High Demand Triggers Increase in Air Fares

Chinedu Eze

Increasing number of passengers, limited number of operational aircraft and high cost of operations have led to a hike in the cost of air fares in the last two months, THISDAY’s investigation has revealed.

THISDAY gathered that the high increase in fares, which peaked during the Easter break as more people travelled for the holidays, is expected to continue, especially on Lagos-Abuja and Lagos-Port Harcourt routes.

Investigation revealed that Dana Air, for instance, sold one-hour flight ticket for over N50,000; the same with Aero Contractors and Arik Air, while Air Peace sold its highest ticket on economy for N43,700 during the period under review.
Officials of some airlines told THISDAY that the hike was caused by the ticketing system, which reacts to demand by customers.

They insisted that they don’t manually increase airfares, adding that those who buy tickets early usually buy at cheaper fares.
The officials, however, noted that as more people demand for tickets, the fares go up.
The airlines also blamed the hike on the fewer operating aircraft.
THISDAY gathered that the number of aircraft that is airworthy for domestic operations is about 34, which is almost 50 per cent of the available aircraft few years ago.

Currently, Dana Air has two operating aircraft; Arik Air, five; Aero, four; Air Peace, about 13 Boeing B737 and six Embraer ERJ 45; and Overland, about four aircraft, making it a total of 32 aircraft for over 180 million people, which have domestic annual passenger traffic of about 12 million.
Industry consultant and CEO of Aglow Limited, Tayo Ojuri, told THISDAY that fixing of airfares has become scientific.
According to him, the system automatically increases the cost of ticket, depending on demand and also analyses passenger requests by comparing seasonal demands so as to fix fares in response to available data.

Ojuri also added that the cost of operation, cost of doing business in Nigeria and cost of taxes and charges also determine airfares.
“Government has been able to stabilise the naira in relation to the dollar, but the price of aviation fuel is not stable and it has not come down. Aviation fuel is about 30 to 40 per cent of the cost of airline operation and the airlines spend another 25 per cent on aircraft spares, training, maintenance and reinsurance, which are done in foreign currency. That is why it costs the airlines more.

“All these factors affect the cost of tickets and that brings us to the question – what is the true value of the ticket when you consider the fact that airlines also pay taxes, VAT, airport charges, navigational charges and other ancillary charges. When you really look at it you will find that the true cost of the ticket should be in the range of N50,000,” he said.

Ojuri noted that Nigeria does not have low cost carriers, thus the cost of ticket is determined by the forces of demand and supply.
He added that inadequate number of aircraft is also a significant factor because fewer aircraft means under capacity, which can also lead to higher airfares.
The aviation consultant also said that there is passenger growth, as confirmed by the Nigerian Bureau of Statistics (NBS), which shows that there is upward trend in passenger movement.

“Added to this is the fact that we have few airlines and fewer number of operating aircraft, which also affect the cost of the tickets,” Ojuri also said.
Head of Corporate Communications of Air Peace, Chris Iwarah, said that fares are computed into the system, adding that it increases with increased demand.
He acknowledged that low capacity might have contributed to the high fares.

“Despite the rising cost of operating a flight, we have continued to maintain our fares without any form of upward review. This is a huge sacrifice we are making to ensure members of the flying public are not discouraged from air travel by fares that are beyond their reach. As you may be aware, traffic during festivities moves towards some destinations depending on the event. What that means is that you may operate a full flight to the destination and return sometimes with an empty flight or a very low passenger load. This notwithstanding, we have kept our fares stable as a way of supporting our customers as well as appreciating and rewarding their loyalty to our brand.

“Air fares are, however, dynamic. You have different classes of fares, ranging from the lowest to the highest. The implication of the fare structure is that those who book early enough get the cheapest class of fares available. Because of the high demand for air travel to certain destinations during the Easter celebrations, the lowest fares were quickly exhausted. What we then did was to schedule more flights to such destinations to ensure a lot more travellers had access to cheap tickets,” Iwarah said.

Also spokesman of Arik Air, Adebanji Ola, spoke in the same vein, saying that demand for airfares pushes the prices.
He, however, added that the fact that there was Easter holiday did not significantly increase the demand.
He noted that many aircraft are on maintenance, stressing that as airlines bring back their aircraft to domestic routes, it would create more choices for travellers.

THISDAY learnt that due to limited capacity many airlines deploy fewer number of aircraft on the busy routes, which do not even meet the demand, hence the high fares.
But the Head of Communications, Dana Air, Kingsley Ezenwa argued that high traffic demand on some domestic routes is witnessed only on festivities and public holidays, adding that low season steps in after every festivity like Christmas, Idel-el-fitri, Easter and others.

THISDAY also learnt that travel agents around the airport terminals, especially Lagos and Abuja exploit passengers by buying tickets at low fares and selling them at a high cost to “desperate” passengers.
These travel agents, popularly known as protocol officers, always envisage when there would be high demand for tickets.