South Easterners experienced the highest airfares this 2024 Christmas holiday season. Quite unlike the previous years, airfares have increased dramatically ranging from N165,000 to N243,000 for a 45 minutes flight. There seems to be absolutely no one to control these prices. Even with the hike, passengers have to search online for the least expensive flights among the limited number of airlines operating into South East and South South Nigeria. Travelers’ circumstances have even worsened with just three major airlines – Airpeace, Ibom Air and United Nigeria, flying to the earlier, while ValueJet and Dana serve the later. All these airlines have either one or a maximum of two frequencies daily into the regions from the Abuja and Lagos, while providing a feeling that they offer elitist services, due to the very high airfares.
A recent video, surfaced online via social media platforms, particularly Facebook and WhatsApp, accusing of Allen Onyema, CEO of Airpeace as being insensitive to the plight of the South Easterners. The video amongst other things wondered why the Chief Executive, an Igbo was punishing his kinsmen while flights to Northern Nigeria of twice the duration was less than half the price of the flights to the East.
This article is aimed at clarifying some of the often-misunderstood reasons why airfares are costlier on more patronized routes. It would shed some light at the misconceptions of airfare practice and show that Onyema and other operators are not insensitive as some may often think.
The Nigerian Aviation Industry
As a significant sector of Nigeria’s economy, aviation fosters both local and international connectivity, creates job and economic development. An analysis of the Nigeria aviation industry, shows that it terms of market size and growth, the sector has experienced steady growth in recent years. The number of domestic and international passengers has been increasing, and this is driven by factors such as a expanding middle class, increasing disposable income, and improved airline connectivity. However, due to the COVID 19 Hiatus, the industry faced significant challenges, resulting in a decline in air travel demand and financial difficulties for airlines.
Nigeria has several major airports, including Murtala Muhammed International Airport, Lagos, Abuja’s Nnamdi Azikiwe International Airport in Abuja, and Obafemi Awolowo international Airport, Port Harcourt and Aminu Kano International Airport, Kano. These airports serve as important hubs for domestic and international flights. However, airport infrastructure in Nigeria faces some challenges, including outdated facilities, insufficient capacity, and limited maintenance, which also impacts the sector’s operational efficiency.
Several domestic and international airlines operate in Nigeria. The major local brands include Air Peace, Dana Air, and Ibom Air, United Nigeria, Rano Air, Max Air, Green Africa, amongst others. These airlines provide domestic and some international connectivity, thereby contributing to economic development and tourism. However, the industry has also witnessed the closure of some airlines due to financial difficulties and operational challenges.
While the major regulatory authority overseeing the Nigerian aviation industry is the Nigerian Civil Aviation Authority (NCAA), the organization is responsible for ensuring safety standards, regulating airlines, issuing licenses, and monitoring compliance with international aviation regulations. However, there have been calls for further improvements in regulatory oversight, transparency, and accountability to enhance safety and operational efficiency. The sector is also saddled with so many other agencies like Federal Airport Authority of Nigeria (FAAN) amongst others. With safety and security being very crucial aspects of the aviation industry, Nigeria has made concerted efforts to improve in these areas. The country has implemented safety regulations in line with international standards, and major airports have enhanced security measures. However, challenges still remain, requiring continuous investment in safety infrastructure, training, and maintenance practices to ensure a high level of safety and security.
The country has recognized the need for infrastructure development to support the growth of the aviation industry, hence, government has over the years undertaken various projects to expand and upgrade airport facilities, including runway rehabilitation, terminal expansions, and air navigation systems. These initiatives aim at improving operational efficiency, enhance passenger experience, and attract investment in the sector.
However, the Nigerian aviation industry is faced with several challenges that need to be addressed for sustained growth. These challenges include inadequate infrastructure, inconsistent government policies, limited access to financing, and the impact of external factors such as global economic conditions and pandemics. A major challenge that threatens the sector is that Nigeria is adjudged to have very high operational aviation charges when compared to contemporary destinations. This is further exacerbated by the recent hike in the cost of aviation fuel and foreign exchange. According to a recent study, among African nations, Nigeria has the highest airport charges. Kamil Al Alwadi, Vice President of IATA for Africa and the Middle East, berates Nigeria as the most expensive country in Africa with about 27 official levies imposed on airlines by the government. Consequently, Nigerian airlines are unable to compete with their international counterparts due to these astronomical fees associated with flying into Abuja, Lagos, and other African airports, he added. Africa has put itself in a situation where it is unable to rescue itself; in addition to high lease and insurance costs and costly fuel, airlines must also be able to make a profit. Nigeria must therefore make decisions to ensure the survival of its airlines, as they contribute to the nation’s GDP.
Despite these challenges, the Nigerian aviation industry still presents significant opportunities, considering the country’s large population, growing middle class, and vibrant business environment, which create a strong impetus and demand for air travel. Moreso, Nigeria is strategically strategic locate on the West African coast and positions itself as a potential regional aviation hub, to link Africa to other parts of the world. Hence, investments in infrastructure, technology, and human capital can further unlock the industry’s potential.
Airfare fluctuations and hikes during festive seasons
A number of variables influenced by supply and demand dynamics in the airline sector frequently cause airfares to rise during holiday seasons. Some of these factors are:
1. Increased Demand: People prefer to travel during festive seasons, such as holidays, religious celebrations, and special events, to see their relatives, take vacations, and take part in festivities. As profit-oriented businesses, airlines raise their prices in response to the increased demand for airline tickets in order to profit from the growing interest in air travel.
2. Limited Seat Availability: Depending on their pricing policies, airlines may decide to increase ticket prices in the bis to maximize income when demand exceeds supply. Hence, flights can fill up fast during peak travel periods, leaving fewer seats available.
3. Operational Costs: Since peak travel times frequently fall around the holidays, airlines may incur increased operating costs. A rise in demand could necessitate more flights, employees, and resources to manage the influx of more passengers, all of which could result in greater operational costs.
4. Seasonal Factors: Holidays may fall within particular weather patterns, such as winter in temperate climates or the busiest travel times for particular locations. Since flying to particular destinations increases in popularity at particular periods of the year, airlines may modify their pricing in response to these seasonal influences.
5. Marketing Techniques: To adapt prices to changes in demand, airlines may employ yield management and dynamic pricing techniques. By offering affordable rates during periods of low demand and raising costs during periods of high demand, these pricing strategies enable airlines to maximize income.
6. Competition: Several airlines may operate on popular routes during holiday seasons, competing for passengers. Pricing decisions can be influenced by competition, and airlines may modify their fares to remain competitive in the market.
7. Advance Booking Practices: In an effort to get better deals, travelers frequently plan their vacation well in advance during the holidays. Airlines may increase the cost of last-minute reservations as departure dates draw nearer and availability shrinks.
8. Holiday Packages: Travel firms and tour operators frequently put-up vacation packages that include lodging, transportation, and other services. The cost of airfare during holiday seasons may also be impacted by these packaged deals.
Airfares pricing in contemporary times
These days, airlines aim to maximize profits through ticket sales, and airfare price is not fixed nor regulated. Pricing is the process of figuring out a ticket’s value and getting the most out of it. Different people may value tickets differently. The booking classes used today, which are different from travel classes such as economy, business, or first class, and a set of letters denoting the fare level paid, determine cost and availability. These codes were initially established by the IATA in the late 1940s in an effort to facilitate ticket acceptance across firms and encourage uniformity among carriers. Even if there have been adjustments, certain things have remained mostly the same, such as:
F – for first class full fare.
J – business class with full fare
Y – Full-fare economy
A list of sub-booking classes are utilized to determine the discount levels offered by airlines. Carriers carefully modify booking classes and manage availability in order to enhance the revenue management system. By utilizing algorithms and Artificial Intelligence (AI) technology, they leverage statistics and mathematics to operate these systems to determine and modify prices. Algorithms are highly guarded techniques and secrets that airlines obtain, use, and store data to improve their understanding of them. When fares were manually fixed and changed, for example, human error was present but not completely eliminated. Price setting, which has significantly improved in recent years, is supported by extensive study of data. Historically, ticket pricing has been determined by carriers based on historical sales and booking data. But more than ever, companies are leveraging this data to develop dynamic algorithms that manage costs for a variety of variables, such as changes in the market, the price of fuel, and fluctuations in foreign exchange. specially in Nigeria.
In the months preceding a trip, fares are subject to large fluctuations. Airlines are becoming more adept at predicting ticket prices to optimize revenue and sales by utilizing past data. Last-minute pricing has changed recently, with current ticket sales being a major determinant of price. Even while it is expected that prices will increase when there aren’t many seats available on a flight, this is just a result of supply and demand in general.
Airlines frequently only provide a set number of seats in each booking class; as the lower booking classes fill up, the only rates left are the higher ones. Certain routes, including as Maiduguri, Sokoto, and Kano, where passengers would not pay the higher rates at Christmas, may continue to see airlines offering steeply reduced pricing on full flights.
The contribution of Allen Onyema’s Airpeace to Nigeria
Air Peace founded by Allen Onyema, is one of the major Nigerian airlines providing both domestic and international flights. Though I have never met Allen Onyema and do not hold forth for him or his company, however, I have very high regards for him, with all he has achieved though Airpeace. Air Peace operates a wide network of domestic flights, connecting major cities across Nigeria. It serves destinations such as Lagos, Abuja, Port Harcourt, Enugu, Owerri, Kano, Kaduna, Benin City, and many others. The airline offers multiple daily flights on popular routes to meet the travel demands of passengers within Nigeria. In addition, the airline operates international flights to various destinations.
Air Peace has a diverse fleet of aircraft to cater to different routes and passenger capacities. Their fleet includes Boeing 737s, Embraer ERJ-145s, and Dornier 328s. The airline has been expanding its fleet in recent years to support its growing operations and enhance its service offerings. Air Peace’s extensive domestic route network allows passengers to conveniently travel between major cities and regions in Nigeria, promoting connectivity and accessibility within the country.
Is Allen Onyema’s Airpeace insensitive to South Easterners?
The perception of whether a company is insensitive to passengers’ plights can vary based on individual experiences and circumstances. It is important to note that airlines, like any other business, can face operational challenges and customer service issues from time to time. It’s worth mentioning that the aviation industry, including airlines, is subject to regulations and oversight by aviation authorities, such as the Nigerian Civil Aviation Authority (NCAA). These regulatory bodies play a crucial role in ensuring the safety and quality of service provided by airlines. If passengers have genuine complaints or concerns, they can reach out to the appropriate authorities or regulatory bodies to report their experiences.
From the foregoing, it is crucial to remember that although flights often increase during holiday seasons, the degree of the increase might vary depending on some of these variables mentioned above. To potentially score more reasonable flights during high seasons, travelers are advised to plan ahead, be flexible with their vacation dates, and keep an eye out for special bargains and promotions on airfares and prices.
It would be ideal to make some recommendations here. Early travel planning would ensure passengers get lower priced tickets. Government, the regulatory agencies and practitioners need to understand the important role of aviation in the development of a nation and the need for interventions and support from the FG which can go a long way to boost the aviation sector. There is also a need for a special development action by South East Governments, specifically for Airpeace and United Nigeria.
While some defunct airlines like Sosoliso, Oriental, Triax, IAS, Havila are owned by Igbos, aviation is capital intensive and requires adequate corporate governance as well as adequate regulatory oversight in the management. The era of family relations with father, mother and son without adequate competence to manage such fragile and sensitive businesses like aviation, spells doom of the sector. Hence, citizens of the SE should align and invest in the sector and secure competent persons to efficient undertake the management of such concerns both at board and management levels. These new investments could either be in ongoing concerns or the floating new airlines.