Experts in the aviation sector have attributed the current low pricing strategy and cost of local air travel in Nigeria to the drop in the revenue of local airlines, demanding an urgent intervention of the Federal Government.
The current low pricing strategy and the attendant low cost of local air travel in the country may be attracting new passengers to airlines, but fast lowering the chances of struggling aircraft in the face of dire financial straits.
Many of them, who spoke with The Point in separate interviews, said the steady drop in the economic power of the Naira to the United States dollar over the years had not helped local operators and investors, as the seeming underpricing approach now accounts for about 50 per cent fall in revenue of some airlines.
Managing Director, Starburst Aviation limited, Capt. David Olubadewo, blamed the development on the desperation of some stronger operators to beat co-competitors to the market. He warned that such an unhealthy competition strategy, if not checked by the Nigerian Civil Aviation Authority, would make it more difficult for airlines to meet financial obligations, compromise safety standards and hasten the collapse of struggling airlines.
People shouldn’t talk about policies each time the industry fails. It is a fact that we lack adequate skilled manpower either within the government agencies or with the private operators
He said, “Ticket pricing is largely liberalised and determined by market forces. If an airline wants to increase its price to cover operational cost, other operators might say no because there is recession. Yet, it is a competitive market where you cannot afford to lose patronage. What do you do? You tag along despite having to lose between 50 and 60 per cent of operational cost at the end of the day. That is why some airlines are owing salaries, unable to keep aircraft in operation and seriously indebted.”
The Chief Executive Officer, Arik Air, Capt. Roy Ilegbodu, however, said charges of an airline were based on cost and business model, noting that several elements dictate ticket pricing. He listed them to include capacity of an airline, route, type of aircraft and number of flying hours daily among others.
Another aviation expert, Group Capt. John Ojikutu, (retd), explained that another challenge of the industry was the lack of adequate skilled manpower.
“Policy is one thing but human beings formulate and drive these policies. How adequate in the knowledge of how aviation works are those people who presently drive, implement and interpret the policies on ground? Only skilled or trained people drive policies adequately,” he said.
According to Ojikutu, policy formulation for aviation sector growth is important.
He, however, said that some policies might not be sustainable if government officials lacked adequate knowledge and skills to drive them.
“People shouldn’t talk about policies each time the industry fails. It is a fact that we lack adequate skilled manpower either within the government agencies or with the private operators.
“Typically, everyone is looking for how to make money. It is a fact that the industry has the potential to create wealth and that is why
everyone rushes in. But The Point is, how skilled are the people as they seek to make revenue out of the industry?” he inquired.
