The Airline Operators of Nigeria, AON, have announced that the rising operational costs occasioned by steady rise in aviation fuel price, shortage of foreign exchange, among other pressing issues, may push the base economy flight ticket of domestic Airlines to at least N100,000 only,
The Spokesperson for the Local Airlines and Chairman, United Airlines, Professor Obiora Okonkwo, made the disclosure during an exclusive interview with The Punch, on Wednesday, in Abuja.
Aside from the lingering aviation price hike crisis, the Airline Chief stated that Local Airline Operators are being compelled to source for foreign exchange from the parallel market at high rates, due to a lack of adequate supply from the Central bank of Nigeria, CBN, through the Commercial Banks.
Consequently, he said that an increase in the base economy flight ticket to at least N100,000, may be inevitable for all domestic Airline Operators, if the current situation persists.
His exact words: “Obviously, it is inevitable. I can tell you that all the Airline Operators in the last three months have been losing money, a huge amount of money. There is too much stress on the operational fronts for them to break even. Even if the aviation fuel is made available, there must be a review to reflect the minimal operational cost. We are offering patriotic services to the nation, and understand the essential part of it. We are part of this economic development process in Nigeria, but it is coming at a very huge sacrifice.
“Nothing less than N100,000, between N100,000 and N120,000 base price, even with Jet A1 fuel at N400 – N500. That is what it is.”
In this regard, he added that meetings with the CBN had yet to yield any positive results in the provision of adequate forex.
He further stressed the need for the Aviation Industry to be seen as an essential service that should have special consideration in financial matters.
Okonkwo clarified that the Operators have no joy in increasing fares, but added that it has become necessary for them, in order to avoid shutting down and running out of business.
He added: “In the industry, it is expected that you will gain some here and lose some here, but the biggest challenge indigenous Operators are having is that the cost of everything is high. You source money from the Commercial Bank rates. You source money from the Black Market. No moratorium for your loans, and the Banks and AMCON are quick to jump on you.”
Corroborating this view, the Chief Operating Officer, Ibom Air, George Uriesi, said that Local Airlines have reached a point in their operational cost, whereby “something has to give in”.
Uriesi stated: “Something has to give in. It is either the prices of fuel come down, or the prices of airfares go up from where they are. So far, the Airlines have tried very much to work within the airfares as they are. All sides of the divide are aware that the Airlines have done the best that they can do.
“I do not know what tomorrow holds, but at some point, if the Airline does not survive, it goes down to the detriment of everybody. The people who work for the Airline, the people who fly on the Airline, the country’s economy, everything goes down. So, Airlines are just trying to be stable and patriotic. That is where we are.
“It is very hard to say, we are watching the business everyday, we are watching a number of parameters. We are watching the load factor, we are watching the yield per passenger, we are watching the cost of operating at the price we are paying everyday, which keeps going up every few days. So, the truth from this is that when it becomes clear that you will not be able to sustain yourself, then you will have to adjust some of your indices, always taking into consideration the ability of the passenger to pay, because you cannot just raise prices, just because fuel has gone up. If you issue what they cannot pay, then you will not carry anybody, you would have committed suicide.”
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