Passengers pay exorbitant fares on lack of competition at second-tier airports

Passengers travelling from Lagos to second-tier airports such as Ilorin, Akure, Anambra, Benin, Katsina, Sokoto, Ibadan and Yola are paying unusually high airfares due to the lack of competition on these routes, BusinessDay findings show.

Only a few airlines operate into many of these airports, limiting competition and allowing carriers to arbitrarily set prices. Airlines argue that these routes remain unprofitable because of low passenger traffic.

However, stakeholders argue that increased airline presence on these routes would drive down prices and encourage more travellers to use the airports.

Currently, a one-way economy class ticket from Lagos to most of these airports with a distance of 30 minutes to 45 minutes costs as much as N200,000 to N350,000, depending on the airline and the route. Also, a one-way economy class ticket from Lagos to farther destinations such as Abuja, Port Harcourt, Kano and Owerri costs an average of N150,000 to N200,000, depending on time of travel and the airline.

“In economics, volume drives down costs, which cascades into lower prices. Competition also lowers prices but multiple providers may also lower prices, which could oversaturate the market and stifle growth,” Samuel Caulcrick, former rector of the Nigerian College of Aviation Technology (NCAT), told BusinessDay.

Caulcrick said the affected state governments can help the situation by redesigning their economic philosophy around airport activities, particularly with the issue of bandits on the roads as well as the bad conditions of the roads.

Recently, Bukola Saraki, former Senate president had appealed to Overland Airways, the primary commercial airline serving the Ilorin Airport, to review its airfares into the state.

Saraki, who pioneered and developed the routes during his tenure as governor of Kwara State (2003-2011), took to his X handle (@bukolasaraki) recently to announce his intervention, citing the economic hardship faced by travellers.

Saraki stated that the escalating cost of tickets makes air travel inaccessible for many residents of Kwara State.

Olumide Ohunayo, industry analyst and director of research at Zenith Travels, told BusinessDay that the law of supply and demand is what applies to these routes as roads to those capitals are in a horrible state, coupled with the insecurity which has tripled traveling time.

“Passengers who ordinarily would have used alternate modes are now forced to fly. In flying, the airlines on that route have not increased their frequencies because almost all of them have big aircraft on the popular routes, and smaller aircraft are shared between the popular routes and these smaller airports.

“So, the demand and amount of supply are not matching. So, you see the fares galloping. For these cities, it is an all-round exorbitant fares and nothing matching the distance covered,” Ohunayo explained.

He said there is a need for airlines to invest in smaller aircraft to take on these alternate airports that will also fit into the trunk route.

He also said there is a need to licence second-tier Air Operator Certificate (AOC) holders who would have smaller aircraft with a maximum of 100 seats in their fleet.

Ohunayo said small AOC holders can concentrate on smaller airports, improve effective transportation, airspace and aviation’s contribution to the economy by virtue of taxes and revenues.

He called on the Nigeria Civil Aviation Authority (NCAA) consumer protection to address these concerns as customers don’t get the services required promptly across these airports and are not remunerated for delays and cancellations that happen on these routes.

BusinessDay’s checks show that currently, Ilorin airport is operated by only Green Africa, Overland Airways, while Akure airport is operated by Green Africa. Anambra is operated by United Nigeria and Air Peace, as Katsina is handled by Max Air and United Nigeria. Sokoto is operated by Max Air, Ibadan by Overland Airways, and Yola by only Max Air.

Before now, Asaba used to be among the airports with high fares when just two airlines operated the route. However, with the presence of four airlines now on the route, passengers now enjoy cheaper fares for as low as N120,000.

Christophe Penninck, managing director of the Asaba Airport, confirmed that increased competition has significantly reduced fares, with the airport now recording six to eight daily departures and airlines offering promotional rates.

Michael Achimugu, director of Public Relations and Consumer Protection at NCAA, reiterated that airfares are dictated by supply and demand. Airlines only cut prices when competition exists, he said, noting the ministry’s focus on supporting local airlines.

“When there is competition, airlines would reduce fares because they want to keep their customers. No civil aviation authority anywhere in the world orders airlines to charge certain fares. We are looking to see how to collaborate with airlines to ensure these issues are sorted,” he said.