The chairman of United Nigeria Airlines and spokesman for the Airline Operators of Nigeria (AON), Prof. Obiora Okonkwo, has pushed back against the plan of the Federal Competition and Consumer Protection Commission (FCCPC) to sanction five domestic carriers over alleged price-fixing during last year’s Yuletide.

In a television interview on Friday, days after the Executive Vice Chairman of the FCCPC, Tunji Bello, told State House correspondents at the Presidential Villa in Abuja that the Commission had concluded its preliminary investigations and was preparing to sanction the airlines, Okonkwo said that the fares in question happened due to what he described the one-sided travel patterns on the Southeast routes during the Yuletide.

He explained that on a balanced route where load factors run at roughly 80 per cent in both directions, such as Lagos to Abuja, an airline can spread its operational costs evenly across passengers. But that on Southeast routes, the imbalance means outbound travellers must effectively absorb the cost of both legs.

“The travel pattern during the Christmas season is heavily skewed towards the Southeast. What happens is this: an aircraft flying from Lagos to Enugu, for example, may have a 100% load factor going, with a full cargo hold, but when that same aircraft returns from Enugu to Lagos, it may come back with just five passengers and an empty cargo hold. In aviation economics, you calculate the combined cost of the outbound and return journeys.

“If a passenger was normally paying N150,000 on a balanced route, then on a one-sided route, the outbound traveller effectively needs to contribute towards both legs of the operation. That is why on certain Southeast routes during Christmas, fares can appear to double. It is not price manipulation; it is basic aviation economics and the reality of operating an imbalanced route. It is purely a function of the season and the travel pattern peculiar to the Southeast during Christmas, and nowhere else in Nigeria at that time of year,” he said.

Okonkwo also spoke on the increase in the cost of aviation fuel as a result of the US-Iran war which has increased from N1,000 per litre to N1,800 within just two weeks and how it would affect the cost of air fares. He said airlines were monitoring the global oil market closely and expected some relief from the international release of crude reserves, but warned that if the situation persisted, fare adjustments would eventually be unavoidable.

He said: “We are not in a position where we can easily adjust our ticket fares the way fuel marketers can adjust their prices. It does not work that way. So what we are doing right now is absorbing the blow. We are selling tickets at very unprofitable rates. We are losing a lot of money. Fuel costs account for between 40% and 50% of airline operating costs in Nigeria higher than the global average of 30% to 35% because of the country’s short airspace, which prevents aircraft from reaching the high cruising altitudes where fuel efficiency improves significantly.”

He however expressed hope that the Dangote Refinery would provide solution to the fuel cost problem, calling it and urged government intervention to prevent the burden from being passed on to passengers.

On the airline’s plans for regional and international expansion, he said: “We are going to expand into more regional flights, and eventually go continental and international. Having already achieved IOSA certification which is a condition precedent for international operations and having become a member of the IATA Clearing House, we are now well-positioned. Membership in the IATA Clearing House allows us to expand our distribution network through our GDS and qualifies us to enter into interline and codeshare arrangements with other airlines. This means they can sell seats on our flights, and we can do the same for theirs. At the end of each month, the clearing house settles whatever is owed to each party. This creates the confidence and trust required for international partnership. It is the highest level an airline can reach in terms of commercial credibility. Right now, in the entire Nigerian system, only Air Peace and United Nigeria Airlines hold operational membership in the IATA Clearing House. I have no doubt that more Nigerian airlines are working towards that, because a lot of positive things are happening in Nigeria and that status is necessary for us to be stronger and more competitive. We are ready for business, both domestically and internationally.” (The Sun)

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