Green Africa airline sparks off price war on domestic routes

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In the past three months, the cost of flight tickets to most of the routes across the country doubled, causing air travelers to groan at what many described as outrageous. A ticket for one economy seat to Abuja which used to cost between 25,000 and 30,000 depending on when the flight was booked, was sold as high as 70,000 and in some cases N80, 000.

Airline operators say that unless the Central Bank of Nigeria (CBN) provides easy access to forex or creates special window for operators, fares would continue to soar. A source within one of the older airlines told leakblast.com that because domestic operators are finding it difficult to source dollars from the CBN, they have resorted to buying it from Bureaux de Change (BDC) operators at N500 and more and this has caused astronomical rise in the cost of operations.

The operator also pointed out that many aircraft that were taken out of the country overseas were yet to be brought back because of Coronavirus pandemic, which has hindered activities in most countries, so the Nigerian carriers have limited fleet but high demand for air travel, as insecurity continues to discourage many people from travelling by road.

Chief Operating Officer of Air Peace, Mrs. Toyin Olajide, said airlines need dollars for most of their operational expenses and to do that, most of them had to resort to buying dollars from the parallel market in order to source spare parts. She explained that if airlines charge according to how much they spend sourcing forex, air fares could be much higher to reflect the actual cost of operations but that competition has kept the cost of ticket at the current pricing.

She also admitted that there is limited capacity because airlines are operating less number of aircraft in their fleet, disclosing that Air Peace has most of its aircraft overseas where they were ferried for maintenance but they got stuck because of COVID-19 pandemic lockdown. She, however, said that the airline’s brand new Embraer E195-E2 would soon start operation, as NCAA is about to complete its certification on them.

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“Airfares are high because of forex. We buy dollars from the parallel market because we cannot source from the CBN. When you look at the prices of tickets, they don’t reflect the actual cost of operation; if they do they will be higher than what we sell tickets now, but competition has kept the fares relatively low. We need dollars for most of the things we do in aviation. We buy spares in dollars and we source dollar at N500 per dollar. Just imagine the cost if you want to import aircraft engine. So the high cost of fares is because of forex.

“We already have two of the aircraft in Nigeria and three are due to arrive this May. NCAA is at the stage of demonstration flight, which will take about one week. So we will have five of the new aircraft operating from this month. But for the other aircraft what is affecting us is the maintenance calendar and the fact that those aircraft taken for maintenance are yet to return,” Olajide said.

Daily Sun had earlier reported that the Chief Executive Officer of United Nigeria Airline, Obiora Okonkwo, said scarcity of forex is a big issue for operators and urged the CBN to grant airlines a special window to access it.

“Forex is a big problem for operators because by the rules and regulations, CBN makes the official bidding market for dollars bi-weekly, which means that if you approach your bank and they bid for you this week, if they don’t get it, you have to wait for the next two weeks. If you rely on that to make things happen, you will find it difficult. I am advocating that a special window be opened for airlines so that we can access forex. Similar businesses overseas have been hugely supported by their countries with different policies. This is a service based industry and a little support from the government would help operators. Air travel helps the economy and it helps security and should not be left alone in the hand of operators,” Obiora said.

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