By Dickson Omobola
Following recent outrage over the spike in air fares, the Airline Operators of Nigeria, AON, has attributed ticket prices to high operating costs, saying fares will be cheaper if taxes and levies are removed and infrastructure is improved.
AON, however, said compared to other countries, domestic travellers in Nigeria pay some of the cheapest air fares in the world, noting that despite their operating cost, they keep ticket prices relatively low.
Spokesperson for the AON, Professor Obiora Okonkwo, spoke on the Morning Brief, a Channels TV Programme.
Okonkwo, who dismissed claims of price gouging, also said with Yuletide, demand for flights was higher and there was a need to meet the demand.
His words: “In aviation, there is a formula in which fares are determined. You have different classes. You have low, middle and so on and so forth. You might have about six classes of tickets. At the end of the day, we make a yield.
“We put it all together and divide it by the number of the seats in the aircraft, including even vacant seats. For that ticket you are talking about N400,000, we might have sold a seat for N150,000. You have to sell in terms of number and in terms of cost to be able to break even and you still have to be able to service the aircraft.
“We buy aircraft from the same market (bigger airlines outside Nigeria). We buy spare parts from the same market. It is the same amount of money we pay pilots, even if they are Nigerian pilots. The cost of operation even in Nigeria is higher.
“99.5 per cent of every expense in our operations, including spare parts, maintenance and procurement of equipment are all in dollars, but we still sell this ticket here in Nigeria in Naira, and we have to compare it before we make our expenses.
“We take loans at 30, 35 per cent as the case may be, and those countries we are referring to may be taking loans at two per cent or five per cent maximum. We also pay a whole lot of taxes, fees that do not exist in any part of the world. Our operational expenses are way higher.
“But still, for some reasons, we charge low. Nigeria remains the cheapest place in terms of air fare. But as a matter of fact, it is to the detriment of operators. If taxes are removed, levies are removed and infrastructures are improved, it will definitely reflect on the cost of the ticket. That is because for every single levy and extra tax, you pass it on to the passengers.
“We are just the cash cow, the source of money for every other aviation ecosystem. What the grand handlers charge, we collect. What the Nigerian Civil Aviation Authority, NCAA, charges, we collect. We want them all to be removed, because 80 per cent of them do not exist in other parts of the world.
“International Civil Aviation Organisation, ICAO, has rules of what must be charged and what must not be charged. The International Air Transport Association, IATA, has said Nigeria is the most expensive place to operate.”
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