Former Director General of the Nigerian Safety Investigation Bureau (NSIB), Mr. Akin Olateru, has said that the persistent rise in domestic airfares is rooted in Nigeria’s flawed aviation ecosystem rather than the pricing strategies of airlines, pointing to longstanding structural and operational inefficiencies that continue to drive up the cost of flying.
According newsbulletinng.com, speaking during a Aviation Town Hall held via Zoom organized by Avaero Capital Partners on the theme: “High Air Fares: Are Airlines Really the Problem?” Olateru noted that seasonal fare increases are a global phenomenon and should not be viewed in isolation.
He explained that travel costs typically spike during peak periods such as Christmas and New Year, just as hotel rates rise during the same season worldwide.
Conversely, off-peak periods like travelling to Dubai during Ramadan, often attract significantly lower prices.
According to him, aviation is no different from any other business responding to demand cycles.
However, he stressed that Nigeria’s situation goes far beyond seasonal demand.
The Ex-NSIB boss identified two fundamental challenges confronting local airlines: foreign exchange exposure and the high cost of funds.
READ: Africa: Why Air Travel Is Cheap in Europe but a Luxury in Nigeria by Alex Nwuba
Unlike airlines in the United States or Europe that sell tickets and settle most of their obligations in the same currency, Nigerian airlines sell tickets in naira while up to 90 per cent of their operating costs ranging from aircraft leasing to maintenance are denominated in foreign currency.
This mismatch, he said, places Nigerian operators at a severe disadvantage.
Compounding the problem is the cost of borrowing. With interest rates ranging between 30 and 35 per cent, Olateru questioned how any capital-intensive business could sustainably operate under such conditions.
He emphasized that airlines are not charitable organizations and cannot absorb these costs without passing them on to consumers.
Olateru added that, maintenance and spare parts, present another major burden.
Many Nigerian scheduled operators, he revealed, now keep one aircraft grounded purely as a source of spare parts due to the difficulty of importing components.
Operators must navigate complex processes involving original equipment manufacturers or third-party suppliers, foreign exchange transfers that can take days or stall without explanation, and prolonged delays at ports of entry.
Even when parts arrive, customs bottlenecks often neutralize the urgency of Aircraft on Ground (AOG) situations, leaving planes stranded and revenue lost.
According to him, these inefficiencies, Olateru said, significantly affect aircraft turnaround time and utilisation.
In some cases, an aircraft may be docked for 15 to 20 days before it can return to service, eroding profitability. Airport infrastructure limitations and facilitation issues further worsen the situation.
He cited passenger processing delays, particularly for early-morning departures, as factors that increase operating costs and reduce efficiency.
Beyond operations, Olateru highlighted broader economic pressures, including country risk, insurance premiums, and the limited inflow of foreign direct investment into the aviation sector.
He also pointed to the heavy tax burden on air travel in Nigeria. While passengers in Europe can fly international routes such as London to Paris for as little as $25, he said such pricing is impossible locally due to multiple charges.
These include a $100 passenger service charge, value-added tax, a five per cent ticket sales charge, a $20 security fee, and additional levies, pushing the base cost of an international ticket in Nigeria to about $250 before airline pricing is even considered.
Regulatory costs also came under scrutiny. Olateru noted that aircraft age restrictions, which have been in place for over two decades, continue to drive up costs.
Under current rules, importing a 10- or 12-year-old aircraft into Nigeria can be more expensive than bringing in an older aircraft elsewhere, further burdening operators.
He also cited helicopter operations as another example of cost escalation. With landing fees of about $300 per landing, helicopters operating in Nigeria many of which make up to 10 landings daily generate costs running into tens of millions of dollars annually.
Regardless of whether these charges are borne by operators or oil and gas companies, he stressed that the ultimate burden rests on Nigerians as end-users.
Olateru maintained that while airlines are often blamed for high fares, the real drivers lie in systemic issues spanning finance, regulation, infrastructure, taxation, and policy.
Addressing these challenges, he argued, is the only sustainable path to more affordable air travel in Nigeria.
