“Competitors, which is what the airline operators are supposed to be, should not be meeting to agree on fixing their prices. This is an anti-competitive practice that should ordinarily attract investigation and possible sanction by anti-trust regulators”.
Air transport in Nigeria dates back to 1925 when the first aircraft landed in Kano. However, for such an old means of travel, air travel remains a preserve of a tiny percentage of the population. Less than one percent of Nigerians travel by air. This is partly thanks to the prohibitive prices of flight tickets in a situation of poor economic growth and low incomes. The cheapest fare for the most popular route, Lagos-Abuja, is now more than a month of minimum wage. The tiny population of air travelers is likely to become a bit tinier as Nigerian airlines came out during the weekend to announce a 63% hike in their fares, effective immediately. While businesses have the right to hike their prices, the way this was done by the airlines raises important questions.
There are media reports that say that eleven out of twelve commercial airlines came together under the aegis of the Airline Operators Association of Nigeria on Thursday to agree on the upward review of their fares. This, if true, is a blatant broad-daylight price-fixing by operators in what has become an oligopolistic industry. Competitors, which is what the airline operators are supposed to be, should not be meeting to agree on fixing their prices. This is an anti-competitive practice that should ordinarily attract investigation and possible sanction by anti-trust regulators. Nigeria is notorious for this price-fixing behavior and you can see examples all around you. For example, the barbers and bakers in your area are likely conspiring to fix their prices.
Also Read: Fly Smart: 7 ways to get the best deals on your next flight
While the method adopted by the airlines to raise their prices is concerning, their reason for doing so is hard to dismiss. Arguably, the biggest cost centre in an airline operation is the fuel used in running their aircrafts. Thanks to the rise in crude oil prices and exchange rate in the last year, aviation fuel Jet A1 prices across the countries have more than doubled. Besides the rise in fuel price, the airlines also face an unstable supply of fuel, according to Dr. Obiora Okonkwe the Chairman of the United Nigeria Airline. It seems Nigeria´s incompetence is not limited to struggling to keep its vehicles fueled but also extends to fueling its aircrafts.
With inflation of goods and services still at its record high, one can safely assume that other airline costs have also gone up. The outrage that has followed the fare hike by Nigerians is understandable, given how crucial air travel has become to Nigerians who can no longer travel by road due to insecurity. However, businesses have to survive and running unprofitable models is not how to ensure their survival. Despite the fare hike, the airlines are still begging for government handouts, demonstrating the seriousness of the predicament our aviation industry faces.
While air travelers’ outrage might not be able to force airlines to run unprofitable flights, the airlines can and should be forced to offer good customer services. The quality of service provided by airlines in the country is poor. Flights are routinely delayed and canceled without any serious explanation, sincere apology and commensurate compensation. In fact, when one books a flight in Nigeria, one must treat the boarding time on the flight ticket as a placeholder as the time is most likely to change. According to the ICIR quoting data from the Nigerian Civil Aviation Authority, 41,328 out of 74,537 flights operated last year were delayed. That’s a 55% delay rate! The airlines have to do better especially now that their flights now cost an arm and a leg.
