Nigerians Are Up Against A Hike In Airfares As Local Flights Resume

By  |  June 30, 2020

Four months ago, Kareem Kadiri boarded a flight from Abuja to Lagos to attend an important business meeting and see some of his family and friends residing there. That was before the country recorded a single case of the novel coronavirus infection. Many unexpected events happened, making the 28-year-old business manager delay his stay not once but twice.

One month into an unavoidably long and seemingly visit to Africa’s largest city almost became a life-changing situation for Kareem. Some things led to others, and Nigeria’s March 30th lockdown made him stuck in Lagos. Movement restrictions, grounded flights, social distancing, and a ban on interstate lockdown left him, more or less, stranded.

Further Easing 

Now, however, Africa’s largest economy has decided to lift the embargo, which means people like Kareem can now legally return to their respective states of residence after months of uncertainty and working from home. Since long distances like Lagos to Kaduna and Benin to Abuja may be involved, local flights are now very much ready to reopen their business.

News flash: the Nigerian government has approved for the ban on restrictions to be lifted, effective as from July 1st (2020). The order yet involves extending the second phase of the relaxed lockdown by 4 weeks, from June 30th to July 27th. The decision also allows schools to reopen, but only for graduating students to prepare for exams.

As part of the easing, local flights have been given the go-ahead to get back in the air as soon as practicable. They must, nonetheless, do so adhering to existing international and local guidelines surrounding Covid-19. There is no certainty whether passengers will queue in numbers as these developments hit the Nigerian airspace.

The air transport industry—including airlines and its supply chain—are estimated to support USD 600 Mn of (Gross Domestic Product (GDP) in Nigeria. Spending by foreign tourists supports a further USD 1.1 Bn of the country’s GDP, totaling to USD 1.7 Bn.

Hiked Airfares

From the looks of it, Nigerians are not going to worry only about arriving airports three hours before their flights to observe mandatory health protocols instituted by the aviation authorities. As the government has already warned, passengers should expect an increase in the price of flight tickets, thanks to the effects of the coronavirus pandemic on the economics of Nigerian airlines. They are also no free from debts, as even the country’s largest carrier, Arik Air, is cash-strapped.

Nigerian airlines owed USD 66.7 Mn to Nigerian aviation agencies in 2011.

Globally, carriers have been laying off staff, restructuring finances, and taking on government bailouts to survive the high tide of the constraints brought on by Covid-19. While the likes of Ethiopian airlines have more or less become cargo carriers, Nigerian airlines had to find ways to stay afloat—at least until the availability of the June 17th NGN 27 Bn bailout by Yemi Osinbajo’s Economic Stability Committee.

Health investments, revenue loss, and carrying only about 50 percent of seating capacity leave airlines no choice but to increase airfares. Vacant seats, especially, are mostly an economic suicide for airlines not even in a breaking-even place before the pandemic. The possible price for the flights is unknown, but the Federal Airports Authority of Nigeria (FAAN) has already increased its customer service fare by 100 percent.

“There is also going to be the maintenance of social distancing in the aircraft. If an aircraft has a capacity of 150 people, it might now be restricted to about 100 or 75 passengers. Flying comes with a component of costs. Aviation fuel is one of it, salaries for the pilots, services that are paid for to the aviation industry institutions are also things to consider,” said Boss Mustapha, Chairman of the Presidential Task Force (PTF) on Covid-19.

Tight Airspace

According to the International Transport Agency (IATA), revenue losses by Nigerian airlines could reach USD 434 Mn—that’s over NGN 168 Mn based on the current NGN 388 greenback. The IATA also said that 124,000 of the industry’s 241,000 jobs are at risk due to the pandemic. The NGN 27 Bn bailout provided by the government has been criticized for being too meager to support aviation in these times.

Meanwhile, the Federal Airports Authority of Nigeria (FAAN) is set to hike the passenger service charges (PSC) in international flights from USD 50 to USD 100. If this happens, it would mean that the price of local and international tickets would rise, probably through the roof this time. Airlines collect PSC’s on FAAN’s behalf while selling tickets to passengers.

It has been more than 3 months since airlines’ businesses have been in limbo. Now that they have been permitted to resume travels, they’re up against certain factors. While passenger traffic might be low, there is no telling when their economic hardship would be over since carriers have almost become the poster child for loss-making ventures.

Customers, presently, are also in no financial paradise. Pay-cuts, disturbing business cash flows, and the rathering of virtual meetings for company meetings have necessitated a stay-at-home work culture. This, coupled with the fact that the pandemic’s end isn’t yet nigh, makes costs for both airlines and passengers all too burdensome.

Featured Image: Sandie Clarke Via Unsplash

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