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Airline Operators Give Condition to Cut Fares

Airline Operators Give Condition to Cut Fares

Airline operators have said that reduction in the price of aviation fuel as well as the availability of the product are conditions that must be met in order to bring down the rising airfare in the country.

» Special Reports | Tuesday, August 2, 2011 • Air News Times
Rising from a meeting with the Nigeria Civil Aviation Authority (NCAA) in Lagos Monday, the airline operators said if the conditions were met by the government, passengers in the country would return to blissful times.
The meeting, which was at the instance of the Federal Government, was called following weeks of exorbitant hike of airfares, which forced many prospective air travellers out of the airports.

Gathered that the airline operators and the Federal Government agreed that because of the need to address the problem of the sector in a holistic way, there was need for both issues to be tackled at the same time.
In this regard, they agreed that as a condition precedent, the government should ensure adequate and regular supply of aviation fuel, known as Jet-A1, at a reduced price.

They argued that with the availability of the product, airfares would nosedive.
At the meeting, which was attended by the chief executive officers (CEOs) of airlines, the Secretary General of Airline Operators of Nigeria (AON), Mohammed Joji, and the Director General of NCAA, Harold Demuren, the airline operators claimed that the removal of Value Added Tax (VAT), which is not applicable to other modes of transportation in Nigeria, and reduction in rent charges at the airports, were responsible for the fare increase in the country.

According to a statement made available by the Media Assistant to the Director General of NCAA, Sam Adurogboye, the airline operators asked the government to commence the allocation of plots of land to enable them to build hangars for their aircraft maintenance.

Adurogboye quoted Joji as saying: “Once these requests are considered, the operators will stand a chance to bring down fares to meet government’s demand of about  $100 (about N16,000) equivalent for a one hour flight as it used to be.”
After deliberations in the short, but crucial meeting, Demuren, who promised to report back to the Federal Government, however, demanded that the operators consider not only price reduction, but the need to render prompt and quality service devoid of unnecessary flight delays or cancellations without prompt refund.

He said government wants to see passengers get value for their money whenever they fly on domestic routes forthwith.
The hiking of airfares by domestic airlines was a reaction to the high prices of aviation fuel, which currently sells at N190 per litre in Lagos and higher in other parts of the country.

For months, the airlines had cried themselves hoarse, protesting the high prices and the non-availability of the product, but government seemed to be indifferent to their plights; and then last June, the airlines hiked the fares to an average of N25,000 for a one-hour flight.

The operators had also accused the marketers of operating a cartel and fixing prices that were insulated from the actual landing price of the product, but the marketers who had stifled competition among themselves, were adamant and seemed to have given them no choice but to increase the air fares.

The airlines were also peeved that the Federal Government had not intervened in the price crisis as it had not done anything to either control the marketers or persuade them to reduce their prices, produce the product locally as it was not subsidised like other fuel products such as petrol and kerosene.

Some of the operators argued that as long as the Jet-A1 was important and the oil marketers were the sole importers, they would continue to operate at high prices, which had the potentials of knocking some of the airlines out of the market.
Even with the high fares, the airlines argued that they were not making any profits because over 40 per cent of the operational cost went into fuel purchase; that they still kept to their maintenance schedule, which was crucial, adding that they had to pay other charges and their staff.

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