Punch Airlines may cut fares to woo back passengers OCTOBER 28, 2013 BY OYETUNJI ABIOYE The crisis in the aviation industry is forcing domestic airlines, which have been losing substantial number of their passengers, to think up survival strategies, including reduction in airfares, OYETUNJI ABIOYEwrites This is not the best of times for domestic airlines, which have lost about 30 per cent of their passengers as a result of the crisis being witnessed in the aviation industry in the country. Trouble began for the aviation sector about a month ago when an Associated Airlines’ plane conveying the remains of a former Governor of Ondo State, Dr. Olusegun Agagu, to Akure crashed in Lagos, killing 16 people. The development was followed by some major incidents that made the nation’s airspace to record four mishaps within three weeks. The situation became worse when reports later emerged that the Minister of Aviation, Ms. Stella Oduah, who is supposed to be championing the cause of safety in the sector, was involved in a multimillion naira bulletproof car scandal. As a result of the developments in the sector, domestic airlines’ chief executive officers, who spoke to our correspondent under the condition of anonymity because of the sensitive nature of the issue, admitted they had lost about 30 per cent of their passengers, who had suddenly developed a phobia for air travel. The chief executive officer of one of the popular domestic airlines told our correspondent, “We are in a crisis situation now. There is a major crisis of confidence ravaging the airline industry now. People are now afraid to fly. “For us in our airline, we have lost not less than 30 per cent of our demand. Our aircraft are going to Abuja and other parts of the country not full again. This is a serious crisis situation.” He said although the domestic air travel industry had lost capacity by about 22 per cent due to the grounding of some operators namely: Dana Air, IRS Airlines and Chanchangi Airlines, the sector was still experiencing a sharp drop in passenger demand. “We have lost capacity as a result of the fact that some airplanes have been taken out of service due to the suspension of the operations of some airlines; notwithstanding this, the remaining aircraft in service for the other airlines are not flying full,” the CEO added. Dana has five aircraft; IRS also has five aircraft but only one was operational as of the time it was grounded by the Nigerian Civil Aviation Authority last week; Chanchangi has three planes but only one was operational at the time it was also grounded. The NCAA had grounded Dana to enable it to carry out an audit of the airline’s operation because of some alleged incidents. IRS and Chanchangi were grounded because their operational planes had been reduced to only one aircraft each; a development the NCAA said was against its regulations. Some industry analysts have, however, contested the regulatory authority’s decision. Arik Air, Aero Nigeria, FirstNation and Medview Airlines have 24, 12, two and four aircraft in their fleets, respectively. At the moment, 13 out of the 59 planes in the fleets of eight domestic airlines in the country are not in service because three of the carriers have been suspended. The five carriers still flying are Arilk, Aero, FirstNAtion, Medview and Overland. The CEOs of the airlines, however, said if the ongoing crisis of confidence persisted for another four weeks when the grounded airlines would have returned to service, there would be a major drop in airfares occasioned by stiff competition. The NCAA is expected to release IRS and Chanchangi back to service in about three weeks’ time when their airplanes, which are currently out for routine maintenance, are expected to return back to service. “If this crisis of confidence persists till the suspended airlines return back to service, airfares will surely drop significantly; this is because there will be an excess capacity in the sector and airlines will be forced to reduce their fares,” the CEO stated. The Assistant General Secretary, Airline Operators of Nigeria, Alhaji Tukur Muhammed, said the domestic airfares would be reduced by at least 20 per cent if the crisis of confidence persisted for another two months. Tukur explained, “Let me tell you something, the truth is that first of all, domestic airlines have lost 30 per cent of their demand owing to the ongoing crisis of confidence in the sector. People are afraid to fly. The situation is becoming worse everyday. “Last week, I could not convince even my own wife to travel by air from Kaduna to Lagos; imagine that! What I foresee now is that if the situation continues like this for another two months, the airlines will be forced to reduce their fares by about 20 per cent in order to remain in business.” Outlining the way forward to restoring the confidence of air travellers, Tukur said one of the things the Federal Government could do was to carry out a major restructuring of the management in the sector. The AON scribe said, “I think the Federal Government may need to replace those at the helm of affairs of some of the agencies to restore confidence. Moreover, the government may also need to consider scrapping the ministry of aviation and put it under the ministry of transport such that what we will have may be a permanent secretary in charge of aviation under the ministry of transport. “This will remove the fear people are having over the alleged erosion of autonomy of the regulatory authority, NCAA, by the ministry of aviation.”
Posted on: Mon, 28 Oct 2013 07:40:16 +0000
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