Market News

By Justice Okamgba

Former President of the National Association of Nigeria Travel Agencies, Bankole Bernard, has stated that Air Peace’s pricing strategies have compelled foreign carriers to slash their fares.

Speaking on Channels Television’s The Morning Brief programme on Tuesday, Bernard emphasised that failure by foreign airlines to adjust their ticket prices on the Lagos-London route could potentially lead to their exit from the market.

This revelation comes in the wake of Air Peace’s recent launch of direct flight operations to Gatwick Airport in London, offering tickets at a competitive rate of N1.2m.

The airline conducted its inaugural flight to London with 260 passengers aboard a Boeing 777, which has a capacity of 274 seats, on Saturday. The route will be served daily from Lagos.

The move has disrupted market dynamics, prompting foreign airlines that previously enjoyed exclusivity on the route to reconsider their pricing strategies.

Bernard highlighted the significant impact of Air Peace’s entry into the market, indicating that it had forced foreign carriers to reevaluate their pricing structures to maintain their market shares.

Bernard said, “How come all of a sudden airfares have gone down? What could be responsible for that? Number one: there is a new entrant to a major route (Lagos-London).

“There are two major destinations that Nigerians fly to. Number one is Dubai and Dubai has been out of it for a while now. So, we (Nigerians) have resorted to the London route. The UK route is where a lot (of foreign carriers) use to earmark their airfares.

“Now that Air Peace has come into that space with a direct flight that will not cause any layover in any other country, the price has dropped. Why? What happened? Is there magic around that? We should be able to question what made the prices drop.”

According to Bernard, prices would drop as long as there was another form of supply that was different from the conventional ones.

“The supply that we now have, that is Air Peace, which is a direct flight, will put pressure on every other route. So, all the other airlines are forced to quickly adjust or they will be out of the market in no time,” he noted.

The PUNCH observed a difference in the costs of air tickets sold on March 4, 2024, compared to those on Saturday.

As of Saturday, the round-trip economy class ticket from Lagos to London varied in cost among different airlines.

RwandAir Express offered it at N1,102,563; Royal Air Maroc at N1,628,675; and Ethiopian Airlines at N1,641,249

The former NANTA boss mentioned that foreign airlines operating at the four major airports – Lagos, Abuja, Port Harcourt, and Kano – were enjoying substantial profits without facing any significant competition

Bernard suggested that if the airlines had been profitable, there was no need for them to publicly complain about accumulated trapped funds.

He proposed establishing an audit committee to examine the reasons behind those backlogs.

The CBN had about two weeks ago announced the completion of payment of $7bn legacy debt, which included FX forward contracts among foreign exchange-denominated debts.

The CBN, however, declared about $2.4bn of the $7bn debt invalid, saying it could not be verified due to improper documentation among other infractions.

Commercial banks were still reconciling with the foreign airlines to clear the final payment following the announcement of the clearance of the final backlog by the CBN two weeks ago.