Acting Senior Vice President Operations and Deputy Managing Director (DMD) Operations of Arik Air, Ado Sanusi, has observed that one of the reasons why Nigerian airlines do not survive for long is that they do not have realistic operational module in terms of determining their fares.
In an interview with THISDAY in Lagos on Tuesday, Sanusi stated the need for the Nigeria Civil Aviation Authority (NCAA) to regulate the fares introduced by airlines to ensure that their pricing could earn them enough revenue for training of their pilots, aircraft maintenance and offsetting their operational cost. He noted that if an airline introduces promotional fares, the regulatory body should ensure that it has enough funds to carry out these essential expenses because safety is breached when an airline does not maintain aircraft in its fleet according to schedule.
He pointed out that some airlines charge ridiculously low fares to win passengers, but may not generate enough funds for the continued running of their operations and this leads to bankruptcy in the long run and finally the collapse of such airlines.
Sanusi observed that all over the world, airlines are having challenges but that government of various nations introduce deliberate policies to buoy their airlines, knowing that air transport is a catalyst for economic development. He therefore advised Nigerian government to device ways to sustain the operations of domestic carriers.
He said: “Airlines ought to have realistic pricing because low fares help you to accumulate debts and it is better to have bigger airlines than smaller airlines. For example, if you have two aircraft in your fleet and one goes for maintenance, you have only one left and that is 50 per cent of your capacity. Big airlines can absorb having aircraft on maintenance checks, aircraft on ground (AOG), so economic regulation will look at all these and establish the right pricing for airlines.
“Economic regulation will also look at the financial health of each airline, the way the airline is selling its promo tickets and ensure that enough money is generated for operational costs because if you are not making money from your fares, you must be subsidising your cost of operation but you have to show the regulatory body that you are subsidising your operations from resources outside the generated revenue to ensure that you can pay for pilots’ training, aircraft maintenance and for cost of operation.”
On the allegation that Arik Air hiked its prices because other airlines grounded their operations, Sanusi explained that, “Arik Air has not increased her prices. We have maintained our prices right from the beginning of the year. In fact, what we have done is to introduce prices that are very, very good; we call them promotional fares whereby if you a return ticket you save up to 15 per cent and in some routes if you even book online you will get a very, very low fare. So we have not increased our prices and I will like to make it very clear.”
The DMD argued that the airline does not just increase their prices because it has a booking and reservation system “where it will take a minimum of 14 days to actually file those prices and this booking system is monitored and is being handled by Emirates Airlines. So prices don’t just come in like that; we need time to file these prices and for these prices to be accepted in the system.”
He warned that touts may be inflating airlines’ prices especially at the airports in Abuja and Lagos and advised passengers to ensure that they go to Arik’s counters or use the airline’s website and do the booking themselves “because I am very sure that it is because of touting that these prices are being increased but we have never increased our prices because of the situation in the industry.”
Although it is believed that limited capacity in terms of the number of operating airlines and the limited number of aircraft in their fleet that is driving up the fares, Sanusi said that Arik has deployed only 60 per cent of its capacity in the market.
“If you look at it, Arik Air flies average of eight hours a day but our competitors outside the country fly the same airplanes for 16 hours; some even push it to 18 hours, so we have not deployed the full potential and the full capacity of Arik Air. We are looking at probably less than 60 per cent that we have deployed. So the capacity of Arik Air has never been stretched and we are capable of increasing capacity if the demand is there.”
Sanusi stated that healthy competition was necessary in any market for the growth of that market, adding that “Arik likes competition and encourages it as it would set a high standard for the development of commercial airline operation in the country”.
“As I said earlier, we have not been stretched to any limit because we have the capacity. Talking from experience it is not good to stretch any airline to its limit because it will affect safety. So the airline should recognise the capacity that it has. In Arik we have huge room for increasing our capacity”, he stressed.
Sanusi, who was former Chief Executive Officer of the Nigeria Airspace Management Agency (NAMA) said although there are developments in the aviation industry, but that a lot still needs to be done to make it better.
“We need to have a deliberate policy from the government and a way forward where the airlines can have a very good environment so that they can grow without having a lot of challenges. Of course airlines are having challenges all over the world but it is left to the host government to make sure that they make the growth of the industry paramount because it has been said several times that aviation is the catalyst of economic growth. So we should also make sure that some deliberate policies are geared towards its growth and expansion”, he said.
Author:Chinedu Eze
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