A must read: Analyzing the Global Increase in cost of Hajj
As Published in Hajj Reporters Magazine 2018 Hajj Edition
By Ibrahim Muhammed
A pilgrim from Bauchi state during the 2018 hajj asked me a question on what would be the cost of hajj in 2019? It was an inquiry dressed in simple language but with elements of how, why and what as defined by essential ingredients of news in journalism profession.
My first response was to ask whether this was his first time of performing hajj and he answered in affirmative. He told me he had saved for five years before he could pay for a seat. Why is the cost of hajj rising year after year and what are the causative factors. if I may rephrase the question on his behalf.
I will not attempt at justifying the increases in Hajj fares every year, but merely to try and give some insights into what could constitute the main reasons.
I would also like to state that I do not get involved in any financial matters or pricing, nor do I make what could be classified as ‘money’ from my services as a pilgrims assistant in the last 12 years. (I will like to keep my intentions for doing this service, solely for the Sake of Allah and because I love doing it).
And so, will the price of Hajj come down? No, it won’t; unless some drastic financial changes take place.
Are there dishonest people dealing in Hajj? Yes, there are. But fortunately, there are very few. Are Saudi Ministry of Hajj and Umrah, Mutawwif Establishment of non Arab countries, other hajj missions or administrators just ripping off the pilgrims each year by increasing their prices? No, they’re not. Now let’s get insight and understanding as to what make up the prices and why it keeps increasing.
Are there Tour Operators who don’t know what they are doing? Yes, there are. Many times people who have been to Hajj come back and say, “I can do this and not charge as much”. An example is when they don’t tell you the reason their flight cost is cheaper. Usually, it is because you will make 2-3 stops on the way, or there is a domestic leg involved. Another example I found out during my last Hajj, was with a pilgrim from India who I met at the Haram. He told me his accommodation was for three persons, but the other two were a couple he does not know. Yes, they shared one small room.
Are there agents who are solely driven by money? Yes, there are many. Are the Saudi’s interested in making it cheaper? No, I don’t think so. I once asked a Hajj official about this and he told me sternly, “If they can’t afford it, then they don’t need to come.”
So my dear pending pilgrim, I am afraid to advise you that Hajj fares have not come down even once in the last 25 years (to my knowledge). The only time I knew, when you could have been able to get cheaper fares than the year before, was when some new group or fly-by-night operator ventured out into Hajj business.
Sadly though, they only last 1 year, or end up having to increase their costs the following year as they couldn’t operate sufficiently on their low pricings. Their costs were sometimes higher than their competitors in the following year to make up for their financial loss in the previous year.
Okay, let us now look at the price of hajj in countries with higher number of pilgrims. Food for thought: Can you think of any precious commodity or item, which price actually comes down?
Also, remember the simple rule in buying and selling; supply and demand. The demand is there and will always be there, so the supplier will always be in the ‘box seat’.
Hajj is no different, unfortunately. How much do you think it’s worth paying to be a guest of Allah?
Now let’s look at factors that Jerk up Hajj fares in some countries,
Hotels (season) – Now this is unique in itself, which only happens in Saudi. The hotels have seasons for Hajj (Makkah and Madinah). So it all depends on what dates you are in what city. Madinah also has seasons, but not as extreme as Makkah. Let me give you an idea of the season breakdown for Makkah hotels. The season titles are my own words:
1-25 Dhul-Qadah – Normal (higher than outside Hajj)
25 Dhul-Qadah – 5th Dhul-Hijja – Above normal
5th – 8th Dhul-Hijja – Extreme
8th – 13th Dhul-Hijja – Crazy
13th – end Dhul-Hijja – Above normal
The Hajj itineraries are within these dates and also some shorter packages cost more than longer packages, because they are normally in Makkah between the extreme to crazy dates.
Cost Implication – Pilgrims itinerary will affect the pricing. Example: Makkah Or Madinah first, in Makkah 8th-13th, etc. There will come a time in the not-too-distant future when affordable packages will not be available for Makkah at all.
Number per room – For Hajj, the accommodation is sold per bed. So the lower the number per room; the more the cost. So when you compare Hajj prices, always look at the numbers ‘per room’. If it says ”quad”, it means 4 per room (i.e. you will share a room with 3 other persons). Obviously then, 2 per room (you and your spouse) will cost more. Most countries have now resort to book 5-6 pilgrims per room to bring down the cost.
Let’s look at the last 6 to 8 years, only in Australia, for example. The prices have increased by more than 30%, and in some cases, almost doubled. In 2009, the average price for 1 person in a 2-shared room (for the higher-end packages) with breakfast and dinner, was = +-$9,500.00AUD. In 2016, a similar package cost +-$15,000.00AUD. The lower-end packages (breakfast only, 4 per room, 4 star hotels etc.) cost+-$6500.00AUD in 2009, yet the 2016 equivalent was priced at +-$10,000-$11500AUD per person.
Today there are about 117 UK Hajj organisers licensed by Saudi Arabia. Each is responsible for their own annual quota of 150-450 Hajj pilgrim visas. British Muslims now have plenty of choices in terms of package options. But UK pilgrims that performed 2018 hajj probably spent as much as £5-6,000 on their package. At an industry event last spring, I was told that a top company selling half their packages for £9,500 per person sold out in six weeks.
Even an “economy” Hajj in 2018 cost more than £4,000. Overall, the cost of Hajj-going has increased by around 25%in recent years.
Hajj pilgrimage for Bangladeshis became more expensive in 2018, raising the cost from Tk 12,000 to Tk 16,000 in two government-supervised packages.
Cabinet Secretary Mohammad Shafiul Alam, who briefed journalists by then said that Package-1 under government supervision would cost Tk 397,929 which was Tk 381,508 in 2017 – a rise of Tk 16,421. The cabinet secretary said the rise in package cost was reasonable given the US dollar rate for taka and airfare hike. Dollar again.
The second Hajj Package under government management in 2018 costs Tk 331,359 an increase of Tk 12,004 from 2017 which was Tk 319,355
Again, Hajj package by private operators was fixed at Tk 168,277 in 2018 which was Tk 156,537 in 2017.
However, depending on the facilities and accommodations the pilgrims prefer, the cost for the private package went up.
What are factors that affects Bangladesh Costs
Most airline companies around the world usually raise fares during the Hajj season for travel to Mecca, Medina, or Jeddah, but rarely is the fare more than doubled.
The regular cost of Dhaka-Jeddah-Dhaka flight is around Tk50,000-60,000, according to Biman Bangladesh Airlines. But a pilgrim has to pay approximately double the original plane fare.
In 2017, government fixed Tk1,24,723 for the dedicated hajj flight with Biman Bangladesh Airlines and Saudia Airlines. Last year, 1,27,178 Bangladeshi pilgrims traveled to Saudi Arabia to perform the hajj.
Along with plane fare, a hajj pilgrim has to pay for accommodation, local transport, and food in Saudi Arabia.
So, why do Biman Bangladesh Airlines and Saudia Airlines charge double?
Biman officials said that the hajj flights’ operating cost is higher than those of regular flights. The flights are operated in a dedicated way since other passengers are not allowed, according to the rules.
Due to the high cost of plane fare, the total hajj package exceeds Tk3 lakh for a pilgrim traveling from Bangladesh.
In Saudi Arabia itself, if you were in Jeddah and signed up with a local Hajj operator; in 2004, it would have cost you +-SR2000 per person for the 5 days. In 2011, the cost was about SR8500; and in 2016, +-SR14500. And that is for 5 days only!
Before 2018 hajj, Hajj Committee of India (HCI) Chairman Mehboob Ali Kaiser told IANS that he was bargaining hard with Saudi authorities to keep the cost in check but that local factors may result in the rise of Hajj expenses this year.
In 2017, the HCI charged Rs 200,000 for Hajj with ordinary accommodation (Azizia) and Rs 234,000 for deluxe accommodation (Green), which is closer to the Haram in Mecca.
“Over the last year, the electricity tariff in Saudi Arabia has shot up three times. Also, the petrol prices have doubled. The accommodation cost is also going up. These factors may result in a hike in the total Hajj cost this year,” Kaiser said.
At this point, it is difficult to predict the final cost to each pilgrim for Hajj 2018, he added.
“It will be unfair to expect the same costs for everything in Saudi Arabia after a threefold rise in electricity prices and doubling of petrol prices. Secondly, the Saudis are cussed bargainers and we have to really haggle hard with them for every riyal,” he said.
After the 2018 hajj, Indian pilgrims pay additional Rs 5600 to make up the Rs 73 Cr loss suffered by the Hajj Committee of India.
As the rupee slides further against the dollar in world trade during hajj, the Hajj Committee suffered the loss of Rs. 73 Cr. When the pilgrims had deposited Rs 81000 in advance, the rupee was trading at 65 to a dollar before hajj but it stood at 72.49 to a dollar during hajj.
According to a report published by Siasat daily, Hajj Committee of India decided to collect Rs. 5600 from the pilgrims to make up the Rs 73 Cr loss suffered by the Hajj Committee of India. It was decided in the meeting of Hajj Committee of India, that the 147 Riyal, which comes to nearly Rs 2500 collected for camps planning in Mina will not be returned to the pilgrims. Apart from that pilgrims will have to pay an additional Rs. 3000. Sending letters to the pilgrims they will be requested to deposit the remaining amount in the account of Hajj Committee of India.
During 2018 hajj, Indonesia House of Representatives vetted an increase of 0.99 Percent in 2018 Hajj Cost. In 2017, the cost of hajj fare was Rp35,235,602. But in 2018 it was raised to Rp345,290 or 0.99 percent from last year.
The head of House Commission VIII while overseeing religious and social affairs, at the Senayan parliamentary complex before 2018 hajj said “the increase is still below the tax increase and the fluctuation of the foreign exchange rate,”
According to Ali, the increase was attributable to Saudi’s 5 percent tax increase, the 5 percent local government tax increase, and the country’s 180 percent fuel price hike.
He explained further that higher prices of aviation fuel and the rupiah’s fluctuating exchange rate against the U.S. dollar also added to the increased hajj cost.
“All of these elements have caused prices to rise for flight components, housing, catering, land transportation, and operational costs,” as reported by Tempo.com.
In PAKISTAN the airfare was fixed at $1,575 for 2018 hajj pilgrims. This was based on the exchange rate of the US dollar during the hajj time. The total airfare includes the airfare 1550 US dollars, airport building charge in Saudi Arabia 174 Saudi riyal, hajj terminal service charge 30,000 Saudi Riyal, Bangladesh embarkation fee TK 575, security charge of the Saudi government 4 US dollars and travel agent commission 25 US dollars . This single item jerked up Pakistan 2018 hajj fare by almost 30%.
NIGERIA Hajj Fare
Historically, hajj fare is determined in Nigeria by exchange rate . In 2003, the exchange rate was $128 dollars, 2004-$128, 2005-$128, 2006-$120, 2007-$120, 2008-$145, 2009-$135, 2010-$135, 2011-$135, 2012-$145, 2013-$146, 2014-$150, 2016-$197, 2017-$305.
In 2003, the air fare was $750 from the north and $800 from the south, 2004; 800(north)-950(south),2005; 900(N)-950(S), 2006; 1200(N)-1250(S), 2007; 1300(N)- 1350(S), 2008; 1700(N)-1750(S),, 2009; 1500(N)-1550(S),, 2010; 1500(N)-1550(S),, 2011; 1600(N)-1650(S),, 2012; 1700(N)- 1750(S) up till 2016.
In 2009 the BTA was 507 with the exchange rate of $135, 2010- 516 ($145), 2011-630($145),, 2012-649($145),, 2013-672($146), 2014-723($150),, 2015- 798($160),, 2016- 1m($197), and in 2017- 1.5m at an exchange rate of $305.
We should note that out of the total component that makes up hajj fare, 98% are the dollar cost. In 2009 the total dollar component was 3,404. 95,, 2010-3,484,, 2013-4,234,, 2014- 4,451,, 2015-4,671,, 2016-5,026,, but in 2017, it reduced to 4,725 which meant there was a reduction in total dollar component of hajj in 2017 with almost $300 compared to 2016.
Within these periods, no single component of the hajj fare was increased by 1 dollar. The bottom line here is that the increase of the 2017 hajj fare was as a result of increase of foreign exchange rate from $197 to $305. Meaning, if a pilgrim that performed hajj in 2016 for 1 dollar, the same pilgrim would have attended for less than 1 dollar in 2017 as it has been reduced with about $300; but the exchange rate however led to the increase in the fare.
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