Charges Stifles Flight Operations as KLM, Lufthansa, Emirates, Others Increase Airfares by 100%
- Business class to hit N12m later August
- NCAA increase TRL to $10,000
Chinedu Eze
Following high cost of aviation fuel, astronomical charges recently introduced aviation agencies, international airlines have increased airfares by 100 per cent, a development that has adversely affected domestic and international flight services in the country.
The airlines include major international carriers like Air France, KLM, Delta Air Lines, Lufthansa, Qatar Airways, Emirates Airlines, among others.
A breakdown of the new fares showed that travellers would now pay a whooping N1 million for economy ticket and business class ticket from N4 million.
As indicated in the airlines websites, business class could go as high as over N12 million for a round trip in later August while economy could go for over N3 million.
In the same vein, the Federal Airports Authority of Nigeria (FAAN) has increased its landing and parking charges, while the Nigerian Civil Aviation Authority of Nigeria (NCAA) has also increased charges for all organizations in the aviation industry, which it regulates, including allied services like aviation handling companies, catering, ticketing, cleaning services, fuel suppliers and also schedule operators and charter services. For example, Air Transport Renewal Licence has been increased from N4 million to N7 million ($10,000).
On domestic flight operation, airfares have continued to go up, as aviation fuel price has not abated and with fewer aircraft in operations, industry insiders predict that high demand and few seats would trigger further increase in fares.
The Group Managing Director of Finchglow Holdings and former President of National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard, told THISDAY that the foreign airlines had to up the cost of their tickets in order to make up for the blocked funds and as the International Air Transport Association (IATA) predicted in June, the airlines would continue to hike the price of the ticket until many Nigerians would not be able to afford the fares.
THISDAY gathered that although the fares are high in Naira but could be cheaper in dollars, but because it is illegal, the airlines cannot issue notice that tickets should be bought in dollars.
By hiking the fares, Bankole said the airlines would not like their money to be tied down so they have to increase the fares so that at least they could earn good revenue.
“The airlines don’t want a situation whereby their money will be tied down, so they make it more expensive,” Bernard said.
On the increase in charges by FAAN and NCAA, he said the industry had been struggling to survive so it is not the time government agencies should be increasing charges.
“This is wrong because we are trying to salvage the industry. This increase in charges will frustrate the local market. We need to look into this issue critically. Government should support the local operators,” he said.
THISDAY learnt that so far there are no indications that the Central Bank of Nigeria (CBN) and the Ministry of Aviation have started doing anything on repatriating foreign airlines blocked funds, which is projected to be over $600 million by now and the major reasons for this is because dollars are not available.
The Finchglow Holdings boss also told THISDAY that travel agencies and airlines are yet to feel the impact of the increase in fares because this is summer, noting that after this period ticket sales for international flights would nosedive.
“Because it is summer, we are not feeling the impact of the hike in fares, but it is really affecting everybody. By the time we get off season, things will change,” he said.
On the increase in charges by aviation agencies, THISDAY learnt that the federal government has charged government agencies to embark on cost recovery of all the monies expended in different sectors of the economy. In the aviation sector, it includes the money spent on COVID-19 to stymie the spread.
Industry insider, however, told THISDAY that it was a subtle way to direct these agencies to increase revenue because the country is broke and there is emphasis on taxation.
“In the aviation industry, when airlines are increasing their fares somebody asked, how about the aviation agencies? Now the agencies have increased their charges, which are expected. Truth is that Nigeria is broke so it needs all the money it can get. Some of the agencies are paying their 25 per cent remittances to the federal government so how can they get this money without increasing their charges at these austere times?
“Government agencies have been charged to embark on cost recovery to increase their revenue base. It is seen as a way to recover money that was spent on COVID-19. There is going to be more taxation because the country is broke,” the official told THISDAY.
On the high fares by foreign airlines, travel expert, Ambassador Ikechi Uko, told THISDAY the fares have been in the system of the airlines but they were offering promotional fares before now, but due to the economic situation and the reality of the blocked funds they have to push out the fares.
“They are charging it now because by the time they will collect the money it would have lost value, so they have to charge the highest fares available. This problem has now become global. There is general increase in fares. We have new fuel taxes and so on,” he said.
On the impact of the new fares on travel, Uko said: “The people who are travelling are still travelling. So far, the planes are still full. This is summer; many have made plans to join their families. Those who have medical issues must travel, students who are going back to school, must travel. Flights from Lagos are having good capacity, but what will happen after this season, we cannot say. Will they be able to hold on during the low season? I doubt that,” he said.
