Bussiness

Flight Ticket Skyrocket Across Nigeria Ahead Of Festive Season

Published

1 year ago

December 17, 2023

FAAN

As the yuletide approaches, air passengers are facing increasing discomfort over the high cost of tickets. Daily Trust on Sunday reports that a one-way flight ticket costs up to N200,000, depending on the route.

Checks by our correspondent showed that ahead of Christmas and New Year, many seats have been booked; and as the festive period draws nearer, available seats are becoming more expensive.

The eastern routes are the most affected, with Enugu flight tickets selling between N171,000 and N200,000.

Checks by our correspondent indicate that the base fare to Port Harcourt is N99,000 and projected to hit N138,000 as bookings increase.

Lagos to Owerri, from December 5 sells between N114,400 and N190,600 for a one-way economy ticket and N238,200 for business, while the base fare for Lagos-Calabar is N100,000.

At the moment, a 30-minute flight to Ilorin from Lagos costs between 100,000 and N143,000 for economy class.

Lagos to Sokoto ticket goes for N150,000, while a Lagos-Kaduna ticket is N143,000 as the base fare.

How airfares have doubled in one year

Our correspondent reports that an economy ticket one-way flight has increased from N50,000 (by 100 per cent) to over N100,000 on some routes. Airlines are blaming the hike on the prevailing economic challenges, especially high cost of operation.

The airlines had in 2022 increased a one-way ticket to N50,000 from N30,000. This had generated controversy in the travel industry.

But at present, a one-way economy ticket base fare is around N80,000.

Some of the factors cited by airline operators who spoke to Daily Trust on Sunday include high cost of aviation fuel, known as Jet A1, high exchange rate, multiple charges, among others.

The managing director/chief executive of Aero Contractors, Capt Ado Sanusi, recently told our correspondent that with the current rate of exchange, a one-way ticket should sell for over N130,000.

According to him, any operator pricing his ticket low might be cutting corners.

He said, “You can quote me on this: When the dollar was N460 we were selling a Lagos-Abuja ticket at N65,000, but the dollar is now twice that amount. And there is nothing we do in aviation that is not dollarised. You can imagine. So, we should be selling the ticket at N130,000.

“We don’t manufacture the aircraft; we don’t even refine the oil. So, what else do you do? We don’t even do the wheel on an aircraft. We also have to buy the bolts on the aircraft outside the country. So the moment the dollar is rising, we are affected. The fuel we buy is imported, as well as parts of the aircraft, so how would anybody tell me that he would not increase his ticket, except he is cutting corners. The only thing we can control is manpower.”

Another airline operator who spoke on condition of anonymity noted that the aviation industry was not immune to the inflationary pressure in the country.

He said with the rise in the dollar, airlines could not afford to maintain the old prices of tickets.

Experts urge govt to control fares

Experts warned that the situation might get worse if the operational challenges confronting the airlines persist. They noted that with the deregulation of the industry, airlines had been empowered to fix their prices in line with the demand and supply principle.

They called on the Nigerian Civil Aviation Authority (NCAA) to intervene by controlling fares, saying the more they go up, the more prospective passengers would try alternatives if they are unable to afford airfares.

Capt Samuel Caulcrick, the chief executive officer of Merchant Express Cargo Limited said, “There will be no respite because we have dollarised the economy. Besides, every component in commercial air transport, apart from personnel wages, rent, etc, is in forex.

“It is only an aggressive import substitution policy that will calm the forex market, but the government has to take the lead.”

The general secretary of Aviation Roundtable, Mr Olumide Ohunayo, in a chat with our correspondent, said the situation might get worse as the yuletide approached.

Ohunayo advised airlines to have a human face in determining their fares.

He said, “The rule of airfare, apart from the cost components, is that of demand and supply. And if you look at it, some routes are getting very busy and they just have one airline on the route. When you have one airline on a particular route, the price goes crazy, which was what happened when we had one airline on the Enugu route.

“At a time, Enugu flight was going for N150,000 when other routes were going for about N70,000 or N80,000.

“What we can only push for is to have more airlines or more aircraft for the airlines to increase their capacity. The more seats you have, the more competition and advantage for passengers.”

Group Capt John Ojikutu also defended airlines, saying, “Majorly, the tariffs are: fuel prices, ground handling service charges, air traffic control/navigational charges, landing and parking charges, catering etc.

“Increase in fuel prices has been incessant in the last six months because of the price of the dollar (from #500/$ to #1000/$), 100 per cent increase, and because it is being imported. Periodic maintenance like the c-checks on aircraft would need the dollars, and that could put extra charges on airfares.”

Murtala Muhammed International Airport
Be reasonable in prices for more people to fly, Expert advises

An aviation expert, Dr Daniel Young, said there must be a way to handle the issue of pricing so that passengers would not stop flying.

“The people who are driving this change in price also must consider that those flying their airplanes are majorly government workers. This is because as a businessman, I don’t see an Igbo man paying N300,000 to go from Onitsha by air to purchase goods.

“Now, airline business is operating at only two per cent of total passenger traffic in Nigeria; and the higher you go up in price, the more you lose out in terms of passenger number. So, if you are losing, then the entire business model, which is supposed to be low-cost, is already lost because it is all about making it affordable so that you can increase your revenue or profit through compound interest. And as more people fly, you take marginal profit that you translate into huge profit,” Young said.

He said that rather than increase fares, airlines should churn out promos ahead of the yuletide.

“Have you ever seen any airline advertising anything? They would rather keep increasing because of insecurity in the land.

“How do we reach a compromise? And that is why I said that in terms of economic regulations, the NCAA has a full right to regulate the industry. It may not impose any price on them, but it should ask questions; such as: Is there no way they can manage this so that everybody in the industry would not feel the bite, including passengers?

“Should the passengers stop flying, the airports become warehouses and the airplanes would be left unused. And mind you, most of these airplanes are on wet-lease and they have paid for block hours. Whether you fly or not, the person who gave you the aircraft must collect his money,” he said.

Airlines are in business to make money – NCAA DG

The director-general of the Nigerian Civil Aviation Authority, Capt Musa Nuhu, in an interview with Daily Trust on Sunday, admitted that the economic situation in the country made things extremely difficult for airlines.

“I understand passengers’ complaint of airfares increasing. Yes, I sympathise with them, but airlines are in the business to make money. Unfortunately, the economic situation in the country has made it very difficult for the airlines. I am not being insensitive, but I sympathise with the passengers.

“How many times has the price of fuel gone up? It has tripled/quadrupled in the last one year? Foreign exchange has gone to over N1,000/$. If you want to service your aircraft at $1million, it is equivalent to N1billion. You can imagine that.”

According to him, if the cost of production can’t be controlled, there is no need to control price.

Airlines advised to merge

Despite the numerous problems affecting airlines in Nigeria, some experts said the operators could still make profit through collaboration.

Tijjani Shehu, who worked with some airlines, both in Nigeria and the United States, said investors should look at the business from a different perspective instead of floating aircraft as status symbol.

He said, “The issue here is that every person wants to have his or her airline for commercial purposes; and that is why they are not getting it right.

“How do you expect someone with two or three aircraft to make any headway? It is not possible.

“They should come down from their high horses and merge for comparative advantage. If two or three of the airlines could come together, they stand to gain more because the taxes they would be paying would be less, and they would not have a top heavy organogram. They would be more efficient and could cover more routes with ease,” he said.

Another aviation expert said, “The major problem is that the airlines are small operations, not large enough to absorb changes in the market while keeping prices reasonable.

“If the airlines were large, for example, if they were forced to merge and consolidate, there would be more efficiency in their operations and routes; and therefore, less need to keep increasing prices at the slightest opportunity.”

Bussiness

Otedola Gives Reason he is buying Dangote Cement Shares

Published

1 year ago

January 23, 2024

Zizzi Times

Otedola Gives Reason he is buying Dangote Cement Shares

Renowned business magnate, Femi Otedola, has said that his choice of investment in Dangote Cement is determined by long-term wealth preservation, export potential and shareholder…

Renowned business magnate, Femi Otedola, has said that his choice of investment in Dangote Cement is determined by long-term wealth preservation, export potential and shareholder value in Dangote Cement share acquisition.

Daily Trust reports that Otedola recently acquired shares worth N6 billion in Nigeria’s largest company by market capitalization, Dangote Cement Plc.

Dangote Cement is one of the Stocks Worth Over One Trillion (SWOOT) with a current market capitalization of above N9 trillion.

Otedola, a serial investor and chairman of Geregu Power Plc, is renowned for his stock-picking boldness and was one of the major drivers of the stock market’s bull run in 2023, after his interest in Transcorp.

Otedola in a statement said his investment in the cement company is a testament to his confidence in its potential to propel Nigeria’s and Africa’s industrial and economic development

“In my investment decisions, I focus on long-term wealth preservation and ensuring shareholders are the ultimate beneficiaries of a company’s success,” he stated.

Otedola said his investment aligned with his vision of long-term wealth preservation and the belief that shareholders should be the primary beneficiaries of a company’s success.

“Companies like Dangote Cement, which consistently deliver value to their shareholders, are fundamental for sustainable economic growth. My investment reflects my belief in its capacity to continue providing significant returns and my commitment to businesses that prioritize their shareholders,” he added.

Otedola, who argued that Dangote Cement’s unique position with two export terminals offers a substantial opportunity to earn foreign exchange, crucial for Nigeria’s economy, stressed that this along with the company’s pan-African presence, makes it an ideal investment choice

“Dangote Cement’s strong corporate governance and impressive ESG compliance track record make it an ideal investment choice. It represents the type of company that not only contributes to Nigeria’s industrial strength but also aligns with my vision for ethical and sustainable business practices,” added Otedola.

He opined that Dangote Cement’s export capabilities and extensive operations across Sub-Saharan Africa are essential for regional economic integration and growth.

Bussiness

Another Large Container Vessel Berths at Lekki Deep Seaport

Published

1 year ago

January 23, 2024

Zizzi Times

Another Large Container Vessel Berths at Lekki Deep Seaport

Lekki Deep Seaport Berths Another Large Container Vessel
The Lekki Deep Seaport has berthed the largest container carrier to sail on Nigerian territorial waters on Sunday 21st January, 2024. The vessel measuring 367M…

The Lekki Deep Seaport has berthed the largest container carrier to sail on Nigerian territorial waters on Sunday 21st January, 2024.

The vessel measuring 367M in length and christened ‘Maersk Edirne’ has a Breadth of 48.2 and carried a Gross Registered Tonnage (GRT) of 142,131metric tonnes and a Deadweight Tonnage (DWT) of 147,340 metric tonnes, constituting 3,376 total cargo onboard.

Before this time, the largest commercial vessels to sail on Nigerian waters were “MV Stadelhorn” and “MSC Maureen” at Onne Port and TinCan Island Port Complexes respectively.

The Managing Director / CEO Nigerian Ports Authority, Mr. Mohammed Bello Koko has said the Lekki Deep Seaport has by this feat in addition to its pioneering of full automation and facilitation of transhipment proven its readiness to exceed stakeholders’ expectations.

Bussiness

Reps Move To Revive Yuan/ Naira Swap Deal

Published

1 year ago

December 21, 2023

Zizzi Times

Yuan/ Naira Swap Deal

The House of Representatives is moving to revive the Bilateral Currency Swap Agreement (BCSA) signed between Nigeria and China.

The lower chamber, on Wednesday, resolved to liaise with the Central Bank of Nigeria (CBN) to speed up the implementation of the currency swap deal.

This resolution followed a motion moved by Jafaru Leko (APC, Bauchi) during plenary.

Three months after the agreement, the CBN commenced the take-off of the scheme through the Special Secondary Market Intervention Sales (SMIS) retail dedicated to the payment of Renminbi denominated Letters of Credit (LCs) for raw materials and machinery and agriculture only.

However, not much has been heard on the financial instrument.

The motion
In his motion, Mr Leko called for the outright adoption of the Yuan as one of the major currencies for Nigeria’s foreign reserve.

He stated that monetary authorities must consider the Chinese Yuan as an alternative trading currency in the face of the decline of the Naira against the US dollar and major currencies.

Mr Leko called for the adoption of the Chinese Yuan (CNY) as an official foreign exchange reserve currency alongside others.

The legislator said the CBN must explore the appropriate mechanisms, policies, and partnerships required for the implementation of the shift to Yuan.

“Global economic landscape is evolving and international trade dynamics are shifting, with China assuming a leading role in global trade.

“People’s Republic of China has a stable and globally recognized currency, the Chinese Yuan (CNY), which is gaining recognition in international trade,” Mr Leko said.

To buttress his point, the lawmaker said “Adopting the Chinese Yuan as an additional foreign exchange reserve currency might mitigate the adverse effects of Naira depreciation.”

He added that “It would enhance Nigeria’s trade and economic ties with China, a crucial trading partner.”

But the Deputy Speaker, Ben Kalu, who presided over the session, said there was no need for the House to call for a new policy, instead, the government should revive the currency swap scheme.

Subsequently, Sada Soli (APC, Katsina) moved an amendment to urge the speeding up of the 2018 current swap agreement.

The motion was passed as amended when Mr Kalu put it to vote.

The Committees on Banking Regulations, Banking and Other Ancillary Institutions were mandated to interface with the CBN on the policy and report to the House within four weeks.

Bussiness

Nigeria Police Arrest Two Over Production Of Fake Drinks, Uncover ‘Multi-room Factory’ In Lagos

Published

1 year ago

December 20, 2023

Zizzi Times

Nigeria Police Arrest Two Over Production Of Fake Drinks,

The police in Lagos, southwest Nigeria, have arrested two persons in possession of fake drinks.

Although the details of the arrest are still sketchy, the Command’s spokesperson SP Benjamin Hundeyin who disclosed the arrest in a post shared on his X (formerly Twitter) handle, gave the names of the suspects as Imo Lawrence ‘m’ aged 35 and Magnus Nwonka ‘m’ aged 42.

Hundeyin said that the suspects were arrested by officers of the Ojo Division of the command on Wednesday.

The police spokesperson said in the course of the investigation, the suspects led detectives to their “inconspicuous, multi-room ‘factory’, adding that “investigation is ongoing.”

SaharaReporters reported on Monday, December 18, that the National Agency for Food and Drug Administration and Control (NAFDAC) uncovered a large haul of fake wine and soft drinks in Abia State.

The agency which disclosed this in a statement said it discovered major brands cloned by the arrested syndicate in an operation that involved over 240 shops-turned-factories.

Bussiness

Naira scarcity lingers, traders ration cash

Published

1 year ago

December 19, 2023

Zizzi Times

Some grassroots farmers and petty traders have expressed frustration over the lingering cash crunch in the country, saying the unfortunate incident has been taking a toll on their businesses.

Some farmers and traders who spoke to The PUNCH said they stopped keeping their cash in the banks to avoid the funds getting trapped.

Small and medium-scale enterprise associations who spoke to our correspondent said the cash crunch would further weaken the government’s efforts to drive financial inclusion, especially at the grassroots.

A farmer in Igboho area of Oyo State, Mr Dele Bamigboye, said, “Many of those who bought from my farm produce have not paid me. They said they could not get money from the banks. It is affecting my business. I sell my things in cash and I have someone who helps me to collect the monies and keep in her bank account when it is much. Now, I cannot get cash because my monies are trapped.”

Another trader in Ogidi area of Ilorin simply identified as Mama Kudi said, “I am selling to only those who have cash to pay. I maintain this position because if they send money to my account, I cannot access cash from the PoS, and banks are rationing their cash. I need cash to buy goods and do my transactions. I am not taking money to the bank.”

Despite assurances from the Central Bank of Nigeria that there is enough cash in the economy, Nigerians have continued to decry the cash scarcity, as many Automated Teller Machines lack funds while banks are rationing cash over-the-counter.

Re
Speaking on the impact of the cash crunch on financial inclusion drive, the President of the Association of Small Business Owners in Nigeria, Dr Femi Egbesola, said it would have a negative effect.

He said, “People are trying to get their businesses structured and take their monies to the bank. With what is happening now, the confidence is eroded, especially at this festive period. People, mostly in the micro sectors, need cash for their daily transactions.

“It is very unfortunate that some of them had to take their monies to the bank, not knowing that a thing like this would happen, and when they are expecting to get their monies from the banks, they are unable to withdraw it.

“A lot of transactions in the economy still go with cash. Grass root business is still cash dependent, and when there is no cash, there will be apathy in going to the bank to lodge their funds.”

The Vice President, Nigerian Association of Small and Medium Enterprises, South-West Region, Solomon Aderoju, said, the cash crunch would affect the confidence of those at the grassroots in the banking sector.

He said, “Financial inclusion is to engender opening of accounts to ensure that you don’t keep your money under your pillow. It is also to help the SMEs to have a structured business, and also to control money in circulation. But with what is happening now, the confidence is lost. People will not have the confidence to keep their monies in the banks.”