•FX squeeze, naira slump swell operational cost

•Interline deal not formalised    •Travelers opt for rail, road transport

 

By Chinelo Obogo

 

As flight tickets for domestic travel soar in response to inflationary pressure and fierce economic headwinds, passenger traffic has shrunk, with many local carriers flying on weak wings and struggling to stay afloat.

At the moment, economy flight tickets to most routes cost between N140,000 and N250,000, a 100 percent increase compared to January prices when economy tickets could be purchased at an average of N70,000 and in some cases, N65,000 depending on the route and time of travel.

The increase in the cost of airfare, analysts note, could be traceable to the depletion of aircraft because in January 2024, the number of operating aircraft in the industry dropped to 43.

This is because some of the existing aircraft flown overseas for mandatory checks were still ‘detained’ in various offshore maintenance facilities due to lack of foreign exchange to bring them back and reintroduce them into domestic operations. 

Daily Sun learned that some local airlines are considering shutting down some routes to concentrate on profitable ones, due to a reduction in the number of aircraft in service.

Data obtained by Daily Sun from Arik Air shows that as at December 2023,  passenger traffic was 95 percent, a situation likened to yuletide festivities. In January 2024, passenger traffic was still at 95 percent but by February, 2024, traffic for Arik Air had dropped to 70 per cent. Dana Air’s passenger traffic is similar to that of Arik Air as data obtained by Daily Sun shows that passenger load factor was 90 per cent in January 2024 mainly due to the return of those who travelled for the festivities in December and dropped to 70 percent in February.  

For airports like Sadiq Abubakar III International Airport,  Sokoto, data obtained by Daily Sun shows that total passenger movement in January 2024 was 15,322, while total aircraft movement was 282. But by February, passenger traffic had dropped to 12,262 and aircraft movement,123. Total passenger movement from March 1, 2024 to March 13, 2024 for the period was 5,703, while the total aircraft movement was 124.

A frequent traveler, Okwudili Onyia, told Daily Sun that despite the risk of traveling by road due to insecurity, he cannot ditch land transportation as air ticket costs reach sky-high. 

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“I recently traveled to Ibadan but because of the high cost of flight tickets, I couldn’t fly, so I opted for the train. I bought a first class ticket for N9,000 and it was very spacious, neat and cool. I bought the ticket online and it was seamless. The only challenge is that you can’t buy a day earlier than your travel date,” he said.

Another frequent traveler, Mark Adams, said he has suspended flights at the moment in appreciation of the high cost and general economic downturn.

“It’s Sienna to the rescue. Sienna to the east is N35,000, flight is N170,000 if you’re trying to book two days ahead. I’ve not inputted the cost of airport taxis yet. If you do, we’re talking about N200,000. Do the maths. I’m pocketing over N160,000 as savings”. 

The Chief Operating Officer of United Nigeria Airlines, Osita Okonkwo, said that domestic airlines are struggling to stay afloat as they have to contend with high cost of aviation fuel, forex scarcity, double digit interest rate for their leased aircraft, inflation and multiple charges from government agencies. These, he noted, has doubled their operation costs. He explained that for any airline to remain afloat, the average cost of domestic flight tickets had to be pegged at a minimum price of N150,000.

An aviation analyst and principal managing partner, Avaero Capital, Sindy Foster, attributed the low passenger traffic to the high cost of ticket and the low season in which many airlines usually experience traffic slump. “Ticket costs would continue to be high because we are in an inflationary environment when it comes to all of the operating costs that relate to aviation and you can’t expect an airline to operate at a loss for too long. When you are in a low season period which is what we currently are, airlines try to maximise whatever little revenue they currently get so that they can cover their cost of operation, maintain their aircraft and still operate safely and profitably, even though it is debatable how profitable the aviation industry can possibly be in Nigeria,” she said.

To weather the storm of low season traffic, handle issues of flight delays and ensure seamless operations, some domestic airlines went into an alliance in April 2022.

However, two years later, the deal remains an informal structure and not fully functional as envisaged.

Okonkwo, the United Nigerian Airlines’ COO, confirmed this.

He said: “The Spring Alliance was supposed to be a very formal structure but it is more informal and we must admit that it is not a perfect interline agreement. It is now more of a cooperation agreement but we are still working on it. At the moment, only two or three airlines are currently strong in that aspect. That is; United, Air Peace and we work very closely with Dana. There is the problem of capacity in the market and many people would not be able to bail you out if you have issues because they don’t have the capacity to do so and not that they don’t want to do so,”.

The president, National Association of Nigerian Travel Agencies (NANTA), Susan Akporiaye, told Daily Sun that unlike individual passengers, the increase in the cost of flight tickets has not affected corporate organizations that have to foot the travel bills of members of staff who have to attend local meetings, conferences or trainings.

“The cost of tickets would definitely affect individual passenger traffic because it is almost a 100 percent increase.  A while ago, we used to have both legs for between N120,000 and N150,000, but now, we are having just one way for that same price. The increase is huge and it would definitely affect passenger traffic. However, most of the requests that travel agencies like ours get for local travel are from corporate organisations and they will always travel irrespective of the cost of the ticket,” she explained.

A travel consultant, Yinka Folami, corroborated Akporiaye and told Daily Sun that unlike individual passengers, corporate organisations have not cut down on their travel and that they make up the bulk of passenger traffic to routes like Abuja and Lagos.

He said: “The times I have traveled to Abuja in the past few weeks, I could see that most of the flights were full. However, it is very important to note that most of the travel to Abuja from Lagos and other cities is largely essential travel and the traffic is usually driven by corporate organisations that have funds to pay and would not stop travelling because of the cost of flight tickets. So, you cannot use the passenger traffic to Abuja and Lagos to analyse. But most other airports would likely have a drop in passenger load factor because unlike Abuja, the traffic to these states is driven by individuals who don’t have money to spend.”