Nigerian airlines keep fares stable during Easter despite rising aviation fuel costs, absorbing losses as operational pressures continue mounting.
Domestic airlines did not increase fares during the Easter holiday despite the high cost of aviation fuel, which rose from N995 per litre in January to between N2, 700 to N3000 per liter as at Monday, THISDAY investigation has revealed.
The Managing Director and CEO of Aero Contractors, Captain Ado Sanusi, told THISDAY that the airline made some calculations on how to increase fares due to the increase in the prices of aviation fuel and the management realised that the fares would be too high for passengers.
The airline also considered the fact that it had already sold out 60 to 70 per cent of its tickets to travelers who purchased the tickets in advance due to the Easter celebration.
“So, we decided not to increase the fares but to make sure we sold out all our seats at the subsisting prices to reduce our losses, but ultimately, we will increase fares.
“But we would not do it drastically but strategically in order not to drive away passengers. It is not only aviation fuel price that has increased; the price of diesel has also increased and some of our equipment use diesel. So, we will raise fares that will cushion the losses and offset the cost of operation,” he said.
Spokesman of United Nigeria Airlines, Chibuike Eloka, told THISDAY in a telephone interview that airlines have resisted the pressure to increase the cost of flight ticket to reflect the high cost of aviation fuel, which increased by over 100 per cent due to the US-Israel- Iran war.
Eloka said airlines have decided to subsidise the cost of operation, hoping that the price of aviation fuel, known as Jet A1, will revert to the January figures if the war comes to an end soon.
According to him, due to less demand of seats this season, United Nigeria Airlines did not exhaust its low inventory tickets, which ranged from N95, 000 to N150, 000.
He noted that if the airlines were to reflect the cost of aviation fuel on the ticket, travelers could be buying lowest ticket for one hour flight at N300, 000.
“We did not increase fares in Easter; unlike in December. We are using our money to subsidise our operation. After the war started in Iran in the last day of February, cost of ticket rose from N1,200 to N1, 700 and now it is between N2, 700 to N3000,” he said.
Eloka alleged that some marketers are hoarding the product because they envisage that the price may go up again after the holiday, adding that the hoarding has further increased the cost of the product.
Air Peace Head of Communication, Efeoghene Osifo-Whiskey, confirmed the allegation that some marketers could be hoarding aviation fuel hence the high prices of the product.
He said that the price of aviation fuel is usually lowest in Lagos and highest in northern parts of the country, disclosing that marketers sell at different prices, adding that a litre could be sold for N2, 700 in Lagos and N2, 900 in Kano.
Osifo-Whiskey expressed doubt that airline operators could continue to sell flight tickets at the current prices if aviation fuel price continues to be at the current benchmark.
“We did not increase fares but there was discussion to that effect and I strongly feel that the airlines may increase fares if aviation fuel continue to sell between N2, 700 to N3, 000 per litre.
“Airlines have called on the federal government and urged it to review downwards the taxes airlines are paying currently to help them survive this austere period,” he said.
THISDAY also spoke to the Chairman of Ndano Energy, aviation oil marketing company, Chris Ndulue, who said there is no indication that the cost of aviation fuel will go down soon; unless the Iranian war comes to an end.
He said that marketers are still sourcing for products “from here and there” noting that Dangote Refinery is the major supplier of Jet A1 because the marketers may have exhausted the product that was imported.
Ndulue said the price of the product at the Dangote Refinery is quoted but it could change at delivery; so, the company usually request to retain 10 per cent of the cost of the purchase but that has increased to 25%.
“That is, if you wish to buy product for N100, 000, N90, 000 will be sold to you. You might get the 10% later or 5% per cent or nothing, depending on the price the product is finally sold. But that has increased to 25%. This means that if you want to buy N100, 000 worth, N75, 000 will be sold to you. You may get the 25% back or less than that,“ he explained.
He said that prices of the product are volatile and uncertain because of the war going on in Iran.
“The price two weeks ago at Dangote was N2, 600 per litre; that may still be the price they will sell this week. Some marketers sold imported aviation fuel, which I think they have exhausted and some sold Dangote’s old stock,” he said.
Ndulue added that government approved importation of the product to ensure stable and competitive pricing.
