Nigeria’s indigenous airline, Air Peace, may face a prolonged market battle with many foreign airlines with decades of experience in the industry following its debut on the Lagos to London route.
Analysts and industry experts who spoke to The PUNCH on Thursday said the airline required support from the government and a strategic approach to stay competitive.
The strategic move has garnered high praise from stakeholders in the aviation sector, considering that Nigerians were paying exorbitant prices to travel from Lagos to London. But, sustaining this momentum will require more than just offering low prices, analysts said.
On 31st March 2024, the 11-year-old airline made a bold statement with its inaugural flight using a Boeing 777 aircraft, offering a capacity of 274 seats and carrying 260 passengers from Lagos to London.
It sold its tickets for N1.2 million, which is way lower than the rates offered by most foreign airline operators plying the same route.
Just two weeks after entering the market, Air Peace’s Chief Executive Officer, Allen Onyema complained on Arise TV that foreign airlines were undercutting prices in an attempt to push Air Peace out of the market.
He said: “We are aware that there are devilish conspiracies. All of a sudden, airlines are pricing below the cost. One airline is advertising $100 and the other $350. If you peel up your entire aircraft and carry people on the wings, it is not even enough to buy fuel.
“Why are they doing that? Their government is supporting them because Nigeria has been a cash cow for everybody. The idea is to take Air Peace out, and the moment they succeed in taking Air Peace out, Nigerians will pay 20 times over. It would happen, God forbid, if they were able to take Air Peace out.
An economy ticket for a flight scheduled for 29th April 2024, from Lagos to London costs about N679,375 on Ethiopian Airlines, an operator with 75 years of experience.
Air Peace priced the same ticket at N1,090,750. The difference is that on Air Peace, it will be a 6-hour non-stop flight, while on Ethiopian Airlines, it will take 16 hours with one stopover.
Last Friday, Ethiopian Airlines reduced the price of its London ticket by 0.77 per cent to N1,628,660 from N1,641,249 two weeks ago.
In the same period, Air France’s price dropped to N1,687,824, nearly halving from last month’s N2,482,138.
On 4th March, Lufthansa offered the Lagos-London route for N1,966,165. Qatar Airways provided the same ticket for N2,016,824, and KLM priced it at N2,448,740.
This continuous decline in air ticket prices was also driven by the strengthening of the naira against the US dollar and the payments of airlines’ trapped funds by the Central Bank of Nigeria.
Earlier this week, the Minister of Aviation and Aerospace Development, Barrister Festus Keyamo, confirmed that the Federal Government, through the Central Bank of Nigeria, had cleared all the trapped funds (foreign exchange backlogs) to the tune of about $160m.
Beyond the ongoing price war, the Air Peace chairman also lamented the challenges with ground handling and space allocation at the London Gatwick Airport, adding that no airline has faced such obstacles before.
He noted: “On the inaugural flight out of London, 24 hours before departure, the management of Gatwick Airport moved us to another checking area instead of the designated one.
“The area they provided had a malfunctioning carousel, forcing us to manually transport luggage 50 meters away, causing delays”.
Air Peace secured the required permits from the United Kingdom Civil Aviation Authority to initiate flights to the United Kingdom in 2023.
The President of the National Association of Nigeria Travel Agencies (NANTA), Susan Akporiaye said at a press conference on Tuesday that the appreciation of the naira, and the payment of trapped funds were the key reasons air ticket prices dropped.
Akporiaye said the issue of high fares resulted in neighbouring countries, such as Ghana and Togo, gaining traction in the travel market, as many Nigerians opted to cross the borders for cheaper fares.
The NANTA president noted that during that period, a significant portion of tickets were sold outside Nigeria under the term “Sold Outside Ticketed Outside” (SOTO), benefiting travel operators financially but resulting in a loss of tax revenue for Nigeria.
“Majority of the tickets we sold were out of Nigeria. Those sales were not attributed to the Nigerian market.
“If we access the Ghana market or any West African country market, they would see unusual growth, while it is a downward trend for the Nigerian market. This is because the airlines closed the lower inventories while the same lower inventories were open in other markets”, the travel agent stated.
The President of the Association of Foreign Airlines and Representatives in Nigeria, Kingsley Nwokoma said that Air Peace needed patriotic support from both Nigerians and the government to sustain the airline’s entrance into the market.
He said government officials should consider setting an example by choosing the carrier for their foreign trips.
According to Nwokoma, such a move not only demonstrates confidence in Air Peace but also contributes to its growth and sustainability.
“Nigerians should be more patriotic; an Ethiopian will fly Ethiopian Airlines, and Kenya will fly Kenya Airlines. This patriotism is what we need. Until we become more patriotic, things won’t be better.
“The government should make sure that all the travelling officials make use of Air Peace. If it is London or wherever they should support the airline,” he remarked.
However, Nwokoma posited that the government was not in a position to determine prices for foreign airlines, as there was room for all players to thrive.
“Competition is competition. The Federal Government cannot tell foreign airlines how to fix their prices. The market is big enough for everybody to play. If Nigerians can collectively support Air Peace, then that would be fine.
“I would be happy too if I saw other carriers flying that same route. It is good for the passengers to have options”, he stated.
Air Peace had consistently acknowledged that it was getting support from the Nigerian government but had called for more as the price war continued to play out.
At the inaugural flight, Aviation Minister Keyamo, the Minister of Industry, Trade and Investment, Doris Uzoka-Anite, the acting Director-General of the Nigerian Civil Aviation Authority, Chris Najomo, and other government officials were present to offer their support.
The airline CEO said: “The government of Nigeria is behind Air Peace, but the government has to do more now that there is evidence that unofficial statements are taking this airline”.
Source: The PUNCH
