30 July 2014

Nigeria: More Airlines, Cheaper Air Fares?

Commercial flight operations are expected to increase as more new airlines prepare to hit the Nigerian airspace with new airports coming on stream in various states across the country.

Two new domestic operators, Azman Air and Discovery Air, have already commenced operations. While Azman Air flagged off its operations in May, Discovery Air joined later, further boosting the number of scheduled passenger air service in the country.

Also warming up to hit the skies are World Peace Airlines, WestLink Airlines and Hak Airlines. While Peace Air has already obtained the Air Operators Certificate (AOC) from the Nigeria Civil Aviation Authority (NCAA) and may resume flight operations soon, others are at the final stages of their documentation with the NCAA.

On these developments, aviation experts have expressed varied opinions.

While some are optimistic that the new entrants into the sector would help to bring down air fares, especially on the triangular busy routes of Lagos, Abuja and Port-Harcourt, others are however pessimistic about how quickly Nigerian airlines collapse after they begin operations.

Nigerian airlines are synonymous with short stay in operations. Mismanagement and maintenance among others have kept these airlines struggling to survive.

It would be recalled that many Nigerian airlines made big start but later fizzled out owing to heavy debts, management crises, bad business model, high or multiple taxes and government's policies that dealt a huge blow on them.

Those who could not absorb the heat closed shop. The high cost of aviation fuel, which experts say consume about 40 per cent of airlines' income, not only make the cost of operation high, but also impossible for local airlines to break even.

There were nine domestic carriers prior to the Dana crash of June 3, 2012 - Arik Air, Aero, Air Nigeria, Associated, Chanchangi, First Nation, IRS, Dana and Overland Airways. But today what we have are Arik Air, Aero, and Overland Airways, in addition to First Nation and Med View airlines, which started operations late 2012.

In essence, six of the nine airlines disappeared within months and even at the moment IRS and Chanchangi airlines are yet to begin operations while Associated Airlines was grounded after its crash of October last year.

The question now is, what is the future of these new airlines that are coming to add seats to the number of those already existing?

Notwithstanding the myriad of challenges confronting the sector, stakeholders are united in their position that the rush portends good for the industry as it will create competition which would lower fares and completely kill the tendency of one airline monopolising the entire sector.

There is however no fear for the new entrants because there would be airfare crash that will attract more air travellers, as well as profit to them.

The coming of more carriers is good for the industry as more domestic carriers would increase capacity for the existing ones and enable them to sit up in their strategy to remain in business. Passengers would benefit from more operators as some airports that were hitherto not covered would join the nationwide air link.

Outside the issue of survival in the industry lies the question of the impact the entrance of more operators into the sector will have on air fares on some destinations.

Apart from stimulating reduction in air fares, will the new entrants force domestic airlines to adjust their flight schedules to enhance capacity?

Is the likely reduction in the fares enough to attract the millions of prospective but poor air passengers?

Our reporter took a look at existing and new airlines, what they charge passengers who opt for online bookings through the airline website. Air tickets bought online often cost than those bought on the counter.

An analysis of the findings was startling and point towards the fact that airfares may be cheap or expensive depending on so many factors but the realistic fact remains that cheaper fares are a mirage to the ordinary man and the various inducement tactics airline operators employ may be helping them.

Improving internet technology now allows passengers to book their flights online. In fact, the passenger may not come in contact with the airline until arriving at the airport for the flight formalities. The airlines invite travellers to purchase tickets in advance by offering online booking on their websites along with e-ticketing.

This system offers prospective passengers a number of advantages. Tickets can be purchased 24 hours of a week in advance. People with very busy schedules don't have to take time off or rush after work to visit a travel agent. You can book at your convenience. "The more you do at home the more you save us", the airlines will explain to underscore the importance of booking online.

Besides the use of convenient bookings and other packages to attract passengers, air fares may not be that cheap for some passenger. After all, as an analysis of online booking obtained from websites of these airlines revealed, there may some other hidden implications behind the perceived lower fares airlines charge for online bookings.

Depending on when the ticket is booked, for instance, an Abuja - Lagos Aero Economy flight if booked online for the next day cost N 25,000 for 7am flight, N22,001 for 8:45am, N19,000 for 10:45 and N22,001 for 19:45 while flights for the same Abuja-Lagos route when booked for two days ahead go for as low as N14,000 but depending on the departure time of the flight.

While it will cost as much as N19, 000 for first flight of that two-day interval, flights at the odd hours, same day, go for as little as N10,001 at 16:45 and N12,000 for 19:55. Therefore, the cost of flights are higher for hours when people are either travelling for work, meetings or business arrangements than other 'odd' hours.

Still for Aero, similar arrangement is obtainable for 50 minutes' Abuja- Kano Economy Flight which for which it charges N10,000 for 06:45 and N14,000 for 17:45 depending on departure day and the time the flight was booked for.

When compared with another domestic carrier, Dana, similar arrangement obtains but while with Aero fares seem slightly lower. Fares for Abuja-Lagos flights booked for a day ahead and for days/week advance differ remarkably. For one day interval 09:00 cost N18,000, 18:55 cost N16,300 both Economy whereas flights booked for two or more days ahead go for as less as N15,300 for 09:00 and N12,600 for 20:07 flights respectively.

However, a 50-minute flight from Abuja to Lagos on new entrant, Azman Air, when booked online goes for N15,520 for14:30. The flight on the same route when booked for a week time remains unchanged at N15,520 for economy class and N40,000 for business class.

However, fares differ from Abuja to Kano. Flights booked for the next day cost N21,500, and five days ahead drops to as low as N15,520.

Our findings reveal that only one airline maintains a fixed/flat fee for its flight when booked online. The same 50 minutes flight from Abuja-Lagos obtained at varying rates from other airlines depending on departure time goes for N21,242 across board on Arik.

For instance, 09:00 and 13:00 Economy flights booked for the next day remain the at N21,242 irrespective of the departure time. Flights also booked for a week later, irrespective of departure time remains the same at N21242.

What all this means is that there are so many factors that will determine if an average income earner will join the growing list of prospective air passengers. Also, a lot factors will determine if it can be concluded that air fares are dropping, stagnant or expensive with new entrants coming on board.

If you are embarking on a last minute trip, finding a cheaper fare may be a mirage for you. If your travel itinerary is uncertain, booking for flights days or weeks ahead which attract cheaper fare may not be ideal for you because the fares are non-refundable. Even so, what if your destination changes? If you want cheaper fares, you cannot determine when you want to travel; the airline does that for you.

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