By Chinedu Eze
The Nigerian Civil Aviation Authority (NCAA) has explained that the recent increase in airfares by domestic airlines was in response to high cost of operation. The regulatory body also said it never issued directive to the airlines to increase the prices of their tickets.
The Authority said due to the low value of the Naira in exchange to international currencies, the cost of aviation fuel, cost of maintenance and training, the cost of airline operation in Nigeria have almost doubled.
It further explained that most of the airline services are done overseas, including personnel development, so the airlines were prompted to introduce fares that will enable them generate in “Naira the monies when exchanged in foreign currency can enable them pay for these services overseas.”
According to a senior official of the agency, the NCAA, as a regulator cannot direct airlines to increase fares, noting that the increase in price of ticket became inevitable because of the high cost of operation.
The official noted that since the downturn in the nation’s economy, passenger traffic has significantly reduced and high fares would further reduce the number of people that travel by air. He insisted that the increase in fares has become inevitable to enable the airlines offset their cost of operation.
The official also noted that part of the function of NCAA is economic regulation, adding that the Authority would not allow airlines to, in response to competition, sell tickets at very low prices that would not provide them money to offset their cost of operation and generate funds to carry out the maintenance of their equipment.
According to him, if the airlines were unable to carry out routine maintenance of their aircraft, they would be tempted to cut corners a development, which can jeopardise safety.
Most expenses carried out by airlines are denominated in foreign currency, from the cost of aircraft parts to maintenance, so the airlines face challenges with the present low value of Naira as they generate their revenue in the local currency.
Industry observers said at the time there is a slide in passenger traffic cost of operation has risen by about 40 percent or more and the exchange rate has also risen by about the same percentage, making it inevitable for airlines to increase fares.
The observers however expressed optimism that as the economy improves, there would be a turnaround and if the Nigerian refineries begin to refine aviation fuel locally, the airlines would pay less for the product.