Airfares prices hike looms as NAMA is set to impose fresh 800% charges

Stakeholders have indicated that this will likely result in increased air fares to reflect the new charges.

Umar Ahmed Farouk, the Managing Director of the Nigerian Airspace Management Agency (NAMA), disclosed this on Friday at the League of Airports and Aviation Correspondent (LAAC) seminar themed “Aviation Survivability amidst a Challenging Macro-Economic Environment,” held in Lagos.

NAMA and the Nigerian Civil Aviation Authority (NCAA) previously held a strategic meeting in January with airline operators under the aegis of Airline Operators of Nigeria (AON) to review the outdated N16,000 Terminal Enroute Navigational Charges (TNS). The meeting, which took place in Abuja, was initiated by the NCAA and NAMA to discuss the rate review, which the airlines acknowledged was necessary.

The implication of the action which NAMA took to cushion its high cost of airspace surveillance and security could further lead to astronomical increases in domestic airfares and by extension fares on international routes.

He noted that the industry requires very efficient pricing of products and services, stressing that it is a critical lever for enhancing affordability, driving competition, supporting infrastructural development, promoting sustainability, and improving operational efficiency.

He however noted that the price for services must reflect the value of these services.

He said, “The Nigerian Airspace Management Agency relies on statutory fees for the management of the airspace (remember that aviation takes place only in the air). These funds are generated from services we provide to the flying community, without these funds NAMA can’t discharge its responsibility of ensuring the safety of our airspace effectively. We majorly generate these funds through the airline companies.”

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Farouk further disclosed that for 2023, NAMA had an expenditure of about N21 billion in personnel costs alone, over N12 billion in capital costs and over N10 billion in overhead costs, adding that all these were to be (and were) funded from fees (no FGN budgetary allocation).

He said NAMA had been charging as low as N11,000 per flight when a one-way domestic ticket cost only N16,000.

He said while ticket prices today have gone up astronomically to as high as between N150,000 to N200,000 for a one-way economy ticket owing to the prevailing economic circumstances, NAMA navigational charges have remained the same since June 2008.

“Currently, our unit rate for international flights charged for service provision is about $70, domestic flights are charged 6,000 Naira. While NAMA recognizes the difficult economic environment aviation operates in Nigeria, it is equally a part of the ecosystem. It goes to the same market to procure equipment and other services like training. If NAMA is to survive and continue to guarantee safety and efficiency in the airspace, it must breathe.

“Even though most costs in the economy have increased by more than 1,000 percent, NAMA has proposed to increase its fees by 800%. The new rates for en-route and terminal navigation charges are to be reviewed from 2,000 and 6,000 Naira to N18,000 and N54,000 per flight. Also, the extension of hours of service is to be reviewed from N50,000 to N450,000 per extension to enable the agency to recover the cost of diesel and other logistics during the period of extension”.

“The largest percentage of NAMA’s revenue comes from en-route navigation charges (domestic and international flights) and terminal navigation charges (domestic and international flights). While international flights pay in US dollars, domestic flights pay in the Nigerian currency.”

The NAMA MD said as a service provider and under ICAO best practices, adding that NAMA does not make a profit.

He stressed that ICAO Doc 9082 recommends cost recovery for service provision to cater for the cost of equipment, personnel, training and other ancillary costs. This is what NAMA tries to do.