ECONOMY - 24 AUG 2018

Why do Nigerians pay so much to travel?

Why do Nigerians pay so much to travel?
Murtala Muhammed Airport Lagos, the busiest international airport in Nigeria

Nigerians love the good life and judging from recent ticket prices, airline companies are taking full advantage. 

Today, international travellers can pay as much as ₦800,000 for an economy class return ticket along the Lagos/London route. The same ticket cost ₦300,000 two years ago. Even accounting for the depreciation of the currency, the rise in prices has come amid a decline in customer service and rumours that airlines reserve their worst planes for Nigerian routes.

Despite this, Nigerians continue to patronise international carriers. So why is flying so expensive? 

 

New Costs, New Heights

Operating an airline isn't easy. Like any other business, operators have to pay tax to cover certain things such as the environmental cost of flying or even to use airport runways. Sometimes companies are able to pass these on to customers through higher prices. 

However, if we are to accept that our flight tickets are so expensive because airlines need to pay the federal government to land and park their aircraft, then we should expect something in return. Usually, tax revenue should be used by the government in one of two ways: improving the flying experience for customers or improving the alternatives to air travel.

A cursory glance at our international airports will prove that this is not how the money is being spent. But it should be. Frequent travellers will have noticed incremental upgrades to airports in other countries. Take Ghana as an example, our jollof might be better, but Kotoka International Airport's new state of the art terminal with electronic gates and the capacity to process over 1,000 passengers per hour puts both our international airports to shame.

And yet, if you were going to compare buying a British Airways ticket to Accra with a ticket to Lagos, you would be paying about 25% more for your Lagos ticket. The story gets more interesting when a price breakdown shows that 54% of a ticket to Accra goes towards taxes, compared to 37% for a ticket to Lagos. So actually, airlines face more government charges in Ghana, but for some reason, they still charge Nigerians more to go (or leave) home.

So are high operational costs really to blame here? They could be. In Nigeria, aviation fuel costs anywhere between ₦200 and ₦240; in Ghana, the product costs as little as ₦120. Airlines face a much higher fuel bill in Nigeria than in neighbouring countries. 

 

Expensive taste?

But that is not the full picture. Another critical factor affects the price of a product: demand. You only need to look at the inflow of foreign-educated students returning home in December to see why international airlines make a fortune doing business in Nigeria. People travelling during the peak Christmas period certainly pay at least 30% more than those traveling in other months—February, for example. It goes without saying that British Airways and friends know how important it is for Nigerians to be home for that Davido concert or to spend New Year's at Boat Club (with family of course).

And to be honest, this makes economic sense. Other prime destinations face similar dynamic pricing patterns during peak periods. Travelling to New York from London is nearly 80% more expensive during the summer period compared to more off-peak months. So there is evidence that it isn't only Nigerians that face higher prices during peak travel times. Still, for a peak ticket along the London to New York route, you pay £0.24 per mile; compared to paying £0.41 per mile for a peak return to Lagos. So while other routes have price hikes during specific periods, Nigeria is definitely a very expensive country to fly in and out of.

 

A level plane field

All in all, airlines could claim the high costs from taxes and petrol prices justify the astronomical prices they charge us to travel. 

But as Nigerians, have we made it even easier for airlines to charge us rogue prices for plane tickets? I mean, not only do we have a high demand for air travel (especially during certain periods), we also have a preference for certain companies. Through strong brand perceptions and market power over direct routes, British Airways and Virgin Atlantic have secured the top positions amongst many Nigerians as the preferred airline for travel.

In the U.S. and Europe, people are not afraid to patronize budget airlines if they can save money and this keeps flight prices relatively competitive along routes. As Nigerians, do we respond to high prices in the same way? A quick Twitter poll suggests that 68% of participants are willing to opt for a cheaper flight with longer transit hours. But this might not mean much if more frequent travellers like business people still need a more direct route so they can get to their destination easily.

Or maybe we are asking the wrong question. Global trends suggest that airline tickets are on the rise. So ultimately, expensive air travel is not peculiar to Nigeria. What is strange though, is how little we receive in service quality considering how much we pay.

 

Follow this Writer on Twitter @FadekemiAbiru. Subscribe to read more articles here.

Fadekemi Abiru

Fadekemi Abiru

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