The Chairman and CEO of Air Peace, Allen Onyema, has clarified why air fares, especially for international operations, are heavily influenced by dollar-denominated costs, shedding light on the economic realities behind airline pricing in Nigeria.
Speaking in a recent media interview, Onyema explained that airlines in Nigeria operate in a global industry where most critical expenses are settled in US dollars. These include aircraft purchases and leases, spare parts, engine maintenance, insurance, and fuel for international flights. Because these costs are largely in foreign currency, pricing tickets in naira must reflect dollar-linked expenses to ensure financial sustainability.
“Even though we sell tickets locally in naira, the bulk of our operating costs are in dollars,” Onyema said. “Without this, it would be impossible for airlines to maintain operations, especially with the volatility of the exchange rate and high local financing costs.”
Operational Costs Drive Dollar Pricing
Onyema noted that Nigerian airlines often need to send aircraft abroad for major servicing and repairs, which must be paid for in dollars. Combined with the high cost of imported spare parts, this makes dollar-linked pricing a necessity, even when serving domestic routes.
He also highlighted that Nigerian airfares remain competitive globally. For instance, while a one-hour domestic flight in the United States may cost over $400, comparable flights in Nigeria are often available for under $60, demonstrating that passengers are already paying among the lowest fares in the world relative to income and operational costs.
Challenges and Industry Pressures
According to Onyema, excessive taxes, levies, and regulatory charges add further pressure to already thin margins, making it difficult for local airlines to absorb costs without referencing dollar expenses. He emphasised that pricing tickets solely in naira without considering dollar-linked costs is not sustainable for the industry.
The Air Peace CEO said that despite these challenges, the airline strives to offer value to passengers while balancing operational realities. His explanation underscores the economic constraints of running a Nigerian airline and highlights why fare structures may appear high but reflect the costs of maintaining safety, reliability, and international standards.
Source: Thepressradio.com
