Chairman and Chief Executive Officer of United Airlines Limited, Prof. Obiora Okonkwo, has said that air travel within Nigeria is one of the cheapest when compared with other countries globally.
Okonkwo, who is also the Spokesperson for airline operators in Nigeria, made the submission while speaking on Channels Television’s The Morning Brief on Thursday.
His submission came following recent allegations of airfare hikes by airline passengers.
He argued that airlines still charge low airfares despite higher operating costs incurred by operators, including questionable taxes and levies.
“I think internal air travel within Nigeria is one of the cheapest.
We know the rates around the world. If you get a ticket for $100, it must have been discounted, and there must have been someone in that aircraft who also paid $1000. We use high ticket prices to compensate for your low ticket prices. And we operate in the same market, buy aircraft from the same market, and pay staff like those airlines operating in other countries.
So the cost of operations in Nigeria is even higher. And don’t forget, 99.9 per cent of every expense in our operations, from spare parts to maintenance, procurement of equipment, is all in dollars. But we still sell tickets in naira here in Nigeria. We have to convert naira to dollars before we make our expenses.
“Our operational costs are enormous. We take loans at 30-35 per cent, while those in other countries are taking loans at 2-7 per cent.
And we here pay a lot of unexplainable taxes that don’t exist in many parts of the world. Still, we charge low.
“I fly around the world and pay about $1400 for a 45 minuites flight. Multiply that. So, Nigeria remains one of the countries with the cheapest fares, and it is to the detriment of the operators.
“We have had high mortality rates of airlines in the past few years. It is good that we understand that everything has to be done to remove taxes, remove levies for the airlines to be marginally sustained,” he said.
He debunked reports of a hike in airfares by airline operators.
“Airline operators are not practicing price gouging. It is just that special time of the year that attracts a spike in the number of people who travel. It has always been like that, even on road travels, and in other parts of the world.
“Cast your mind back to when there was the Thanksgiving Week. The roads were perfect, and the right security, but the airports were filled up with people, and there was some stress both from the operators and travelers.
“So, it comes with that during this season. And the airlines are also prepared for these kinds of situations, because they service their aircraft and have good schedules.”
According to him, tickets being shopped online were sensationalised.
I know it has been a hot topic in recent times. But airline operators are not doing anything unusual, because what I have seen recently, especially on social media are the highest ticket category being shopped around.
“In any aircraft where you see a fare of N400, 000, there are also some seats where passengers would have paid N100, 000 in the same aircraft.
“But for an airline, at the end of the day, the average may not be more than between N120,000 and N150,000. We have a formula and pattern in which the fares are determined. We have six classes of tickets, even in an economy cabin. And there is a number of tickets we have to sell to break even, because you still have to service your aircraft, pay staff members, and other expenses.
“So, I sympathise with Nigerians, but do not forget, once upon a time, tickets were sold for N20, 000, N30,000 and at that point, the dollar was about N250/$1.
“But today, even at the highest fee, which you see, it is barely 200 dollars. So, some of these tickets that you see circulating and being sensationalised were not economy tickets. They were either business class or premium economy tickets, which may have been bought on the day of travel.
“We are not happy because tickets must be affordable before the aircraft can be filled. And we want to fill the aircraft.”
Last week, the House of Representatives urged the Federal Government to grant immediate tax waivers to airlines in a bid to reduce flight fares during the Yuletide season.
Lawmakers also called for a 50 percent reduction in auxiliary charges within the aviation industry.
The Senate also summoned the Minister of Aviation, Festus Keyamo, and other stakeholders over rising flight tickets.
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FCCPC Probes Airfare Hikes
The Federal Competition and Consumer Protection Commission (FCCPC) said it has expanded its investigation into what it described as suspicious and potentially exploitative increases in domestic airfares, especially on routes serving the South-East and South-South.
In a statement issued last Friday, the FCCPC Director of Corporate Affairs, Ondaje Ijagwu, said the widened probe follows a new wave of public complaints alleging coordinated price manipulation by some airlines.
“In the last three months, Nigerians have been complaining about the outrageous airfares being charged by the airlines,” Buhari said during plenary.
He noted that one-way tickets on some domestic routes — particularly in the South-South and South-East corridors — have risen by as much as 150 per cent, with prices now exceeding N300,000.
Current fares show that a one-way ticket from Abuja to Lagos costs between N400,000 and N650,000.
Ijagwu said the commission is now scrutinising the pricing templates and ticketing behaviour of airlines on the affected routes to determine whether the fare spikes violate the Federal Competition and Consumer Protection Act, 2018.
“Following public inquiries, the Federal Competition and Consumer Protection Commission (FCCPC) today announced an expansion of the scope of the existing investigation into pricing templates behind rates charged for tickets by some airlines on some domestic routes with a view to establishing possible violations of the provisions of the law.
“Concerns have been expressed widely in the past few days over what appears to be coordinated manipulation or exploitation in the pricing of airline tickets by some airlines on certain routes, especially in the South-East and South-South, as the festive season begins.
“The ongoing investigation targets operators on the identified routes,” the statement read.
FCCPC Not A Price Control Board
FCCPC Executive Vice Chairman/CEO, Tunji Bello, has stressed that the agency is not a price control board but is mandated to protect consumers from exploitation.
“For the avoidance of doubt, we are not a price control board. But the FCCPA 2018 empowers us to check the exploitation of consumers.
“When we receive petitions or find cogent evidence, we will not stand by and watch Nigerian consumers being exploited under any guise,” he said.
He added that the commission would act decisively where evidence indicates that consumer welfare or market competitiveness is being undermined.
Under Section 17(b) of the FCCPA, the Commission is empowered to monitor economic activities and identify anti-competitive, anti-consumer protection, and restrictive practices. Section 17(e) authorises it to carry out investigations as necessary.
Although the FCCPC does not set prices, the Act obligates it to ensure fair pricing and protect consumers from excessive, opaque, misleading, or collusive pricing practices.
In view of the recent airfare spikes, the Commission said it is examining pricing patterns, the basis for the increases, and any conduct that may undermine competition. It pledged to apply appropriate enforcement measures where violations are confirmed.
“The commission will provide further updates on the ongoing aviation investigation in due course,” the statement added.
This is not the first time domestic airlines have faced regulatory scrutiny over pricing practices.
