High operational costs weaken African carriers performance, says IATA

Africans airlines may continue to record the weakest performance in air travel business in the world, as the region’s carriers have to face high operating costs, especially for fuel, which is 20 per cent costly than in other parts of the globe.


Also, as a result of their long haul service that faces stiff competition from carriers outside the region, including political barriers that still stand in the way of enhanced regional connectivity, according to the International Air Transport Association (IATA), recently

Nigerian domestic airlines are not exempted in this situation, indeed, the operators have been crying out on the high operational cost of running airline business in the country, ranging from high aviation fuel, otherwise called Jet A1, charges for custom duties on spares parts and aircraft importation and high leasing cost, among others.

For aviation experts, the price of aviation fuel is unduly high, not reflecting the price trends in the international market and because fuel accounts for some 30 per cent of the operational cost of airlines, it impacts on the fares these airlines charge.

Some of these charges, according to them are paid by passengers through high fares, which the International Air Transport Association (IATA) has described as extremely high, noting that, in many countries of the world an hour flight is less than $100.00 (N16, 000) ticket, but in Nigeria the average fare ticket is more than that.

The airline operators complained that high cost of aviation fuel, double taxation on spare parts, huge amount of money in foreign exchange on maintenance and other agency charges are impacting negatively on their operations.

They asked government for urgent bailout plans and reduction or elimination of some charges that were perceived as unnecessary, some of which were not obtained in other countries.

Also, the operators were of the opinion that it is only in Nigeria that Jet-A1 (aviation fuel) are sold at higher prices than other commodities, adding that it is the cheapest in other countries where same aviation laws apply. At that, airlines were leaving the stage almost on a monthly basis due to the effect of the economic recession, coupled with Nigeria’s harsh operating environment.

According to the Director General, IATA, Tony Tyler: “This is a very tough business. The day-to-day challenges of keeping revenues ahead of costs remain monumental. Many airlines are struggling. An average airlines will earn about $4 for every passenger carried, less than the cost of a sandwich in most places.
http://www.ngrguardiannews.com/index.php?option=com_content&view=article&id=123760:high-operational-costs-weaken-african-carriers-performance-says-iata

Culled from The Guardian Author: Chika Goodluck-Ogazi