Market News
High domestic airfares will persist, say stakeholders - PUNCH
Stakeholders have predicted that airfares for domestic travel would remain because of operators’ rising operating costs.
In separate chats with The PUNCH, they pointed out that airline operators were contending with various economic factors, such as increasing fuel costs and operational expenses.
The General Secretary of Aviation Roundtable, Olumide Ohunayo, told The PUNCH that although there had been a decline in air travel lately, airlines have not lowered ticket prices.
He explained that fares were determined by market dynamics, influenced by factors such as inflation, the naira-to-dollar exchange rate, and operational costs.
He said, “There has been a decline in the number of passengers, but this has not prompted airlines to reduce air ticket prices. With the devaluation of the naira and other cost components, along with inflationary trends, it is very difficult for the airlines.
“What they will do is cut down their frequencies until the market booms again. People would rather ship cargo or send money than travel due to the cost. Corporate travel has decreased, while most operators are declaring losses.”
According to the National Bureau of Statistics, the costs of air travel increased by 11.01 per cent in November compared to the same period of the previous year.
In February, former President of the National Association of Aircraft Pilots and Engineers, Sheri Kyari, warned that aviation fuel prices would remain high as long as the product was imported due to the exchange rate.
Currently, aviation fuel, also known as Jet fuel, is selling for over N1,200 per litre in Lagos, compared to N250 in the same period last year.
In 2022, the aviation sector reportedly incurred $192bn operating costs, as indicated in a report by Phillips Consulting Limited.
The Chief Executive Officer of Centurion Security Limited, Captain John Ojikutu, noted that aviation fuel accounted for approximately 60 per cent of airlines’ operational costs.
Ojikutu told The PUNCH that with the current price of aviation fuel, air tickets for local travel would cost as much as N140,000.
He recommended the resumption of local manufacturing of aviation fuel to alleviate the impact its scarcity was having on both operators and passengers.
