Yuletide: Domestic operator faults hike in airfares

describes it as wrong business model

By Dickson Omobola

Less than three months after some domestic airlines raised ticket prices to the South-East and South-South regions ahead of the Yuletide, Managing Director/Chief Executive Officer of Aero Contractors, Capt Ado Sanusi, has faulted the approach and described it as a wrong business model.

Sanusi said although airlines adjust fares based on demand and supply, increasing ticket prices during the Yuletide was unfair to travellers.

Sanusi, in a chat with Vanguard, said: “Airlines have more demand for tickets during the Yuletide, so they feel that they can increase the prices so that the highest bidder can pay for these tickets.

“Personally, I believe that is a wrong business model. I believe that it is wrong to increase prices during the Christmas period. I do understand it is basic Economics 101 because supply and demand is a factor. When supply is low and demand is high, prices go high. When demand is high, supply is constant, prices still go up.

“That is the economics of the whole thing. I believe airlines should have a way of managing the supply and demand through what we call booking in advance, opening fare buckets and properly managing inventory, which is good.”

In August, Vanguard reported that Nigeria’s largest airline, Air Peace, had jacked up its one-way economy ticket from Lagos to Asaba in Delta State, as well as Lagos to Enugu and Benin in Edo State.

Findings by Vanguard also revealed that United Nigeria also significantly increased its one-way economy ticket from Lagos to Enugu, Lagos to  Owerri in Imo State and Asaba in Delta State simultaneously.

Trustee member of the Airline Operators of Nigeria, AON, Roland Iyayi, had justified the increase, telling Vanguard that anything about pricing was an economic consideration. 

Iyayi said: “We look at it from the standpoint of demand and supply. There is also a need to consider all the factors involved. For the South-East, during a peak period, traffic is typically one way. What it means is that the demand is usually in one direction. If an airline takes maybe 100 passengers to that destination, it comes back with maybe about 20 passengers.

“Now, because the price is in one direction, the price of each seat has to be priced in such a way that the yield from one direction would fairly cover the operating costs. What happens around that period (Yuletide) to scheduled airlines is similar to the structure adopted by charter airlines.”

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