have had to sell at higher prices due to the high demand of tickets.
“I am not aware that there is a price increase; maybe not for Ibom Air. I don’t know what other airlines are doing but at Ibom Air, the highest fare for economy class is N50, 000 and business class is N70, 000 and we have not increased fares on any of the routes.
“It is a demand that increases the fares and we have sold all our seats from now till January because there is a high load factor.
“Maybe other airlines have increased the price structure to maximise the benefits of the high season. You know that there were no flights for a long time while airlines were maintaining their aircraft and servicing their leases; so this season is an opportunity to take advantage of because, after January 15, 2021, we go into another low season till March. But now people cannot find seats in flights,” he stated.
Uriesi also noted that the weakling exchange rate has made it has affected the revenue of the airlines because “when (Naira) place side by side with dollar value six months ago, it would become obvious that airlines are not making profits because ticket sold at N50, 000 pre-COVID-19 is more than the value of $100 but today is just equal to $100 dollars; so the airlines are really losing.”