Price War: Foreign Airlines Move To Muscle Air Peace, Increase Flights On International Routes

By Lateef Adegbite

When Air Peace , one of the most prominent Nigerian based airline operators  which currently has over 20 Aircrafts  on its fleet including Airbus 320 and 20-200  and Boeing 737-800 series  secured  the Foreign Carrier  Operator  Permit and Third country  Operator Permit,  to fly to Europe and he United Kingdon, UK, in November, 2023, the Management of the Nigeria based airline    knew that it has a big task at hand: to fight a airfare price war with the foreign airlines which are well prepared for it.

 At present the Europe and UK, flight routes are currently   dominated by established foreign airlines like British Airways, Virgin Atlantic, Emirates, Qatar Airways, Ethiopian Airline, among others, which have brand new Aircrafts.

 As a prelude to meeting the expectation of the travelers on the Europe and UK, routes and  compete with, the foreign airlines to win the heart of foreign  travelers, the  Management of Air Peace, according to an insider were said to have placed significant  aircraft orders, including  33 firm orders  and 17 purchase rights , totaling 50 new planes.  According to the source, the orders include, Boeing 73 MAX 8 and MAX 10 as well as Embraer E195-e2 and E-175 models.

Onyeama: Chairman, Air Peace

From the onset, Allen Onyeama, the Chairman, Air Peace, may have sent a message to the other foreign airline operators operating the Lagos-London route, had g to be prepared for price war as its entry into the route will crash airfares, which had remained a burden to Nigerian travelers over the years.

 Air peace, which is one newest Foreign airlines to enter the Lagos –London route knew that it had met other airlines already on ground before plying the route, it has to adopt a new marketing strategy of popularizing its operations by slashing its fares to win  the heart of the Lagos- London return route bound passengers.

Air Peace Authorities   may have  reciprocated  the lopsided  Bilateral Air Service Agreement , BASA,  between the Nigerian Government and the UK,  when  it started the direct flight  operations from  Lagos,  to Gartwick  Airport  in London.

I t was therefore not very surprising that when it commenced operations on March 30, 2024, on the profitable Lagos-London route , it slashed its  flight ticket  , which was as high   as N3.5 million   for the  economy  class  to N1.2 million , which the foreign airlines did not find funny.

The Foreign air line operators which appears to have had the backing of their home governments fears that with the action taken by t Air Peace, they would lose most of their long standing Customers from Nigeria and other parts of the West African sub-region to Air Peace.

The fallout was a gang-up by the foreign airline operators which have the resources to fight the price war with Air Peace which had just entered the Lagos-London route to underprice to remain competitive before being pushed out of the airline business by Air Peace.

Air Peace flight To London from MMIA, Ikeja, Lagos, fully booked

 The step taken by Air Peace Authorities to slash its round trip return ticket on the Lagos –London may have prompted the aggrieved foreign airlines  to gang up against Air Peace   to cut their airfares   to as low as N1.4 million  for a  round- trip  economy ticket for much of penultimate week .

Some of the foreign airlines were said to have further slashed their airfares to an average of N874,32.00  to retain their Nigerian based customers.  Mention was made of Egypt Air  , which was said to have further dropped  its Lagos-London  economy ticket  price  to  the North American country of the United States, US, 470 dollar, or N585,620.00, going by the current exchange rate of N1,240 to one US dollar, Virgin Atlantic, $927.99 or N1.1 million,  and Royal Air Moroco, $456.99 or N569,422.00 while British Airways   goes for $787.99 or N981,848.00  for a round- trip to London.

Other foreign airlines like  air Randa,  pegged its fare to London  at $545.35 or N679,070.00, Ethiopian Air, which had been contracted by the then Muhammadu Buhari’s Administration to manage and operate  the still-unborn Nigerian Air,  slashed it fare  on the Lagos-London round-trip London trip to  $543.84 , which is an equivalent of N67.824.00 Turkish Airline,  $647.84 or N807,408, and Air France, $915.99 , equivalent of N1.1 million.  KLM, on its part was said to have pegged its airfare on a round –trip Lagos route   to $927.84 or N1.1 million.

The Air Peace Authorities may have known that the foreign airlines , championed by British Airways, Air France ,and KLM, Luthansa and Ethiopian airline  are prepared to sabotage  Nigeria, that they  may have prepared for the war  to reduce the pressure on the naira  at both the Autonomous Foreign Exchange and Parallel, popular, Black market  exchange rate.

Until,   Air Peace, took the bold initiative to start the airfare war with the foreign airlines, to reduce the pressure on the country’s local currency,  a one –way  economy  class ticket  from Lagos  to London  cost  about N3 million and N9 million for economy and  business class respectively . It was said to have later been pegged at N2 million for economy class and N7 million for the business class.

Even Virgin Atlantic , which had  a business relationship with the Nigerian Government during the Buhari’s Administration which had charged  N2 million for the economy class  and N5 million for  economy premioum  and N12 million  for the business class  now cost  N1.5 million  for Economy,  N3 million  for Premium and  N6 million for business class, which was a rip-off on Nigerian travelers.

 Data from the US Bureau of Labour Statistics published in February 2024, had predicted   that airfares to some international destinations will significantly drop in 2024. Also the American Express Global Business ravel Air Monitor 2024 had reported that prices on some of the international routes may drop by 12% and which may lead to increased flights in the international routes.

One of such routes that had been pinpointed that will witness increased competition for customers was the Lagos-London route.   It was therefore not surprising when the foreign airlines operating in Nigeria, the most populous country in the African Continent decided to slash their air   tickets on the Lagos-London route.

 But the Association of Foreign Airlines and Representatives in Nigerian, AFARN would not agree that the foreign airlines operating in Nigeria had reduced their air tickets on the economy and business classes from Lagos to London  in the recent weeks because  of the entry of Air Peace  entry into the Lagos-London. It had attributed ‘’to the   drop in   in the naira exchange rate to other world major currencies at both  the AFEM and the Parallel foreign exchange markets   and the repatriation of trapped funds  by the Nigerian government to the foreign airlines’’.

.Kingsley  Nwokoma,  President , AFARN,   had said that even before  the Air Peace took the decision to peg its airfare on the Lagos-London route  when it commence operation late March,  2024,   the foreign  airlines   have been talking   to  the International  Air Transport  Association, IATA,  and the Nigerian Government  on releasing  low inventories .

Hear him: a substantial amount of the foreign airlines trapped funds in the Central Bank of Nigeria, CBN, during Buhari’s Administration has been paid to the airlines by President Bola Ahmed Tinubu’s government.  He noted that was the foreign airlines had released new fares and not necessarily because of Air Peace into the Lagos-London route and decision to charge low price on the route. He had justified the reason why airfares on the Lagos-London route went up in in the first instance was because ‘’low inventories were shut down by the previous Administration of Buhari.  

Onyeama, Air Peace Chairman would not take it from AFARN, President, noting that the foreign airline operators had slashed their fares on the Lagos-London route ostensibly ‘’to drive   the Nigerian carrier out of the market’’.  The Air Peace Chairman who is not worried by the gang up of the Foreign airlines against the Nigerian Carrier had said that the same strategy  being employed  right now  by some of the foreign airline operators   ‘’to drop  their old airfares   so that international travelers  will now leave Air Peace  and patronize  those Foreign airlines will fail them’’’.

‘’Describing it as devilish’’ ,  he had said that the Foreign airlines are underpricing   below the cost   of operation, let alone buy Aviation Kerosene  run the  aircraft   but much more concerned in filling up the entire aircraft  to  carry people  on the wings to show that the airlines are still making waves  but are really  bleeding internally.  

With the reduced pressure on the demand for US dollar, by International travelers,  due to the price war by the foreign airlines to  beat air Peace to it, may have informed why Vice President Kashim Shettima,  who incidentally was a former governor of  Borno state had said that  ‘the naira  will continue  to stabilize  in the  coming weeks and months’’.

 Adebayo Adelabu, the minister of Power ,  and an apostle of the recent increase of electricity tariff  by Musiliu Oseni led National Electricity Regulatory Commission, NEC, for consumers on category A Band,  had said that the Foreign airlines may not be the only Organizations to take advantage of the appreciation of the naira at the Foreign Exchange markets to cut drastically their airfares but that’’ the current high electricity  tariff  paid by Nigerians   should moderate positively to come down below  the N225.00 currently  charged  per kilowatt   per hour.’’   

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