Why FG can’t interveve in high air fares — Keyamo

FILE: Minister of Aviation and Aerospace Development, Festus Keyamo.

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The Minister of Aviation and Aerospace Development, Festus Keyamo, says the Federal Government cannot fix domestic airfares because the market is deregulated, but promised that fresh aircraft leases and tougher competition will force prices down.

Briefing State House correspondents after Wednesday’s Federal Executive Council meeting at the Aso Rock Villa, Abuja, the minister said Nigerian aviation has operated on market pricing since liberalisation began in the Babangida era and government has “no legal powers” 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, adding, “But that does not mean we are leaving the airlines without engagement.”

He confirmed he had been invited by the Senate over rising fares but could not attend because he was making presentations to FEC.

He revealed that he directed the Nigerian Civil Aviation Authority and domestic carriers to honour the National Assembly invitation.

Keyamo linked the end-of-year steep fares to structural cost drivers such as limited access to aircraft, expensive lease terms, lack of local heavy-maintenance capacity, and the perpetual hunt for foreign exchange to run mandatory C-checks abroad.

These pressures, he argued, inevitably lead to high air fares.

According to him, a major confidence boost has arrived with the return of one of the world’s biggest lessors to Nigeria, offering cheaper dry-lease aircraft to local operators for the first time in years.

“You remember that we have passed the practice direction regarding the Cape Town Convention, and for the first time in the last three, four weeks, one of our local airlines now began to access dry lease.

“The dry lease was three times lesser than the price they normally get, and it was given by one of the best and the biggest lessors in the world, Aercap, after abandoning Nigeria for nearly two decades,” he said.

Keyamo argued that lower lease rates will unlock capacity and spur competition which, he noted, is the only factor that reliably reduces prices in a free market,

“The only thing that can drive prices down in a free economy is competition. So 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. We are going to do that, I assure you,” he explained.

Nigeria’s domestic market has been price-driven since deregulation opened the airways to private carriers in the late 1980s and 1990s. Established in 2000, the NCAA has provided strictly safety and economic oversight regulator rather than a price-setter.

In recent years, spikes in the price of jet fuel, exchange-rate fluctuations, and the high cost of leasing and maintaining aircraft offshore has been the major drivers of airfares.

Keyamo also said the Federal Government has received ECOWAS’ circular urging relief for operators, but stressed that the regional bloc cannot compel members on tax policy and that his ministry alone cannot waive collections.

“The second one is on the issue of the taxes. We have received the communication,” he noted, explaining that “ECOWAS still do not have that jurisdiction to force us…Now the meeting goes beyond aviation. All the tax we collect, they go into the Federation Account.”

He said consultations have begun with fiscal authorities, adding that the process will be holistic.

“In fact, Hadiza Bala Usman (Special Adviser to the President on Policy Coordination) has been very, very good on this, to rally us to one table to look at it, so we are looking at it holistically.

“I cannot wake up one morning and abolish taxes. The Finance Minister, the tax authorities and other stakeholders must all be at the table,” he explained.

The Minister also announced a portfolio of aviation projects approved by the Council, beginning with 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, Kano,” he said, explaining that 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 first period of maintenance expired, and then we sought for extension of two-year maintenance by CCECC. That is the first one which was graciously approved,” he stated.

The Council also approved high-end navigation and surveillance upgrades to tighten safety in Nigeria’s airspace, Keyamo revealed.

“The award of contract for the procurement, installation and commissioning of what we call the Advanced Surface Movement Guidance and Control System, and ongoing installations of surface-movement radar in Lagos and Abuja airports.

“This type of equipment will not only detect anything moving on the surface of the runway; it will detect the exact spot it is, and advise approaching aircraft,” he noted.

According to the Minister, a modular air-traffic-control tower cabin with a 360-degree view will be installed at eight airports.

Another FEC approval covers “the installation of aeronautical frequency spectrum monitor and interference detection solution” to strengthen communications between towers and cockpits, he revealed.

The ministry also secured the “procurement, replacement and upgrade of the remote-control air-ground communication, total VHF radio system” across nine airports. They include Lagos, Port Harcourt, Ilorin, Abuja (two sites), Kano, Maiduguri, Sokoto and Makurdi.

FEC aapproved additional biometric e-gates at all international gateways to fast-track arrivals and departures. “We want to continue to upgrade those passenger e-gates…that promote quick passage of passengers across the airports,” Keyamo said, declining to state the contract sums when asked.

With three years of experience, Stephen, The PUNCH correspondent, has been covering Nigeria’s presidency, politics, security, immigration and trafficking in persons

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