Why FG Can't Act on High Air Fares — Keyamo

Daftar Isi

Government Cannot Control Airfares, Says Aviation Minister

The Minister of Aviation and Aerospace Development, Festus Keyamo, has stated that the Federal Government is unable to control domestic airfares because the market is deregulated. However, he emphasized that new aircraft leases and increased competition could lead to lower prices in the future.

During a briefing with State House correspondents after the Federal Executive Council meeting at Aso Rock Villa, Abuja, Keyamo explained that Nigeria’s aviation sector has operated on market pricing since the liberalization process began during the Babangida era. He clarified that the government does not have legal authority to set ticket rates for private airlines.

“Government has absolutely no powers to fix prices for private enterprises. That is what deregulation means,” Keyamo said. “But that does not mean we are leaving the airlines without engagement.”

He confirmed that he had been invited by the Senate to discuss rising fares but was unable to attend due to other commitments. However, he directed the Nigerian Civil Aviation Authority and domestic carriers to respond to the National Assembly's invitation.

Keyamo attributed the high end-of-year fares to several structural cost drivers, including limited access to aircraft, expensive lease terms, lack of local heavy-maintenance capacity, and the need for foreign exchange to conduct mandatory C-checks abroad.

New Opportunities for Domestic Airlines

A major development in the industry has been the return of one of the world’s largest aircraft lessors, Aercap, to Nigeria. This has allowed local airlines to access cheaper dry-lease aircraft for the first time in years.

“We passed the practice direction regarding the Cape Town Convention, and for the first time in the last three or four weeks, one of our local airlines now began to access dry lease,” Keyamo said. “The dry lease was three times lesser than the price they normally get, and it was given by one of the best and biggest lessors in the world, Aercap, after abandoning Nigeria for nearly two decades.”

Keyamo argued that lower lease rates would increase airline capacity and promote competition, which he believes is the only reliable way to reduce prices in a free market.

“The only thing that can drive prices down in a free economy is competition,” he said. “In the next few months, or within the next one year, I expect that we will have more aircraft to service more routes and force down the prices by pure competition.”

Challenges in the Aviation Sector

Nigeria’s domestic market has been price-driven since deregulation opened the airways to private carriers in the late 1980s and 1990s. The Nigerian Civil Aviation Authority (NCAA), established in 2000, provides safety and economic oversight but does not regulate prices.

Recent years have seen spikes in airfares due to factors such as rising jet fuel prices, exchange-rate fluctuations, and the high cost of leasing and maintaining aircraft offshore.

Keyamo also mentioned that the Federal Government has received a circular from ECOWAS urging relief for operators. However, he stressed that the regional bloc cannot compel member states on tax policy, and his ministry alone cannot waive collections.

“We have received the communication,” he noted. “ECOWAS still do not have that jurisdiction to force us… All the tax we collect, they go into the Federation Account.”

Infrastructure Upgrades and Safety Measures

The Federal Executive Council has approved several aviation projects aimed at improving infrastructure and safety. One of the key initiatives involves continued maintenance at the Chinese-built terminal in Kano.

“We sought approval for award of contracts for the continuous maintenance and technical support services at the Aminu Kano International Airport,” Keyamo said. “CCECC, which constructed the new terminals in Abuja, Lagos, Kano and Port Harcourt, was contracted from the start to maintain chillers, carousels, lifts and other systems while training Nigerians to take over.”

The Council also approved upgrades to navigation and surveillance systems to enhance safety in Nigeria’s airspace. This includes the installation of an Advanced Surface Movement Guidance and Control System and surface-movement radar in Lagos and Abuja airports.

Keyamo revealed plans to install modular air-traffic-control tower cabins with 360-degree views at eight airports. Additionally, the ministry secured funding for the procurement, replacement, and upgrade of remote-control air-ground communication systems across nine airports.

Enhancing Passenger Experience

The Federal Executive Council also approved the installation of biometric e-gates at all international gateways to fast-track arrivals and departures. These e-gates aim to improve the passenger experience by reducing waiting times at airports.

“We want to continue to upgrade those passenger e-gates…that promote quick passage of passengers across the airports,” Keyamo said. He declined to disclose contract sums when asked.