SOARING AIRFARES

By NBF News
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The soaring cost of air travel with resultant 30 per cent drop in passenger traffic volume between January and May this year has become a source of concern for airline operators who recently called for reduction in the price of aviation fuel and exemption from payment of Value Added Tax (VAT) as conditions to reduce airfares.

The operators, who met with the Director-General of the Nigeria Civil Aviation Authority (NCAA), Dr. Harold Demuren, under the aegis of Airline Operators Association of Nigeria (AON), lamented the increase in cost of aviation fuel from between N80 and N100 to between N190 and N220 per litre.

As a result, the average cost of a domestic one-hour flight in the economy class, which was about N14, 000 last year, is now about N30, 000. President of the association, Dr. Steve Mahonwu, warned that the high cost of aviation fuel and airfares, coupled with drop in passenger volume and the other operational problems they have been facing in recent years, might lead to collapse of the Nigerian aviation industry.

Indeed, the astronomical increase in airfares has become a serious problem for air travellers in the country. The cost of aviation fuel cannot, however, be divorced from the diversion of the product, which is also known as Dual Purpose Kerosene or Jet A1, for sale as kerosene for domestic cooking. The price of kerosene skyrocketed following shortfall in supply of the product. This problem is an aspect of the oil-pricing conundrum in the country. Unfortunately, as much as soaring airfares is troubling, air travel may not belong to the category of necessities for which demand could be made for subsidy of aviation fuel.

However, in view of the fact that alternatives to air travel such as rail and water transportation are not well developed, while road transportation is fraught with challenges on account of dilapidation of our highways, government should do all it can to reduce the price of aviation fuel and make it available in sufficient quantity. Already, the problem in the aviation sector has driven up inter-state road transport costs by 10 per cent. Statistics from the Federal Airports Authority of Nigeria (FAAN) indicate that the number of persons travelling by air in 28 states of the country declined by 1,282,625, from 5,178,296 between January and May 2010, to 3,809,671, this year.

While we sympathise with airlines on the drop in passenger traffic because of its impact on their profitability, it will be difficult to push for an exemption from VAT payment, which is not peculiar to the airline industry. Exemption of the industry from VAT will generate demands for similar gestures from other sectors, which will defeat the essence of the VAT law. Government should, however, address all the issues raised by AON. It is important for the authorities to ensure that airfares are within acceptable limits.

They should compare favourably with the cost of air travel in other countries to boost patronage of our local airlines and the economy. Let government improve infrastructure for other transport modes, especially roads and railways. The authorities should also address the crisis in the energy sector. For now, the cost of diesel, kerosene and aviation fuel is so high with negative implications for the people and the economy.

The Nigerian National Petroleum Corporation (NNPC) is always quick to tell Nigerians that it is on top of the energy supply and pricing problems, yet the cost of critical products like diesel and kerosene is well beyond the reach of the average Nigerian, while rising aviation fuel price and airfares have restricted access of ordinary Nigerians to air travel.

We expect greater responsiveness from NNPC on the pricing and availability challenges of all petroleum products. The agency should tackle the problem and let the people know exactly what is going on in the sector. What is required now is a significant reduction in price of aviation fuel to bring down airfares, not endless reassurances that are not matched by reality.