Market News

...Fuel price, FX scarcity heighten uncertainty for airlines

Passengers are unable to book local flights early enough to avoid price hike during the yuletide season as major airlines currently do not have flights available for November and December, BusinessDay findings reveal.

A survey of major airline operators like Ibom Air, Air Peace and Max Air show that these airlines have no flights available on their websites for November/December into the new year.

The only airline that had opened inventory for air bookings during yuletide as of Thursday was Green Africa, with one-way ticket prices for an hour trip selling for as high as N108,000, N115,000 and N124,000.

Travel experts advise that to get the best prices, domestic travellers should start searching for flight tickets one to three months in advance, while for international flights, the best prices are typically available from two to eight months in advance, noting that seasonal changes and holidays can create price fluctuations in ticket prices.

The yuletide is often the highest peak period for airline operators but crisis in the aviation sector stemming from issues around lingering scarcity of aviation fuel and foreign exchange has dampened the expected flight traffic.eorge Uriesi, chief operating officer, Ibom Air, told BusinessDay that the unavailability of ticket inventories for passengers was just another effect of the high levels of uncertainty in the current airline business environment.

Uriesi said it was difficult for domestic airlines to predict with any measure of reasonable certainty how much the fuel price would be in two months or even in one month, not to mention the value of the naira.

“So in order to remain safely in business, airlines have to respond to the fast changing and unpredictable environment with much caution. Therefore, the current philosophy is you take what you can get today and hope for the best tomorrow. But you cannot plan for tomorrow based on today’s situation because if there’s one thing we’ve seen, the situation keeps changing and mostly for the worse. Is it an ideal situation under which businesses should run successfully? Absolutely not. But it is what it is,” he said.

Stanley Olisa, Air Peace spokesperson, said December schedules for Air Peace would soon be up, as the airline has just received two Airbus 320s and more are expected.

“We’re firming up our operational plans to position us more strategically to meet the increased travel demand characteristic of the Yuletide,” Olisa said.

The aviation fuel crisis, which began in late February and deteriorated further through the months of March to May, has further worsened and is threatening the ability of airlines to continue operations with the price of JetA1 rising from N200 in December 2021 to over N400 per litre in February. Currently, the price has skyrocketed to over N800 per litre and sometimes more.

Airlines have also continued to struggle with operating costs such as taxes, surcharges and maintenance costs which have risen because of the scarcity of foreign exchange. Airlines carry out most of their activities in US dollars which today is in short supply.

BusinessDay’s findings show that aviation fuel accounts for over 65 percent of airline’s revenues, excluding multiple charges to aviation agencies, labour, aircraft maintenance and rent, non-aircraft rents and professional services, landing fees, amongst others.

In May, domestic airline operators threatened to discontinue operations due to the increase in the price of jet fuel among other issues but withdrew their decision after interventions from the government and instead further hiked the price of tickets.

Ope Adeniji who resides in Abuja tried booking a flight to Lagos for December 23 ahead of the yuletide in order to save cost and avoid the hike of close booking as the fear of insecurity and the discomfort of a 12-hour trip will not allow her travel by road.

“I checked the major airlines and there was no available flight to Lagos, if this persists I may not go home to celebrate the festive season with my family members because if the ticket is too expensive I cannot afford it,” she said.

Experts believe that alternatives to this occurrence could be private charters which will be more expensive or road travel with heightened risk as issues around insecurity persist.

Read also: ASUU strike: Passengers miss flights as students protest at Lagos airport

Susan Akporiaye, president of National Association of Nigerian Travel Agencies (NANTA), also confirmed that most airlines have not opened inventories for ticket sales for yuletide.

According to her, airlines are only releasing inventory for one month and they release the next month by the last week of each month.

Akporiaye explained that although no official statement from them on this but she believes the reason may not be far from the fact that they want to be monitoring the Jet A1 fuel situation in case they have to stop flying so they don’t leave passengers stranded and be burdened with refund issues.

The NANTA president said the development has been happening since the aviation fuel situation got worse that led to the current increase being experienced.

Gina Ogonna, a travel agent from Green Travels, told BusinessDay that some airlines do not have flight at the moment.

Ogonna said ticket fares are yet to pop up, adding that Air Peace fixed the fares of their tickets between one or two months’ interval.

“For instance, tickets for April will be fixed in February or March. Tickets for December by October or November. That’s how they operate,” she said.