Travel News

Airport terminals empty as airfares rise across local destinations - BUSINESSDAY

MARCH 19, 2024

Airfares across local destinations in Nigeria have continued to rise, leading to a drastic drop in the influx of passengers arriving and departing from airport terminals across Nigeria.

A recent visit by BusinessDay to the three busiest terminals in Nigeria — Murtala Muhammed Airport, Lagos (MMA2), General Aviation Terminal (GAT), Lagos and Abuja local airport terminal — shows few passengers being processed to travel.

In most cases, only arriving passengers are present at these airports, as most airport workers decry low patronage because of rising fares.

“The past two weeks have been like this. Once the first and second flight leaves the airport, passengers become scarce. Most times, we struggle to fill up the aircraft and even when we delay the flight for an hour or more, the passenger number will still be sparse and discouraging,” an airline staff told BusinessDay.

The staff also disclosed that in recent times, airlines have had to help one another airlift passengers going to the same destinations and share proceeds from the flight to avoid rising operational costs.

“Aviation fuel is costly now and airlines sell tickets in naira but pay for spare parts and tickets in scarce dollars. It would be bad economics for an airline to have an aircraft with 150 passenger capacity to carry just 50 passengers on the flight. It will only amount to losses.

“It only makes sense for the airline to partner with another to airlift passengers as long as they go to the same destinations. This will reduce costs and help save money” the staff said.

BusinessDay’s findings show that aviation fuel currently takes about 45 percent of the operating cost; labour takes 17 percent; aircraft rent and ownership takes 8.5 percent; non-aircraft rents and ownership, 7 percent; professional services, 4.5 percent; landing fees, 2 percent; food and beverage, 1.5 percent; maintenance materials, 13 percent, and transport related, 1.5 percent.

It cost about $3,000 to operate a B737 aircraft on a one-hour flight when aviation fuel was less than N100 per litre about five years ago. Similarly, when aviation fuel increased to N200 per litre, airlines operated a B737 aircraft at about $6,000.

BusinessDay’s findings show that with the current exchange rate and increase in aviation fuel, which currently cost about N1,300 per litre, airlines operate a B737 aircraft for over quadruple that amount.

Airlines are also faced with increasing naira to a dollar rate pushing the cost of fares up.

BusinessDay’s findings show that a one-way economy class ticket from Lagos to Abuja which cost N55,000 a few months ago now costs between N100,000 to N150,000 on Air Peace; N90,000 to N160,000 on United Nigerian Airlines; N70,000 to N130,000 on Dana Air and N170,000 to N200,000 on Ibom Air.

A one-way economy class ticket from Lagos to Abuja which cost about N50,000 some months back now costs N105,000 to N160,000 on Air Peace, N95,000 to N120,000 on United Nigeria Airlines, and N175,000 to N200,000 on Ibom Air.

A one-way economy class ticket from Lagos to Port Harcourt which cost about N55,000 some months back now costs N105,000 to N160,000 on Air Peace, N85,000 to N100,000 on United Nigeria Airline, N65,000 to N125,000 on Dana Air, N96,000 to N130,000 on Ibom Air and N86,000 to N170,000 on Arik Air.

Mazi Osita Okonkwo, Chief Operating Officer (COO), of United Nigeria Airlines said “Currently, aviation fuel has increased to N1,300 per litre or even more. Forex is over N1,000 for one dollar. So, if we are leasing aircraft, how do we pay for the aircraft, having paid for spare parts? The minimum cost of airfare should be $100.

“So, I don’t even see how you can fly for less than N150,000 and you will make a profit. Anybody telling you he is making it is not telling you the truth. Once the cash runs out, you will see operators parking their aircraft as some have done already.

“Today, we had other operators saying they wanted to transfer their passengers into our aircraft because it doesn’t make sense to fly 50 passengers in a 150-seat capacity aircraft. People are burning cash,” Okonkwo said.

He called on Festus Keyamo, the Minister of Aviation and Aerospace Development, to intervene.

He said local airlines need cheap loans, forex, and lower country risk as lessors will charge more when operators are from Nigeria, whereas, operators from other countries get cheaper insurance.

Ndukwe Ginika Ogechi, CEO Geena Travels And Tours Ltd also told BusinessDay that the turnout of passengers on local destinations has been scanty lately as a result of the costs of tickets.

“The aircraft on local destinations are barely full these days because people cannot afford the fares, yet these airlines have refused to reduce fares. I’m not even sure they make profit anymore as a result of low patronage,” Ginika said.

Air Peace’s maiden London flight fully booked amid scarce cheap tickets - BUSINESSDAY

MARCH 21, 2024

Air Peace’s maiden flight to London slated for March 30, 2024 is already fully booked by Nigerians who have since sought cheaper tickets.

Nigeria’s largest carrier had pegged its economy class ticket at N1.2 million, thereby slashing fares on the route.

According to the airline, a return Economy Class ticket goes for N1.2 million while a return Business Class ticket sells for N4 million, and Nigerians studying in the UK can now access their special 15 percent rebate on the already reduced Economy Class fares.

Meanwhile, the average cost for a return Economy Class ticket on a foreign airline is about N3 million, while Business Class goes for about N8 million or more.

Foreign airlines have failed to reduce fares despite a warning by the Nigeria Civil Aviation Authority (NCAA) that lower ticket inventories (cheaper tickets) be released.

Airfares in the last two years have risen by over 400 percent as a result of accumulating trapped funds of foreign airlines in Nigeria caused by the lingering foreign exchange scarcity in the country.

For two years now, airlines blocked low ticket inventories, leaving high inventories to be sold in naira only while the low ticket inventories on most airlines’ websites can be bought with dollar cards only. This was in a bid to cushion the effect of their trapped funds in Nigeria.

However, the NCAA recently directed airlines to release low ticket inventories, but BusinessDay’s findings show that many of the airlines showed cheaper ticket classes on their websites but these ticket classes were not accessible to Nigerians.

High fares charged by foreign carriers have driven many Nigerians to book Air Peace.

“I am particularly excited that Air Peace is now flying to London because I am a frequent flier on the Lagos-London route. I have two businesses I run in London and some in Nigeria. So I often fly to London from Lagos. Fares have been so high in the past two years and this has since eaten into my business profits. Air Peace is coming at the right time and I am really happy because it will change the narrative of air travel on the Lagos-London route,” Temitayo Lawanson told BusinessDay.

Susan Akporiaye, president of the National Association of Nigeria Travel Agencies, told BusinessDay that Air Peace’s maiden flight to London was filled up within a few days after the airline announced ticket prices, which shows how much Nigerians have waited for cheap tickets.

Akporiaye said after the NCAA warning, foreign airlines managed to release a few low inventories, which are hardly accessible.

She said: “Legacy carriers say they have released low inventories, yet cheap tickets are still not available. The legacy airlines say the low inventory tickets have all been fully booked but I know this may not be true.

“They released the tickets to avoid NCAA sanctions. Flights are still very expensive. Some of the low inventory tickets won’t be available till April or even May. That is why Nigerians are quite excited about Air Peace and travel agents are willing to support Air Peace.”

A one-way Economy Class ticket from Lagos to London on British Airways cost N4.5 million for Premium Economy and N11 million for Business Class.

On Lufthansa, a one-way economy class ticket from Lagos to London cost N1.4 million for Economy Basic and N1.6 million for Economy Basic plus. Both were not accessible at the time of filing this report. Accessible tickets on Lufthansa cost N1.7 million for Economy Flex and N3 million for Premium Economy.

On Virgin Atlantic, the same destination cost N1.3 million for Economy Class, which is no longer available. Accessible tickets on Virgin Atlantic cost between N2 million to N5.6 million. An Upper Class ticket on Virgin Atlantic cost N12.3 million.

Kingsley Nwokeoma, president of the Association of Foreign Airlines and Representatives in Nigeria, told BusinessDay that while foreign airlines agreed to release low ticket inventories, this may take time as it requires planning and some processes.

He said: “Airlines are different with different rules and procedures of doing things. Some of these things take time and procedures. These things go through processes before they are implemented.

“However the reason why tickets are high is because of trapped airline funds. Before trapped funds, airlines had low inventory tickets. I appeal to the government to pay the airlines. Nigeria owes these airlines a lot of money compared to what other countries owe them.”

Foreign airlines dispute CBN’s claim of settled FX backlog - BUSINESSDAY

MARCH 21, 2024

Against claims by the Central Bank of Nigeria (CBN) that it has successfully settled all outstanding foreign exchange (FX) obligations, foreign airlines says the status quo remains the same.

Kingsley Nwokeoma, President, Association of Foreign Airlines and Representatives in Nigeria, (AFARN) told BusinessDay that as far as he is concerned, nothing has changed as regards clearing foreign airlines’ trapped funds.

“If they say they have cleared the trapped funds, they should show us figures. They should tell us how much have been cleared. The last I checked, the status quo still remains the same,” Nwokeoma said.

Hakama Sidi Ali, acting director of corporate communications at CBN, on Wednesday disclosed in a statement that the financial regulator recently concluded the payment of $1.5 billion to settle obligations to bank customers, effectively settling the residual balance of the FX backlog.

But Bankole Bernard, chairman of Airlines and Passengers’ Joint Committee (APJC) of the International Air Transport Association (IATA) told BusinessDay that CBN’s claim is true, adding that the airlines’ trapped funds have been cleared.

According to him, the foreign airlines have been offered the option to get their funds from the banks using the rate of the I & E window but have refused because the current I &E window rate is not the same they used to sell tickets.

Bernard said the airlines would be making losses if they collect the money using the I & E window, that is why they stopped selling low inventory tickets and are selling only very high fares in order to recover their monies that have been lost as result of the current exchange rate.

When asked why Emirates is yet to resume flight operations in Nigeria, he said “Emirates cannot resume flight operations because of the diplomatic row they have with Nigeria. The rich and powerful still find their way to Dubai.

“The crimes Nigerians are committing in Dubai has made them refuse Nigerians from coming to Dubai. These crimes affect tourism. They do not want their country to be perceived as unsafe. Emirates still has their office in Nigeria and they have staff they are paying salaries,” he said.

Last year, International Air Transport Association (IATA) disclosed that Nigeria owes $812.2 million out of $2.27 billion trapped funds, making it the country with the highest trapped funds globally.

The top five countries that account for 68.0 percent of blocked funds include Nigeria ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million) and Lebanon ($141.2 million).

Air Taxi Startup Joby Sees Service Starting in Dubai Before US - BLOOMBERG

MARCH 25, 2024

(Bloomberg) -- Joby Aviation Inc. expects to launch its flying taxi service in Dubai before anywhere else, including the startup’s home turf in the US. 

Work on a partnership with the Gulf emirate announced earlier this year is “a bit more advanced in the approach that they’re taking” than in other jurisdictions, Joby’s president of operations, Bonny Simi, said in an interview. “So we’ll be able to launch in Dubai first.” 

Joby said in February that it was targeting initial operations by 2025 in Dubai, where it won a six-year exclusive agreement to operate its electric air-taxi services, and commercial services by early 2026. That milestone may now be reached as soon as late 2025, Simi said. 

Dubai’s government has provided economic support, while regulators have dedicated resources especially to Joby, helping to “remove as many roadblocks as possible for us to move as quickly as possible and as safely as possible,” Simi said. The support will help to “de-risk that initial launch for us” financially, she said. 

Joby initially plans to establish four vertiports across Dubai for its electric vertical takeoff and landing vehicles, Simi said. The launch sites include Dubai International Airport, a global hub for air travel; also the man-made island of Palm Jumeirah, downtown Dubai near the Burj Khalifa tower, and the city’s marina.

Rival Archer Aviation Inc. reached a preliminary deal last year with the government of nearby Abu Dhabi, targeting manufacturing and a service launch by 2026. While Joby will have exclusivity for flights contained within Dubai, Archer plans to operate flights between Abu Dhabi and Dubai, and across the United Arab Emirates.  

Other eVTOL market aspirants have also flocked to oil-rich Gulf states. Lilium NV, Embraer SA’s Eve Air Mobility and Volocopter GmbH have all signed agreements in Saudi Arabia, the UAE or both.

Canada's economy to slow with new limits on temporary migrants - BLOOMBERG

MARCH 25, 2024

BY Randy Thanthong-KnightBloomberg News

Growing skepticism about immigration is a real political economy threat: Sean Speer

Canada’s planned reduction in temporary residents is set to add downward pressure to inflation and economic growth in the coming months, and the policy will likely halve its population growth rate when it takes full effect next year, economists say.

Prime Minister Justin Trudeau’s government plans to reduce the number of temporary immigrants by 20 per cent over the next three years, bringing the level down to 5 per cent of the population from 6.2 per cent currently. Starting in May, the government will make it harder for firms to rely on temporary foreign workers.

With one of the world’s fastest rates of population growth, the country has benefited from quickly expanding its labour force. But the rapid increase, driven primarily by foreign workers and students, has led to growing anxiety about housing shortages and the cost of living, prompting the Trudeau government to scale back its open immigration policies.

“This policy would have a material impact on the economy moving forward,” Royce Mendes, head of macro strategy at Desjardins, said in a report to investors. “The combination of a highly interest-rate sensitive economy and the likelihood of slower population growth are the main reasons we have been more bearish on the medium-term outlook for the Canadian economy.”

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A decrease in temporary residents might offset the short-term economic benefits of any Bank of Canada rate cuts this year, Mendes said, adding that it could have an “even more severe impact” next year and in 2026 as population growth will be cut in half.

Robert Kavcic, an economist at Bank of Montreal, expects Canadian population growth to be slashed to near 1 per cent in the coming years, in line with the pace seen in the decade before the pandemic. The population has been growing around 3 per cent recently.

“The impacts will be: Less pressure on rents and housing, less stress and inflation in services, and lower interest rates than we otherwise would see if these inflows were to continue,” Kavcic said.

Worsening housing affordability was a major impetus for the government’s cap. Rent prices have been surging across major cities and have been a key contributor to consumer price increases in Canada. In February, the overall rate of inflation eased to 2.8 per cent on an annual basis, while rents jumped 8.2 per cent.

Excluding shelter costs, the consumer price index rose 1.3 per cent, below the central bank’s 2 per cent target.

“By way of just slowing the upward momentum in shelter inflation, this reinforces our view that the central bank will cut rates more forcefully than what’s implied by market pricing,” Desjardins’ Mendes said.

Currently, markets are pricing in more than three rate cuts by the end of this year, with a high probability that the Bank of Canada will begin that process in June.

The government’s immigration change will hurt businesses that are relying on importing low-wage foreign workers to fill jobs. According to the Canadian Federation of Independent Business, 22 per cent of small businesses in February said that a lack of unskilled or semi-skilled labour was impeding their ability to maintain their current operations or grow.

“The costs of bringing in a foreign worker are much higher compared to those associated with the hiring of someone already in Canada,” Christina Santini, CFIB’s director of national affairs, said in an emailed statement. “When employers turn to temporary foreign workers, it’s because they can’t find someone already in Canada.”  

France Raises Security Alert to Max Level After Attack in Moscow - BLOOMBERG

MARCH 25, 2024

(Bloomberg) -- French authorities have raised their security alert level to the maximum following the deadly Friday attack in a Moscow concert hall.

Prime Minister Gabriel Attal said the increased countrywide awareness level was justified given “Islamic State’s claim it was responsible for the attack and the threats weighing on our country.”

He made the announcement in a tweet on Sunday evening following a defense and security council organized by President Emmanuel Macron at the Elysee Palace. 

Africa Seen as Growing Hot Spot for $3,000-a-Night Hotel Rooms - BLOOMBERG

MARCH 26, 2024

BY  Adelaide ChangoleBloomberg News

, Source: W Hospitality Group

(Bloomberg) -- Major hotel chains including Marriott International Inc. and Hilton Worldwide Holdings Inc. are on track to more than double their footprint across Africa in the coming years as the continent sees a boom in tourism. 

Marriott, which last year opened the JW Marriott Masai Mara Lodge in Kenya with rooms averaging more than $3,000 a night, has more than 138 hotels under development in Africa, while Hilton has 72 properties in the pipeline, according to a report by W Hospitality Group. Hyatt Hotels Corp. is planning to add another 11 locations across the continent, the report shows.

In all, the Lagos, Nigeria-based travel specialist found that the total number of hotel rooms operated by major chains on the continent is expected to soar 75% to 175,346 in the coming years. More than three-quarters of the properties are expected to be upscale, upper upscale or luxury locations.  

“There an enormous concentration of new hotels and resorts in the luxury and upper upscale level and hardly anything at the economy and midscale,” Trevor Ward, managing director of W Hospitality Group, said in an interview. “I hope that will come.”

Recent additions to the hotel scene in Africa include Nobu Hotels, which made its debut on the continent last year with an outpost in Marrakesh. Meliá Hotels International SA also opened Ngorongoro Lodge in Tanzania, where a stay can typically be booked for more than $1,100 per day. 

Countries across Africa are poised to benefit as tourism to the continent surges in the aftermath of the coronavirus pandemic. Google searches for African safaris, for instance, more than doubled in the first three months of 2023 compared with the same period a year earlier, according to the travel specialist Go2Africa. In Uganda, visitor arrivals last year jumped 57% in 2023, driving earnings to $985 million, according to the tourism ministry. Revenue is expected to surpass 2019 levels this year. 

Still, the continent makes up a very small share of the global hotel industry. Hilton, for instance, last year opened almost 400 properties. Just two of those were in Africa. And out of the 560 new locations that Marriott opened in 2023, only four were on the continent, W Hospitality Group’s report found.

Of the 524 properties that hoteliers are currently planning to open across Africa, more than one-quarter are expected to begin taking visitors this year, Ward said. The remaining locations are expected to debut in the next six years, he said.

“It has been very difficult to raise finance for hotels globally, and then when you put in the Africa factor, it gets more difficult,” Ward said. “The costs are just ballooning and when the price goes up while you are under construction, it gets very difficult to bridge that financing gap.”

--With assistance from Fred Ojambo.

(Updates with tourism data from Uganda in sixth paragraph.)

Kenya Airways to Name Strategic Investor by Year-End - BLOOMBERG

MARCH 26, 2024

(Bloomberg) -- Kenya Airways Plc has started the process of identifying suitable partners to support capitalization of the company to boost its efforts to reduce debt and expand operations.

KQ, as the carrier is known, plans to announce a strategic investor by the end of this year, Chief Executive Officer Allan Kilavuka said Tuesday in a virtual briefing. The carrier, which is 48.9% state-owned, didn’t receive a direct disbursement from the National Treasury last year and instead got support in restructuring some debts, he said. 

“The one thing that we have not yet completed is really to rethink our balance sheet — that is completely essential and that’s what we are really focused on this year,” Kilavuka said. “We are still projecting to break even at the very least for 2024.”

KQ said in June it owed creditors $1.35 billion and was at risk of defaulting on a $420.5 million government loan. Other loans include $439.8 million owed to a special purpose vehicle domiciled in Delaware set up for the acquisition of seven aircraft and an engine, and $97.9 million from another one incorporated in the Cayman Islands to purchase 10 Embraer jets. Local lenders are owed more than $224.9 million, while liabilities to suppliers, who include fuel companies, total $164.2 million.

The airline swung to an operating profit of 10.5 billion shillings ($79.6 million) last year, and the annual loss narrowed by 41%, Chief Financial Officer Hellen Mathuka said during the briefing. 

KQ shares have been suspended from the Nairobi Securities Exchange since July 2020 as the company implements the operational and corporate restructuring.

“In the near term, the focus is in completing the restructuring plan whose main objectives are to reduce the group’s financial leverage, fund growth and increase liquidity,” Kilavuka said. 

50,000 Nigerians May Miss 2024 Hajj, Media Group Raises Alarm - LEADERSHIP

MARCH 27, 2024

Written by Abdullahi Olesin

Unless the federal government act swiftly, over 50,000 intending Nigerian pilgrims may miss this year’s Hajj exercise.

The Muslim Media Watch Group of Nigeria (MMWG) raised the alarm following the additional N1.9m fee slammed on the intending pilgrims by the National Hajj Commission of Nigeria ( NAHCON).

The national coordinator of the group, Alh. Ibrahim Abdullahi, said this could only be averted if the federal government approves concessional rates of dollars to naira for this year’s Hajj exercise.

LEADERSHIP reports that NAHCON had on Sunday announced additional payment of N1.9 million by intending pilgrims who had earlier paid N4.9million for the exercise due to astronomical increase in the rate of dollars to naira in the last five months.

But, the MMWG national coordinator, who spoke to LEADERSHIP on the outcome of the group’s extra-ordinary meeting held in Abuja, maintained that “without granting concessional rate for dollars to Naira, it would be difficult for over 50,000 Nigerian pilgrims who have paid so far, to participate in the important religious duty of Hajj.”

He maintained that granting concessional exchange rates for Hajj annually has been a ritual by the past administrations in Nigeria.

Abdullahi, therefore, called on President Bola Tinubu to urgently intervene to save this situation, which according to him, has reached a critical stage.

He reminded the federal government that though Hajj is a religious obligation, its positive impact on the lives of the people and people in governance is very significant, adding that Nigeria needed spiritual intervention to move out of the present socio-economic situation as well as insecurity pervading the country.

He added that, “granting that concession could pave way for the success of Tinubu as beneficiaries would pray hard for the President and his noble administration in the holy lands of Makkah and Madinah.”

He, however, commended NAHCON for its untiring efforts over the matter and appealed to the intending pilgrims to be calm.


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