A short note to the aviation minister

A quick note on two issues.

First the threat to BA and Virgin Atlantic over alleged unfair pricing. As it turns out flights from the UK to Accra are cheaper than flights to Lagos which is also cheaper than flights to Abuja. But so what? Is it unexpected? There is a much larger and richer population in Lagos compared to Accra which should translate to higher demand for flights. Higher demand should translate to higher prices unless there is some increase in the number of flights. Same can be said for Abuja. Higher demand but with a lot less flights. Again we should expect higher prices not because BA or Virgin Atlantic is ripping anybody off. Can prices go lower? Probably. How? By getting more flights into Abuja and Lagos. The price of flights from the US to Lagos has crashed over the last few years primarily because there are a lot more flights. I am yet to understand how banning BA and Virgin hence reducing the number of flights into Lagos and Abuja could somehow lead to reduced prices. A ban will simply result in much higher prices for the other airlines who don’t get banned.  If they are somehow prevented from raising their prices then there will simply be no flights and the bulk of people will probably have to make their way to Accra.

This is the important point I want to make: IT IS NOT THE JOB OF GOVERNMENT TO DETERMINE WHAT A FAIR PRICE IS. You think we would have figured that out by now.

The second issue is the cancellation of the contract with Maevis on the running of some airports. I don’t know all the details. It is always a bad sign when a government acts as accuser, judge and juror. The arbitrary cancellation of contracts sends a bad message to investors. “Contracts are only valid if we say so or until we leave office”. The message to investors: don’t do business with us. We will change our minds later on.

 

Update: Turns out taxes are a lot higher in Lagos and Abuja compared to Accra. $60 in Accra as opposed to $316 in Lagos for a typical flight to London. Really

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