Why airlines should charge some passengers more
Air ticket price spike. Source: Stears Business

I was about to book a flight a few weekends ago to Abuja until I scrolled through my Twitter timeline and read this tweet.

"Just look at how empty a morning flight is. ₦50k! 100% increase in air tickets! We are finished in this country. #Nigeria"

Accompanied with it was a photo, possibly of the Twitter handler and an empty row of seats in the flight behind him. 

This is how most Nigerians across my social media feed reacted to the recent price increase for domestic airline tickets. But why the increase? Considering the times we live in now, let’s start with the most obvious reason—COVID-19.

 

Some takeaways:
 

  • Amidst the growing challenges of running a business in Nigeria, airlines operators are faced with increasing costs of jet fuel, leading to a 100% hike in airfares.

  • Airlines operate with an oligopolistic market structure that explains how airlines can take this price-hiking path.

  • The reaction and reality of Nigerians to the price hike suggest that a higher base fare might be short-sighted. Instead, airlines could price discriminate and transfer their high operational cost to the customers who are willing and able to pay more for flying.


The after-effects of the pandemic have left various sectors of the economy scrambling to recover. The aviation industry is no exception. The virus heavily hit the sector since airlines had to be grounded to contain its spread. According to Flightradar24, which tracks the global average of flights weekly, total global flights were 13% down at the start of 2022, compared to the same period in 2020. The previous year was even worse: flights were 22% down at the beginning of 2021 compared to 2022. Airlines are still figuring out the most effective route out of this turbulence, from job losses to uncountable billions lost in revenue.

Although air travel is picking up, the Nigerian aviation sector is feeling a different kind of burn in addition to the pandemic. Reports about the rising costs of jet fuel have many airline operators reaching for the panic button. But this should not be surprising. According to data from the National Bureau of Statistics, the price of household kerosene (HHK)—a similar fuel type to jet A-1—has been steadily increasing since last year. Prices went from ₦434.39 in September 2021 to ₦467.97 per litre by December 2021.


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Anne-Marie Amadi-Emina

Anne-Marie Amadi-Emina

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