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Airfares double amid high fuel prices, others

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By Abraham Adekunle

Naira devaluation against dollar causes challenges in aviation industry.

Ahead of the busy festive season, airline operators in Nigeria have increased flight ticket prices in local currency by nearly 100 percent on certain routes due to the continued rise in fuel costs and shortages of foreign currency. With over ten active scheduled carriers connecting several destinations within the country’s borders, Nigeria has one of the most robust domestic aviation sectors in Africa. In 2022, about 16.1 million passengers flew through Nigerian airports, with 78.2 percent of all traffic being served by domestic carriers.

The devaluation of the naira against the dollar has caused challenges in the aviation industry, with a significant fuel price hike threatening to further increase ticket prices. December is usually the busiest, with the highest number of flights and passenger activity recorded during this period. However, before this year’s holidays, average domestic fares that were below ₦75,000 may peak at over ₦130,000, leaving many consumers uncertain about their December travel plans. As it is, popular holiday destinations like Abuja, Port Harcourt, Owerri, Uyo, and Enugu have already seen significant increases, with fares expected to be even higher between December 15 and January 5.

Over $700m of airline funds trapped in the country.

While the naira is steadily devalued against the dollar, it has caused significant challenges in the aviation industry. According to The Guardian Nigeria, the price of aviation fuel is now at nearly ₦1,000 per liter ($4.81 per gallon). In both the domestic and international sectors, the open market rate of ₦1,200 per dollar and almost 400 percent fuel price hike have threatened to double the already high ticket prices and further shrink the air transport industry.

It is also reported that airlines have increased ticket prices to cover the cost of operations but have not entirely put it on consumers. Foreign operators have also increased the price of tickets. During the weekend, the International Air Transport Association (IATA) Rate of Exchange (IRoE) increased in one leap by ₦139 from ₦842 to ₦981 against the US dollar. While IATA stood against increasing airfares, it expressed concerns over Nigeria complicated foreign exchange liquidity crisis. The same crisis has kept over $700 million of airline funds trapped in the country. About $300 million of this amount is legacy debt, which is still yet to be remitted to IATA by the Central Bank of Nigeria (CBN).

Aviation fuel accounts for one-third of all airline costs.

As African carriers face several operational challenges, the price of aviation fuel is among the biggest. It accounts for over a third of all costs. As a deregulated commodity exclusively controlled by suppliers, the price consistently fluctuates according to the rate of the naira against the dollar. Over the weekend, the price of jet fuel increased by nearly 20 percent from ₦800 per liter ($3.70 per gallon) to ₦1000 per liter ($4.61 per gallon), depending on the location. Lagos Murtala Muhammed Airport (LOS) had the lowest rate of ₦935 per liter ($4.30 per gallon). In other regions, Abuja (ABV) had ₦975 ($4.49), Port Harcourt (PHC) had ₦970 ($4.46), Kano (KAN) had ₦985 ($4.53), and an average of ₦1000 per liter ($4.61 per gallon) in the Upper North region, where it is also subject to availability.

Abuja, Port Harcourt, Owerri, Uyo, and Enugu are among the most popular destinations in Nigeria during the Christmas season. Fares from Lagos to these cities have already increased by nearly 100 percent. A travel agent, Gina Chika, told the media that this was noticed as soon as the fuel price went up. Chika added that ticket prices for Christmas do not usually go up until November, but that is not the case this year. For example, Air Peace one-way Lagos-Abuja tickets, which previously sold between ₦55,000 and ₦65,000, now range from ₦100,300 to ₦162,000. Similarly, an economy ticket from Lagos to Enugu or Kano costs ₦100,300.

Airlines were subsidizing costs of seats per flight.

Aero Contractors, United Nigeria Airlines (UNA), and other carriers have also increased fares on various domestic routes. UNA Chairman and Spokesperson for the Airline Operators of Nigeria (AON) told news correspondents that Nigerian carriers should be commended for not passing the whole cost of operations to customers. He said that airlines are subsidizing the cost of seats per flight. He urged passengers to understand if there are fare increases now. Fares may still be higher because airlines are actually not covering the cost of operations. According to him, the little adjustment is to serve the public better. “It is better to fly safe, be viable, and remain in business than just flying cheap and risk collapse,” he remarked.


Related Link

IATA: Website


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