Competition on the popular Lagos-London route has continued to intensify as foreign airlines continue to slash fares with some airlines now charging below rates by Air Peace Airline, the only Nigerian carrier operating the route.
BusinessDay has earlier reported that air fares from Nigeria to other countries saw a significant drop, following the appreciation of naira few months back and the competition arising from Air Peace commencement of Lagos-London route.
Air Peace started the Lagos-London flight on March 30, 2024, fully booked by Nigerians who have since sought cheaper tickets to London. The airline had pegged its economy class ticket at N1.2million, thereby slashing fares on the route.
According to the airline, a return economy class ticket goes for N1.2 million while a return Business Class Ticket sells for N4million naira, as Nigerians studying in the UK accessed their special 15 percent rebate on the already reduced economy fares.
As at Tuesday, the International Air Transport Association (IATA) rate for sales of ticket rate for ticket sales in Nigeria dropped from almost N1,800 few months ago to now N1,505 to a dollar. These factors have seen the prices of tickets drop on the Lagos-London route.
For instance a one way economy class ticket from Lagos to London on British Airways which cost N3.5 million for Economy and N11 million for Business Class few months ago has seen a sharp drop to N605,000 for economy and N7.6million for Business Class. Other airlines that had pegged their tickets between N3.5 million to N2.5 million have also reduced fares, with some airlines currently selling lower than Air Peace.
As at Tuesday, a one way economy class ticket on Qatar Airways sold for N870,000, Ethiopian Airways N892,000, Royal Air Moroc N983,000, Air Peace N1,010,000, Asky N1,150,000 and Turkish Airlines N1,190,000.
The reverse is however the case for Business Class ticket as Air Peace remains the cheapest for this ticket class, as it sells for N2.5 million, Royal Air Moroc N2.6 million, Ethiopian Airlines N3,6 million, Qatar Airways N3.7 million, Turkish Airways N3.9 million, Air France N7.5 million and Lufthansa N10.6million.
British Airways’ Premium Economy class ticket cost N2.7million, and Business Class N7.6 million.
Olumide Ohunayo, industry analyst and Director, Research, Zenith Travels told BusinessDay that apart of Air Peace’s presence on the Lagos-London route which has seen airlines reduce fares, the price war is also in anticipation of the arrival of Emirates Airlines in October.
“Emirates is an airline that has strong dominance in the international route and 98 percent of their passengers are going to destinations beyond Dubai. So they have come to give European airlines competition,” Ohunayo said.
According to him, the European airlines are now reacting with price, service and offers such as lounges and even promo fares. While this price war continues, he advised Air Peace not be rigid with what they are offering.
“They need to have a team that is studying the market and the offers and they will need to provide such offers to their passengers. This is about seat and capacity that is being offered to Nigerians as Nigerians have been flying these other airlines.
“Air Peace needs to show some balancing with what they are offering. Air Peace must watch what the competitors are offering in terms of lounges, excess luggages, amongst others. I am happy Air Peace has been given greater schedule till March next year. With this, people can do their bookings ahead,”Ohunayo said.
Susan Akporaiye, former president National Association of Nigerian Travel Agencies (NANTA) told BusinessDay that all airlines have now opened up low inventories.
Akporaiye said the release of inventory has created competition, making almost all airlines prices at the same range.
She argued that the reason some airlines have cheaper tickets than Air Peace is because Air Peace has sold all its cheap tickets and the classes of ticket it now has is selling for more than N1 million.
“Air Peace said they have sold out seats till September. This means they are doing very well. It is after September that we will know. After last week, we got a circular that Air Peace has opened up their availability up to March next year.
“If sales from Air Peace’s side is not much, it is because the cheap fares have been sold out. What is now available are tickets of over one million naira, which makes it more expensive than the other airline because the other airline still have cheap tickets. Air Peace has sold all their cheap ticket classes,” Akporaiye said.
The former NANTA president also hinted that the exchange rate has also contributed in slashing fares.
“What determines the amount of tickets in naira is the rate of exchange. At the time when economy class ticket was selling for 5 million to 7 million, these were the highest economy when low inventories were closed.
“When exchange rate was between N400 to N600 to a dollar, the highest economy class ticket sold between N2 million to N2.5 million. When the rate of exchange went to as high as N1,800 to N1,900, that was when the same ticket of N2.5 million went to about N7 million,” she said.
She argued that the release of cheap ticket inventory was happening at the same time rate of exchange was coming down.
“Airlines released low ticket inventories and the rate of exchange came down. Two things were happening at the same time. Airlines released low ticket inventories and at the same time, the rate of exchange was coming down. When they released all their inventories and rate of exchange came down to N1,200 to a dollar, that was when we were seeing N800,000 to N1 million tickets rates to London,” Akporaiye said.
John Ojikutu, industry expert and the CEO of Centurion Aviation Security and Safety Consult, Nigeria said he had earlier predicted that Air Peace’s commencement of Lagos-London flight would bring about competition on the route.
“This is the beginning of the competition for scrapping the exploitation of the foreign airlines on the Bilateral Air Service Agreement (BASA) routes. We hope those in the administration of our government and the management of the agencies will give the necessary support to Air Peace?,” Ojikutu said.
He said as Mexico is doing, federal government will need to restrict the foreign airlines operate into to Lagos or Abuja airports only to create a healthy competition.
“Let foreign airlines make as many frequencies as they wish daily but they must interline with the domestic airlines,” he said.
