Fare hike imminent over new service charge, high operation cost

By Wole Oyebade |   30 June 2020   |   1:21 am  


Passengers on local flights should as well brace up for a new regime in ticket fares, as operators have recorded almost 100 per cent increase in the cost operations.

Besides, the Federal Airports Authority of Nigeria (FAAN), has raised Passenger Service Charge (PSC) by 100 per cent had in a memo notified airlines that effective August 1, 2020, PSC rate will increase from N1000 to N2000 for domestic flight passengers and from the former $50 to $100 for international travellers.

Stakeholders, however, said the increment would further push airfares beyond the masses and reduce patronage, whatever it is worth, in the COVID-19 era. The high cost of operations and increase in the PSC is despite the promise made by the Minister of Aviation, Hadi Sirika, that there would not be an increase in air fares by airlines when local flight operations resume.

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The Chief Operating Officer of one of the local carriers, yesterday, told The Guardian that the times were indeed different, with fresh safety hurdles for operators to comply with.

Although he would not put a cost to it, he said all these had “high cost implications” on operations “for any airline to sustain the old fare rates.”
“It is surely going to be a tough call for all. First, we are just resuming after three months, yet the coronavirus is still out there. The traffic is going to come back gradually, but you also don’t want to scare them with high costs. Yet, we have to sustain our operations. I don’t know exactly what the percentage will be, but I’m sure we all will have to share the burden,” he added.

The Managing Director of FAAN, Capt. Rabiu Yadudu had in a letter dated June 22, 2020 with reference Ref: FAAN/HQ/MD/18E/VOL.86/72, titled, “Implementation of the approved new passenger service charge (PSC) effective August 1, 2020,” said the decision was premised on the approval given by the Minister of Aviation in a letter referenced FMT/FMA/COM/T/69 dated August 3rd, 2017, which he said was sought with the intention to improve and upgrade airports infrastructure among others.

Yadudu noted that the Authority recently notified the Minister of Aviation of its intention to commence the implementation effective August 1, 2020, stressing that on several occasions they had engaged the Nigerian Civil Aviation Authority (NCAA) and relevant stakeholders, which he said delayed the implementation from 2017 to date.

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The FAAN boss disclosed that the cap on the value of the PSC was outdated; explaining that another review of the PSC was overdue.
According to Yadudu, the last review of PSC on domestic routes from N350 to N1000 and from $35 to $50 on the international route was on May 1, 2011 and March 21, 2011.

He said: “This does not correlate with the prevailing economic situation and the index to meet the needs of today and future growth in passenger traffic by FAAN and airport development, most especially for the airport upgrade to post COVID-19 standards.

“You will also wish to recall that Bi-Courtney Aviation Services, operators of the MM2 has for years been charging N2,500 as its PSC. Despite the operating PSC, some airlines recently moved operations from the General Aviation Terminal (GAT) handled by FAAN to the MMA2 because of the inability of FAAN to expand GAT. This increase will, therefore, afford FAAN the needed funds to upgrade our facilities to accommodate new airlines including the anticipated national carrier.”

Yadudu counted on the airlines’ support for the implementation of the reviewed PSC tariffs of N2,000 and $100 on the domestic and international routes respectively effective August 1, 2020, to ensure that the cost associated is reasonably recovered as well as improve on the dilapidating and decaying airport infrastructure and obsolete equipment.

A stakeholder, Akin Williams, said the increase was coming at a time when every aspect in the aviation business was grappling with the impact caused by the coronavirus pandemic on the sub-sector.

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Williams said: “In these pandemic and economic hard times, is it the right time for FAAN or any agency to be increasing statutory fees? I don’t think so. Rather, this should be the time to reduce the high cost of operations in Nigeria and to encourage air travels.

“And the increase is not a single-digit increase but it is 100 per cent, domestic from N1000 to N2000 and foreign from $50 to $100. These are massive increases and really should be revisited.

“Of course the airlines will do their best to pass this directly to the customers who are already struggling financially. And to think this is being proposed for implementation in less than two months in August is very disturbing,” he said. Another stakeholder, Amos Akpan, said with the increase, air travellers might need to reconsider their plans onboarding an aircraft for any travel soon.

“The news from aviation agencies such as this helps me review my intending travel plans. I will do much more transactions online. Conduct meetings by video conferencing and move documents by courier.

“Avoid travel since every organisation in the industry has a reason to increase the price of the services they offer at resumption; and they have put us all on notice. There are too many hurdles and happenstances to cross as a possible traveller. Unions are threatening strikes; we don’t know how we would be seated on aircraft; what happens if one passenger on the flight has an increase in temperature? I thank the aviation industry for sending an intending traveller the inputs to make travel decisions,” he said.

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