Home Business Blame high domestic airfares to lack of access to official forex—Airline operators

Blame high domestic airfares to lack of access to official forex—Airline operators

by Business News Report

Domestic airlines operators have blamed the current high domestic airfares being charged on different routes to non-availability of foreign exchange needed for their operations. This has compelled the airlines to source forex from the open parallel market. According to some of the the airlines, they have been buying dollars from the parallel market at  N500 per dollar. From N28,000 hitherto charged for one hour flight, the average cost of one hour ticket has now risen to N60,000 for a one way ticket and could rise even higher to N120,000 if a passenger buys ticket on the day he is travelling.

The airlines are also saying that there are clear ” indications that the fares would continue to soar, unless the Central Bank of Nigeria (CBN) provides  us forex or creates special window for aviation.”

Speaking about the high airfares, the Chief Operating Officer of Air Peace airline , that currently control more than the 50% of the domestic market,  Mrs. Toyin Olajide, said that airfares are high because of forex. She also revealed that airlines currently buy dollars from the parallel market to source spares, which they use to maintain their aircraft. According to Mrs Olajide ,“Airfares are high because of forex. We buy dollars from the parallel market because we cannot source from the CBN. When you look at the prices of tickets, they don’t reflect the actual cost of operation; if they do they will be higher than what we sell tickets now, but competition has kept the fares relatively low.

“We need dollars for most of the things we do in aviation. We buy spares in dollars and we source dollar at N500 per dollar. Just imagine the cost if you want to import aircraft engine. So the high cost of fares is because of forex,” she  emphasised. She further revealed  that currently there is limited capacity because airlines are operating less number of aircraft in their fleet, disclosing that Air Peace has most of its aircraft overseas where they were ferried for maintenance but they got stuck because of COVID-19 pandemic lockdown as maintenance facilities overseas are engaging in skeletal operations. Our aircraft that were ferried for maintenance overseas have not returned due to the lockdown. The maintenance facilities cannot meet delivery time. Few people are allowed to work on the aircraft and because of the lockdown so many things are not working the way they should.”

“We have some of the aircraft in Israel, if you order spare parts from another country it takes time before it will be delivered because immigration services may not be working in some countries, some companies may not even be operating optimally. So these are some of the challenges that we have”. We have 21 airplanes that are under maintenance or due for maintenance but we have not got slot for those due for maintenance in facilities overseas. They have to push out the ones that have completed their checks before they will take in more. So the aircraft have to queue and wait,” Olajide said. She, however, said that the good news was that the brand new Air Peace aircraft, Embraer E195-E2 would soon start operation, as NCAA is about to complete its certification on them. 

Also speaking on the high cost of airfares, the former CEO of Aero Contractors, Captain Ado Sanusi said that  ” high demand triggered the increase in airfares and capacity is not growing. ” Dollar is getting scarcer every day; so airlines go to the market where they can buy the dollars at any amount in Naira. Also there is no capacity. For instance, Azman Air that was grounded by NCAA has three aircraft. That number is off from the system until they resume operations. Airlines are also taking advantage of the demand because I cannot understand why economy ticket was selling for N74, 000 from Abuja to Kano, one way, which is less than one hour flight. There is a lot of demand for air travel because of security challenges on the roads; airlines are taking advantage of that,” Sanusi said. Corroborating what other airlines CEO are saying, the  Managing Director of Aero Contractors, Captain Mahmoud Abdullahi, said that high fares are caused by scarcity of foreign exchange so airlines are finding it difficult to access dollars ; so they buy from the parallel market. Captain Abdullahi said , “Airlines are finding it difficult to source dollars, so they are buying it from bureau de change. If we are getting it from CBN it will be better. Then there is this issue with aviation fuel, which prices change everyday. It keeps on going up.  Everything is dominated in dollars. CBN should give airlines special window to access forex. The fares are increasing but there is a limit to what the passengers can afford,” he added.

Related Posts