Air Peace Lagos-London Service ‘Sparks Price War’ Among Foreign Airlines

Air Peace CEO Allen Onyema claims foreign airlines intend to drive the Nigerian carrier out of the market.

The entry of Nigeria’s major carrier, Air Peace into the lucrative Lagos-London route, has sparked a price war among foreign airlines which have severely reduced their airfares to compete, a THISDAY report reveals. 

Air Peace started direct flights from Lagos to London on March 30, pegging its price for a round-trip economy ticket at N1.2 million on a route that foreign airlines used to charge as much as N3 million.

This prompted the foreign airlines to cut their airfares to an average of N1.4 million for a round-trip economy ticket last week. But checks on Wednesday showed that some foreign airlines have further slashed their prices to an average of N841,732.

 Egyptair has dropped its Lagos-London economy ticket price further to ($470) N585,620; Air Peace London to Lagos now goes for ($655) N816, 130; British Airways goes for ($787.99) N981, 848; Virgin Atlantic ($927.99) N1.1 million and Royal Air Moroc ($456.99) N569,422.

Also, RwandAir has pegged its airfare to London at ($545.35) N679,070; Ethiopian Air ($543.84) -N677, 824; Turkish Airlines ($647.84) – N807, 408; Air France London ($915.99) -N1.1 million, while KLM pegged its price to ($927.84) – N1.1 million.

Comparing the current air fares to the cost of flight tickets last week, before the entrance of Air Peace to the London market showed that a one-way economy class ticket from Lagos to London on British Airways used to cost N3 million for Economy and N11 million for Business Class, which has since dropped to N1.7 million for economy and N6.8million for Business Class respectively.

On Lufthansa, a one-way Economy class ticket from Lagos to London which also cost about N3 million and N9 million for Business class was later put at N2 million for economy class and N7 million for Business Class respectively.

On Virgin Atlantic, the same destination which used to cost about N2 million for Economy, N5 million for Economy Premium and N12 million for Business Class now cost N1.5 million for Economy, N3 million for Premium and N6 million for Business Class.

These indicate that since Air Peace joined the Lagos-London route, foreign airlines have reviewed their fares downwards severally. 

But the Association of Foreign Airlines and Representatives in Nigeria (AFARN) debunked reports implying that foreign airlines in Nigeria reduced fares because of Air Peace’s debut flight to London.

Earlier this week, Kingsley Nwokoma, the president of AFARN told BusinessDay that fares reduction on the London route and other destinations is not because of competition by Air Peace but a drop in the foreign exchange rate and the repatriation of trapped funds.

“Competition is good but before Air Peace came onboard, foreign airlines have been speaking to the International Air Transport Association (IATA) and the government on releasing low inventories. This discussion has been going on for a while now.

“A substantial amount of trapped funds have been paid to foreign airlines and that was why foreign airlines released lower fares. The reason why fares went up in the first place was because low inventories were shut down.

“Now government has shown enough goodwill to make payments, so it is in the interest of airlines to also show some goodwill to Nigerians by making low inventories available. To the best of my knowledge, CBN has cleared all the backlog, the only outstanding payments are the ones with the bank,” Nwokoma said.

However, the Chairman and CEO of Air Peace, Dr Allen Onyema said in a Channels TV interview on Tuesday, the London-Lagos route is no more lucrative because the airlines are slashing their prices to drive the Nigerian carrier out of the market.

“The same strategy is being employed right now by some of the foreign airlines to drop the price so that people will now leave Air Peace and go to those foreign airlines.

“Of course, it is a very devilish conspiracy. All of a sudden, other airlines are underpricing; that is below the cost of operation.

“One other airline was advertising $100, one $350. If you fill up the entire aircraft and carry people on the wings, it is not even enough to buy your fuel, so why are they doing that?

“Their governments are supporting them because Nigeria has been a cash cow for everybody. Their governments are supporting them to do this and take Air Peace out.

 “The idea is to take Air Peace out and the moment they succeed in taking Air Peace out, Nigerians will pay 20 times over and it’s going to happen if, God forbid, they’re able to take Air Peace out because what is happening now is scary and of course, even at Gatwick where you are, are you given 100 percent cooperation?

“Let me tell you this, on the first day of the inaugural flight out of London, 24 hours to the time, they moved us to another check-in area other than the place assigned to us. The place they gave us, the carousel was not working so when you check-in people, you need to manually carry the load to some 50 meters away to go and drop it somewhere else just to delay you.

“No other airline faces that. If they take out Air Peace prematurely, this country will pay dearly for it 10 times over quote me, billions will be lost and there will be another heavy strain on the naira,” Onyema said.

Reacting to this development, former Director General of the Nigeria Civil Aviation Authority (NCAA), Benedict Adeyileka, told THISDAY that price war was on among foreign airlines on the Lagos-London route, adding that the plan was to drive out Air Peace from the market and then they increase airfares by 300 percent.

He said before Air Peace entered into the market, foreign airlines were ripping off Nigerians with outrageous fares, making Nigeria their most profitable route because they charge very high fares that are almost double what they charge for London-Johannesburg route that is three hours longer than Lagos-London, which is about six hours.

 Adeyileka, regretted that the Nigerian government allowed foreign airline to operate cabotage service, whereby they carry passengers from one Nigerian airport to another Nigerian airport, against what is in the Bilateral Air Service Agreement (BASA) and what those countries that own the airlines will never allow Nigerian carriers to do in their airports.

“Foreign airlines are crashing their prices because they want to bring Air Peace down. Nigeria has become very lucrative to these airlines because government allowed some of them, including Ethiopian, Turkish, Qatar, Lufthansa to practice cabotage, taking passengers from one of our airports to another of our airports, which is unacceptable. I can say it anywhere; they cannot do this without the connivance of Nigerians.

 “They have been enjoying monopoly on the Nigerian route; but now a Nigerian carrier joined the market they want to drive it out with price war.

“If they succeed within 48 hours the airlines will more than double the prices. They will increase the fares by 300 percent. Let them continue to bring down the prices, it is good for Nigeria,” Adeyileka said.

 According to him, what would save Nigerian carriers was patriotism as well as government support, noting that when he worked in UK, the UK- owned airlines were not buying aviation fuel at the same cost as foreign airlines and they were not paying the same airport charges as foreign airlines and urged the Nigerian government to find ways to support Nigerian carriers.

He added: “If we want the naira to continue to gain value and also to reduce the demand on the dollar, government should encourage local carriers where passengers can buy their ticket in naira and the airline will not repatriate its earnings through forex out of the country.”

 Chinedu Eze