The demand for air travel in Nigeria’s domestic space exceeds supply for a couple of reasons including high level of insecurity on the roads and COVID-19 which led airlines to reduce their operations.
Now, the whole cancellation saga got my engineering, banking and data analytics brain thinking. The average price for a domestic flight ticket is N50,000. The average plane takes about 120 passengers. This comes to a total revenue of N6m per flight. Again, because of high demand, tickets are typically purchased in advance and mainly online.
Let us take it that each airline cancels at least one flight a day. However, to give the airlines the benefit of doubt, I will assume they cancel only 25 flights in a month, which allows for some days without cancellations. I strongly believe it is more than this but I will stay with this for ease of analysis. This comes to N150m of ticket payments tied down with the airlines monthly.
Now the two airlines mainly affected (Arik Air and Aero Contractors) have a policy of refund after 40 days of complaint. So, these airlines get to trade every month with N150m of passengers’ funds for at least 40 days and given the long and complicated refund process, approximately about 10% of the funds (N15m) end up with the airlines for no service rendered. This scam translates to the airlines trading with N150m monthly and illegal appropriation of N15m in the end
The regulatory authorities like the Nigeria Civil Aviation Authority should step in. There should be compensation to passengers by the airlines for such cancellations. And in situations where the cancellation is unavoidable, refunds should be made within 48 hours.
Ibude Guobadi, Punch