FEBRUARY 27, 2024

(Bloomberg) -- Ryanair Holdings Plc warned that it could be forced to pare back its schedule in the peak summer travel season amid fresh delays in jet deliveries from Boeing Co.

The Irish discount carrier may receive fewer than 40 Boeing 737 Max jets before the end of June, Chief Executive Officer Michael O’Leary said. A shortfall of that magnitude would force Ryanair to cut its annual passenger forecast to 200 million people from 205 million for the coming fiscal year, he said at a media briefing in Dublin.  

Aircraft shortages are likely to drive up European fares this summer, O’Leary added, as competitors such as Wizz Air Holdings Plc and Deutsche Lufthansa AG ground planes to address an engine issue on some Airbus SE jets. 

“We’re doing our budgets based on a fare increase of between 5 to 10%, O’Leary said. “To me it feels kind of reasonable.” 

Read More: Ryanair Plans Growth in Central, East Europe as Wizz Cuts Routes

As recently as last month, Ryanair remained “reasonably confident” Boeing would deliver 50 new jets by summer, after a near-disaster in early January forced the US planemaker to slow output. The airline originally was due to take 57 Max jets between summer 2023 and 2024.

“Our growth has been constrained because at this point in time we don’t really know how many aircraft we’re going to get from Boeing,” O’Leary said. “I think 40 looks like the most realistic number but that’s moved down from 50 in the last two weeks.”

Bonus, Boeing Crisis

Ryanair makes most of its money in the summer season and cuts to its schedule mean lower revenue. O’Leary said the carrier had based its planning on the expectation it would receive 50 planes, and it will have to make some schedule cuts if it doesn’t receive at least 40 by March, its fiscal year-end.

“There is a debate with Boeing as to whether we’re entitled some compensation for these delayed deliveries,” O’Leary said.

Ryanair shares rose 1.1% to €20.67 at 8:43 a.m. in Dublin. The gains puts the stock near the €21 threshhold that, if sustained, would hand O’Leary a massive €100 million bonus payout. 

Boeing has lost 23% this year, the worst performance on the Dow Jones Industrial Average.

The midair blowout on a 737 Max jet on Jan. 5 has led to withering scrutiny of manufacturing quality at the US planemaker. Factory output has slowed as Federal Aviation Administration inspectors review quality controls at Boeing and its fuselage supplier. The agency has barred Boeing from increasing production rates of the Max until they’re confident quality has improved.

“We are communicating with customers that some delivery schedules may change as we take the necessary time to make sure that every airplane we deliver is high quality and meets all customer and regulatory requirements,” Boeing said in a statement. The company is working to address Ryanair’s concerns “and taking action on a comprehensive plan to strengthen 737 quality and delivery performance.”

Last week, Boeing announced it ousted Ed Clark, the head of the 737 Max program. Katie Ringgold succeeds him, while production chief Elizabeth Lund has been made the senior vice president of quality at Boeing Commercial Airplanes. 

O’Leary said he wasn’t happy with the changes, saying Boeing should have one person responsible for producing 737s without quality flaws.

--With assistance from Siddharth Philip.

(Updates with Boeing comment in 11th paragraph)

FEBRUARY 28, 2024

Air Peace on Wednesday,  announced N1.2 million and N4 million respectively on its London route for Economy and Business classes, effective March 30.

This is contained in a statement in Lagos by the airline’s Corporate Communications Lead, Mr Stanley Olisa.

Recall that flight tickets for London in Nigeria are between N2.3 million  to N4.2 million  for economy and N6 million for business class.

According to Olisa, the flight schedules for  Air Peace London route is now available on our website, and we are crashing the price of  flight tickets.

”A return economy class ticket goes for N1.2 million, while a return business class ticket sells for N4 million.

”Nigerians studying in the United Kingdom can also now access their special 15 per cent rebate on the already reduced economy fares.”

The airline had announced a special fare for Nigerian students in the UK when it hosted travel agents in Lagos in preparation for the launch of the London route.

Olisa also disclosed that London would be the airline’s seventh international destination since kicking off operations,  almost 10 years ago.

FEBRUARY 28, 2024

Nigeria has imposed a mandatory annual levy for organisations employing expatriate workers, requiring them to pay $15,000 (£12,000) for a director and $10,000 for other employees.

The move is meant to encourage foreign companies to employ more Nigerian workers.

Staff of diplomatic missions and government officials are exempt.

President Bola Tinubu has warned that the levy should not be used to frustrate potential investors.

He spoke while launching the Expatriate Employment Levy (EEL) handbook on Tuesday, adding that the government was expecting to improve revenue and indigenisation.

He said that its aim was to balance employment opportunities between Nigerians and expatriates.

"The goal is to close wage gaps between expatriates and the Nigerian labour force while increasing employment opportunities for qualified Nigerians in foreign companies in the country," he said.

There are more than 150,000 expatriates in Nigeria, according to local media citing data from the interior ministry.

They mostly work in the oil and gas, construction, telecommunication and hospitality sectors.

Nigeria is one of Africa's biggest oil producers. Its oil and gas exports account for 90% of foreign exchange earnings, according to the International Monetary Fund.

It already costs companies in Nigeria $2,000 a year to obtain a residency permit for each foreign employee.

The move comes as Nigeria is experiencing its worst economic crisis in a generation, which has led to widespread hardship and anger in recent months.

Labour unions and government workers on Tuesday held demonstrations to protest against economic hardships.

Mr Tinubu acknowledged that Nigerians were going through a difficult period.

He said efforts were being made to improve the country's finances and grow the economy.

The levy applies to employees who work for at least 183 days in a year.

The scheme imposes fines of up three years and jail terms of up to five years for a person or organisations that do not comply, including failure to provide accurate information.

The Nigerian Immigration Service will be responsible for enforcing the levy.

Local media quoted Interior Minister Olubunmi Tunji-Oj as saying that it would be operated on a public-private partnership model between the government, the immigration service and a private firm.

Nigerian economist Abubakar Abdullahi says the levy is good for the country and won't frustrate potential investors as "they'll love to see the country grow as well"."I believe Nigeria stands to benefit from this levy as more companies will start looking inwards as there are qualified Nigerians from all sectors," he says.

Additional reporting by Mansur Abubakar

FEBRUARY 29, 2024

BY Karl Lester M. Yap and Ram Anand, Bloomberg News

, Bloomberg

(Bloomberg) -- Malaysian businesses are paying a high price for their country’s weak currency that is making importing material and servicing foreign debt more costly.

With the ringgit hitting a 26-year low, industries from airlines to raw material-intensive sectors are particularly at risk, according to S&P Global Ratings.

The ringgit has slid to its lowest level since the Asian financial crisis in the late 1990s and the government has assigned the central bank to closely monitor the currency, Malaysian Prime Minister Anwar Ibrahim said Friday. 

The local currency last week slipped past 4.8 against the dollar, the weakest level since January 1998, during the height of the Asian financial crisis.

“We have already been feeling the impact as the ringgit has been falling,” said Chin Chee Seong, national secretary general at the SME Association of Malaysia. “Now it will be even more severe. Those of us in the services sector that import materials and products will lose even more.”

The weak ringgit could add strain to Malaysia Airlines Bhd., still recovering from restructuring its debt in 2021, as well as budget-carrier AirAsia. 

“The airline sector is the most exposed to risks due to currency mismatch in operations,” said Xavier Jean, S&P senior director for corporate ratings in Singapore, adding that they have expenses, including fuel and leases, in dollars and revenue in ringgit.  

“Debt in these companies is often denominated in dollars,” Jean said. “They have the double whammy of operating and financial exposure to currency depreciation.”

Malaysia Airlines declined to comment about the impact of the currency weakness on the company’s bottom line. 

AirAsia Group CEO Tony Fernandes said in an interview he isn’t concerned about the ringgit “as it’s mostly sentiment.” While 70% of the carrier’s costs are paid in dollars, “we have good ancillary income and fares are strong,” helping to buffer the company against the weak local currency, he said. 

Construction companies that depend on imported raw material, as well as telecommunication firms, whose capital spending are in dollars, also face a financial fallout, S&P said. 

For Axiata Group Bhd., Malaysia’s biggest wireless carrier, the biggest concern is the rising cost of servicing debt. The company has about $3.6 billion of dollar debt.

“The real concern is we have a large dollar debt, about 50% of that is hedged already,” said Vivek Sood, the company’s chief executive officer.

Some companies, such as state-owned oil and gas company Petroliam Nasional Bhd., are in a position to benefit from the plunge in the ringgit. A significant amount of its operations is either in foreign markets or pegged to the dollar, S&P said.

Sime Darby Plantation Bhd. said the weak ringgit is beneficial for the company, as well, because its revenue is in dollars.

“That is actually very promising for us,” said Chief Financial Officer Renaka Ramachandran. “We bring in dollars and convert them into ringgit.”

--With assistance from Finbarr Flynn and Anuradha Raghu.

FEBRUARY 29, 2024

BY Ifeoma Okeke-Korieocha & Chigozirim Enyinnia 

Competition has commenced on the Lagos-London route as Nigeria’s largest carrier, Air Peace, has pegged its economy class ticket at N1.2 million, slashing fares by 66 percent on the route.

BusinessDay’s findings show that foreign airlines charge an average of N3.5 million for economy class tickets from Lagos to London.

British Airways, which had an exclusive advantage of operating direct flights from Lagos to London, now has Air Peace to contend with as the local carrier would operate flights from Lagos to Gatwick London.

Air Peace went live on Wednesday, with its flight schedules for its London service billed to commence on March 30, 2024.

According to the airline, a return economy class ticket goes for N1.2 million, while a return business class ticket sells for N4 million, and Nigerians studying in the UK can now access a special 15 percent rebate on the economy class fares.

The airline had announced a special fare for Nigerian students in the UK when it hosted travel agents in Lagos last week preparatory to the launch of the London route.

British Airways’ economy class return ticket from Lagos to London cost $2,698, or about N4.7 million, using the N1,778 to a dollar International Air Transport Association (IATA) rate on the airline ticketing platform. British Airways’ business class cost $8,598, or about N15.2 million.

For Virgin Atlantic, economy class ticket cost $1,745 or N3.1 million; economy delight cost $1,797 or almost N3.2 million, and economy premium cost $3,442 or N6.1 million.

Business class on Virgin Atlantic cost $7,578 or N13.5 million.

The economy class return tickets on Qatar Airways cost between $973 and $2,095, or N1.7 million–N3.2 million, depending on the ticket class.

The business class ticket on Qatar Airways cost between $3,826 and $4,757, or N6.8 million–N8.4 million.

Ndukwe Ogechi, CEO of Geena Travels And Tours Ltd, told BusinessDay that Air Peace’s fares are good, adding that she envisaged intense competition on the route soon.

“My clients are already excited, although they expected the fares to be cheaper since Air Peace is a Nigerian carrier and the foreign exchange pressure is not so much on them. However, IATA’s exchange rate on the platform as at Wednesday is N1,778 to a dollar, which is really high. This exchange rate will continue to be a key consideration when airlines fix prices,” Ogechi said.

She pointed out that on Monday, the exchange rate on the IATA platform was N1,805/$. This also pushed ticket prices up on Monday.

John Ojikutu, an industry expert and CEO of Centurion Aviation Security and Safety Consult, said: “Competition has started. I hope that the foreign airlines and their multiple frequencies and destinations in our country can gradually get reduced.

“This is the beginning of the competition for scrapping the exploitation of the foreign airlines on the Bilateral Air Service Agreement routes. We hope those in the administration of our government and the management of the agencies will give the necessary support to Air Peace.”

Airfares in the last two years have risen by over 400 percent as a result of accumulating trapped funds of foreign airlines in Nigeria caused by the scarcity of foreign exchange in the country.

Last year, the Central Bank of Nigeria floated the naira after years of sticking with a hard peg that spooked investors and drained dollars from the economy.

For two years now, airlines blocked low ticket inventories, leaving high inventories to be sold in naira only, while the low ticket inventories on most airlines’ websites can only be bought with dollar cards only. This was in a bid to cushion the effect of their trapped funds in Nigeria.

Bankole Bernard, chairman of Airlines and Passengers’ Joint Committee of IATA, said Air Peace’s London flight is a welcome idea, especially as Nigeria would now have its own carrier.

He said: “There will be a bit of balance. Air Peace has been given a daily slot to Gatwick which amounts to seven frequencies, compared to 21 frequencies that the legacy airlines have; 14 in Lagos and seven in Abuja. To an extent, we have something that will balance it up.

“Air Peace is not going to be faced with challenges of foreign exchange because the fares will be in naira. It is a welcome idea for travel agents and Nigeria as a whole. We appeal to Air Peace to try its best to sustain the London route. We are willing to give them all the support to ensure this is successful. With Air Peace, travel agents envisage a 50 percent fare reduction.”

Oluwatoyin Olajide, chief operating officer at Air Peace, during the launch of the Lagos-London flight with travel agents, said the service will be operated with the airline’s Boeing 777 aircraft and the Boeing 787 Dreamliner aircraft, one of the most modern and efficient aircraft in the skies.

She said the airline will be launching with special promo fares and attractive plans for agents.

“Operating daily, this service will also offer several other benefits which give Air Peace an edge over the competition. It’s a direct flight without stop-overs and offers unbeatable fares. The specifics of these offers and other unique selling points will be presented as this engagement progresses.”

London will be Air Peace’s seventh international destination since kicking off operations less than 10 years ago.

Air Peace currently leads Nigeria’s aviation industry with a rapidly expanding network of 21 domestic routes, 10 regional routes and 6 international destinations with a growing modern fleet of over 30 aircraft.

FEBRUARY 29, 2024

Nigeria’s Ministry of Interior has entered into talks with IDEMIA, a multinational technology company to explore the possibility of producing passport booklets within Nigeria. Led by Olubunmi Tunji-Ojo, the interior minister, the discussion opened Thursday.

“The Minister of Interior, @BTOofficial-Ojo on Thursday engaged in discussions with @IdemiaGroup to explore opportunities for localizing passport booklet production in Nigeria,” the ministry announced on its X handle. No further explanation was offered after the X post. Reacting to the announcement, X commentator, @Solomon_dynasty described the move as good for industrialisation, however, he feels other agencies of the country could also be explored.”This part of industrialisation, we need to do more in terms of homemade things and I would have thought Nigeria mint and print would handle the passport booklet production,” the X user noted. Other commentators described the move as good for the ailing naira as buying locally is always good for the domestic market.

IDEMIA, a multinational technology company headquartered in Courbevoie, France, specializes in providing identity-related security services. The company offers a range of products and software, including facial recognition and other biometric identification solutions, catering to private enterprises and government entities.

Last year, it was reported that Idris Jere, former comptroller-general of the Nigerian immigration service, lamented that the country lacks a domestic production facility; highlighting that travel documents are manufactured overseas.

“We generate forex from the sale of passports but we do not have access to buy the same booklets, and that is a challenge for NIS,” Jere had said.

“The factors responsible for the scarcity of passports include the inability to set up passport-producing factories in Nigeria, as its production is done abroad. The major seven components used for producing passports are sold in the international market and the assemblage and production are done in Malaysia.

“This makes the production process solely dependent on forex and the scarcity of forex due to the fall in Naira value is of major concern.”

The discussions between the Minister of Interior and IDEMIA signify a potential collaboration aimed at enhancing Nigeria’s passport production capabilities.

Localizing passport booklet production could bolster efficiency and security measures within the country’s passport issuance process. It will help alleviate passport booklet shortages to some extent.

Previously, shortages of booklets resulted in reports of corruption during the passport issuance process in Nigeria, with agents taking advantage of desperate applicants. However, by localizing passport booklet production in Nigeria, such abuses will be minimized.

As discussions progress, citizens await further developments and potential outcomes of the collaboration between Nigeria’s government and IDEMIA in the realm of passport production.

FEBRUARY 29, 2024

There are seven airlines with scheduled flights from Europe to Nigeria.

SUMMARY

•  Nigeria has scheduled flights from 12 intercontinental destinations, with nearly 40% of flights from Europe.
•  British Airways is the top European carrier to Nigeria, followed by Turkish Airlines, Lufthansa, and Air France.
•  Virgin Atlantic and KLM are also among the airlines serving Nigeria, with different flight frequencies from Europe.

This summer, Nigeria has scheduled non-stop flights from 12 intercontinental destinations in the Middle East, Europe, North America, and Asia. While its two main airports are among the most expensive to fly to, they are also among the busiest on the continent. According to data from Cirium, an aviation analytics company, nearly 40% of Nigeria's intercontinental flights are from Europe.

The country's largest carrier, Air Peace, is the latest airline to schedule flights to Europe. It will start serving London Gatwick (LGW) from Lagos on March 30, initially with Norse Atlantic's Boeing 787s after signing an ACMI agreement earlier this week. There are six other airlines with scheduled passenger flights between Europe and Nigeria. Let's take a look at the top carriers and routes.

British Airways is the top European carrier in Nigeria

British Airways is the top carrier between Europe and Nigeria this summer (April-October), with 420 scheduled flights and 103,110 seats (one-way). The carrier serves Lagos Murtala Muhammed (LOS) and Abuja Nnamdi Azikiwe Airport (ABV) from London Heathrow (LHR). It has 210 flights and 53,760 seats to Lagos and 210 flights and 49,350 seats to Abuja.

Photo: Sudpoth Sirirattanasakul | Shutterstock

Lagos is served daily with the Boeing 787-10, while Abuja is served daily with the B777-200. In terms of its Africa network, Nigeria is British Airways' fourth-most popular destination by number of flights after South Africa, Morocco, and Egypt. Through its main fleet and subsidiary, BA Euroflyer, it serves two destinations in each of the top four countries.

British travelers can now seamlessly connect to more destinations in Southern Africa.

Three other airlines serving Lagos and Abuja

With a total of 360 flights and 102,245 seats, Turkish Airlines is the second-largest European carrier to Nigeria this summer. It has scheduled 210 flights and 59,520 from Istanbul to Lagos and 150 flights and 42,725 seats from Istanbul to Abuja. It operates daily flights to Lagos and five weekly to Abuja with the Airbus A330-200 and A330-300.

Photo: Kevin Hackert | Shutterstock

Lufthansa is the third top carrier from Europe, with 308 flights and 83,148 seats. It also serves Nigeria's two primary airports, operating flights from its hub at Frankfurt Airport (FRA). Abuja is its top Nigerian destination this summer with 162 flights and 45,198 seats, followed by Lagos with 146 flights and 37,950 seats. Abuja sees the A340, while Lagos sees both the A340 and A330.

Check out more African aviation news here

The fourth and final European carrier serving Nigeria's two main airports is Air France. It has a total of 270 scheduled flights, offering 81,448 seats to the West African country. There are 210 flights and 68,008 seats on the Paris-Lagos route and 60 flights and 13,440 seats on the Paris-Abuja route. Lagos will be served with the A350-900, while Abuja is served with the A330-200.

Virgin Atlantic and KLM

Virgin Atlantic is the third airline flying between Nigeria and the UK this summer. It is also the fifth top airline between Europe and Nigeria, with 210 flights and 68,220 seats. It currently operates daily flights from Heathrow to Lagos with the A350-1000. Meanwhile, Air Peace will be the only airline flying between Gatwick and Lagos.

Photo: Bradley Caslin | Shutterstock

The sixth top airline for Europe-Nigeria flights is the Dutch national carrier KLM. It has 176 scheduled flights and 46,464 seats on its route from Amsterdam Schiphol (AMS) to Lagos. It currently operates six weekly flights with the A330-200. The Federal Airports Authority of Nigeria (FAAN) recently reopened Lagos' main runway for international flights. The airport is currently served by about 29 airlines.

MARCH 01, 2024

BY Chinedu Eze

It has emerged that factors such as foreign exchange fluctuations, age limited of aircraft set by the federal government and high interest rate are responsible for the short lifespan of Nigerian airlines and their inability to acquire new aircraft. Analysts believe this is why no Nigerian carrier has operated schedule service for up to 30 years since the deregulation of commercial airlines in 1988.

Foreign exchange fluctuation, they said, makes it impossible for airlines, which depend on foreign exchange for spares, maintenance and training, to plan and make financial projections.

Also, high interest rate makes it difficult for airlines to access long-term credit facility for aircraft acquisition and operational funds.

Another major factor, stakeholders said, is the federal government policy that bars airlines from bringing aircraft over 22 years for commercial operation in Nigeria.

This, they stated, impinge on the ability of the airlines to acquire aircraft, as many of the equipment so banned in Nigeria are still relatively new for aircraft, which can operate for over 40 years with proper maintenance.

In an exclusive interview with THISDAY, Chairman/CEO of Omni Blu Aviation (OBA) Limited, an aircraft charter services operator, Akin Olateru said that an airline needs cash, access to loan with single digit interest rate, good management in addition to good financial planning in order to survive.

“But with foreign exchange fluctuation, an airline cannot plan well and this in the long run leads to its demise. There are two things that are critical to the survival of an airline anywhere in the world. One is access to cash. An airline should be able to access loans with single digit interest rate. The second critical element is good management. You can’t run any business without strong management. So that is given.

“But we have one thing that is working against us in this part of the world, currency exchange fluctuation. Currency exchange fluctuation alone will kill your business. If the best aviation consultant does a very beautiful business plan, you come in with the right aircraft, employ the right management team, but that singular factor, currency exchange fluctuation, will kill you. Olateru noted that in the US, they operate aircraft, they buy the aircraft, they pay for insurance, they pay for supplies, they pay salaries, all in dollars. They are not exposed to that currency fluctuation.

“In Europe it is the same thing. All bills are paid in Euro. They are not exposed to that currency fluctuation. You come to Nigeria, 85% of your cost is forex, apart from salaries, ground handling bills and fuel. But the bulk of your purchases in terms of volume are in USD. Now, you sell ticket today as schedule airline, due to the depreciation of the naira, the fare may be equivalent to $50. But tomorrow if you want to make budget on that exchange you find out that the dollar has gone up. You can’t buy at the same rate you sold the ticket,” he explained.

Olateru who is the immediate former Director General, the Nigerian Safety Investigation Bureau (NSIB), recalled when he set up a cargo airline in 2009, did the business plan of the new carrier, but after one year he destroyed the business plan because,  “the currency fluctuation had wiped out the entire profit of that operation. We had to rejig, we had to redesign because it just was not making sense anymore.”

“So, it is one big issue. I don’t know how many good businessmen out there that can run any business at all, any business, and make profit when you don’t have a stable exchange rate. In a country where you have to import, in a country where bulk of your purchases are in forex. Nigeria is an economy where we spend naira, but our economy is denominated in dollars. That is a fact. That is why any time you move that dollar, everything moves, unfortunately,” he said.

He said the impact of dollar in Nigeria’s economy is not just about aviation but affects all the sectors of the nation’s economy.

He, however, remarked that in the past the aviation industry was not well structured and organized as it is today, “because the sector in the past was weak and there were no checks and balances as it exists today with strong aviation agencies that regulate and provide service in the industry.”

On the age of aircraft and the minimum number of aircraft needed to start commercial service in Nigeria, Olateru stressed that to move the industry forward; government should review its policies to spur the industry’s growth.

He said that government came up with a policy, which banned aircraft that are 22 years from being brought into the country for schedule service, but the reality is that at 22, most aircraft are still at their peak of operation with effective maintenance.

“Because of a lot of crashes in the past, government came up with a policy that says aircraft that is 22 years is banned in Nigeria as commercial airplane. To me, let’s evaluate 22-year old aircraft ban. If you ask me, it doesn’t make sense. There are extremely few countries in the world that restrict aircraft in terms of age. We focus on maintenance culture. Proper aircraft maintenance is not reactive but proactive. That is what you do on airplanes. So you don’t wait for things to spoil before you change and stuff like that. There are a lot of checks done over time, every week, every month, per hour, per cycle, depending on the maintenance manual approved,” Olateru, an aircraft engineer said.

He said it would be difficult for an investor who wish to establish an airline in Nigeria to succeed because he is limited by aircraft age; so, he cannot acquire certain aircraft, including some technologically advanced Boeing NG aircraft because some of them were manufactured in 1999 and over 22 years.

“The cheapest Boeing 737 NG aircraft you can get today is between $15 million and above. So NCAA now says bring six aircraft. So, to start an airline and you want to use Boeing 737, you need to come with $15 million times six, just aircraft acquisition alone. Are we really helping the industry? I don’t think so. We are a developing nation. Loans are not available for the operators. Everything is do it yourself . You want to buy a brand new aircraft, right? The US Exim and all the Exim banks in the world will be happy to fund your acquisition up to 85 per cent, you bring 15 per cent. So, you bring your 15 per cent, they are happy to fund 85 per cent. The next question is, give us a bank guarantee for $85 million. Go to our banks in Nigeria today, request for a bank guarantee for $85 million, they will ask you to put $85 million cash in the bank before they can give you the guarantee.”

On aircraft leasing, Olateru said, “When you talk of lease, we have been blacklisted as a nation. Yes, we signed the Cape Town Convention. The idea is to say we can repatriate lessor’s aircraft anytime they want to, but is that the reality on ground? Yes, one or two airlines failed to meet agreements. They have argued that in the past, there has been an issue.

“But do you blacklist a country because of one, two operators? Over there in Europe, one, two operators too do mess up. They don’t blacklist them. So this is where the government needs to step up the game, engage these people. And I think the Minister, I was reading a few days ago, has engaged some decent companies. So, that is the right step. That is a good one in the right direction. We need to rejig some government policies to push our aviation industry forward.”

MARCH 01, 2024

The United Kingdom is Nigeria’s most visited country in Europe and the route is deemed one of the most lucrative from Nigeria, but over the years, two UK based airlines have enjoyed a duopoly, which makes the airfares to that destination very exorbitant. Nigerian carrier, Air Peace is primed to commence flight service to London on March 20, 2023. Chinedu Eze writes that the airline will knock down the fares to save Nigerians from many years of exploitation.

When Asset Management Corporation of Nigeria (AMCON), which took over Arik Air in February 2017, stopped the airline’s flight operation to London, airfares to that destination from Nigeria rose by 40 per cent, according to insiders in the airline.

In the recent past, three Nigerian airlines operated to London. Arik Air operated to London Heathrow, the defunct Virgin Nigeria Airways operated to Gatwick, Medview Airline operated to Gatwick  and now, Air Peace Limited had been designated to operate to Gatwick. In 2009, Virgin Nigeria Airways stopped its stint with long haul service to London and Johannesburg; in 2017 Arik Air under AMCON receivership stopped flights to London, New York and Johannesburg and in 2018, Medview stopped its flight to London.

THISDAY learnt that there is consistent trend when Nigerian airlines operate international destinations, airfares to those destinations come down. It happened with Arik Air, Virgin Nigeria and Medview and Air Peace has already announced relatively low airfares.

Air Peace London Operation

Last week, Air Peace announced to travel agents that it would commence flights to London and the airport would be Gatwick. The Chairman and CEO of the airline, Dr Allen Onyema said that the Air Peace London route was borne out of his love for Nigeria and to put an end to high fares from Nigeria to London and back, promising that the airline would give Nigerians the best option in terms of fares.

Currently direct flight to London from Lagos on economy class as at Tuesday, British Airways round trip economy class cost 788 pounds, equivalent to about N2, 357, 900 and one-way ticket was 565 pounds, equivalent to N1, 629, 535. Virgin Atlantic Airways Lagos-London ticket was $1, 460 (about 2, 357, 900) for cheapest round trip or return ticket.

Air Peace announced on Wednesday that its Return Economy Class Ticket goes for N1,200,000 while a Return Business Class Ticket sells for N4,000,000, adding that Nigerians studying in the UK can now access their special 15% rebate on the already reduced Economy fares. 

Although the airline initially requested to operate to Heathrow Airport, but when it was given Gatwick it realised that the airport has its advantages for Nigerian passengers.

“Many of our people live down South East part of London and there is heavy traffic into Central London from Heathrow, but at Gatwick, they allotted Southern terminal to Air Peace and when you get to south terminal, you get out of immigration, take your luggage, you walk into the Gatwick express train within three minutes and that will take you to Victoria, right into Central London. From the south terminal you have access to tube, you have access to national rail and you have access to road transport to other parts of UK. So, Gatwick has turned out to even be better for us. That’s why we took Gatwick,” Onyema explained.

Frequency

Onyema also explained that Air Peace would operate daily flight into London and besides its three Boeing B777,  Air Peace is also bringing three brand new Boeing B787 Dreamliners, to join the operation.

He added, “We are going to do something different, exceptionally different. The competition is going to be massive and explosive. Nigerians will see something they have never seen before because if you are not prepared for this kind of competition, you get yourself burnt. We are going to give our customers the best.  Air Peace will be on that route to provide a difference, make airfares affordable for people, make it seamless with respect. It is going to be a different ballgame.

“Our unique service starts with the equipment we are going to use. It starts with the capacity we want to bring into the market, the ambience, everything you can think of, we have them. So it is left for Nigerians now to patronize their own. And I am really pleased with the Nigerian traveling agencies, their union. They came up with a slogan, ‘Air Peace Our Own’. Some even printed T-shirts, ‘Save the Naira, Fly Air Peace’.”

Affordable fares

Former President of National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard said that Air Peace’s London flight is a welcome idea, especially as Nigeria would now have its own carrier creating balance of trade which in the past tilted to one side.

“There will be a bit of balance. Air Peace has been given a daily slot to Gatwick which amounts to seven frequencies, compared to 21 frequencies that the legacy airlines have; 14 in Lagos and seven in Abuja. To an extend, we have something that will balance it up.  Air Peace is not going to be faced with challenges of foreign exchange because the fares will be in naira. It is a welcome idea for travel agents and Nigeria as a whole. We appeal to Air Peace to try its best to sustain the London route. We are willing to give them all the support to ensure this is successful. With Air Peace, travel agents envisage a 50 percent fare reduction in fares,” Bernard said.

Alternative Choice

The Managing Director of Flight and Logistics Solutions Limited, Amos Akpan, said the commencement of Air Peace flight to London will give Nigerians better choices and create opportunity for affordable fares and competitive pricing.

“There are few families in Nigeria that do not have relatives in UK. Concerning international trips, Nigerians travel to UK more than other countries because of historical ties. The first benefit of Air Peace operating to London is the choice. Nigerians can now choose between their carrier and foreign carriers. Air Peace fare will definitely not be as high as the fare charged by the current operators on the route. For example, Air Peace management has already announced their intention to create special fare for students on the London Route.

“Nigerians will not need to travel to Togo and Accra to catch a London bound flight because the fares from these stations are lower than the fares from Lagos and Abuja. The Nigerian travel agencies will now have a wider customer base to catch because lower fares will encourage people to travel. Air peace demand on foreign currency from our Central Bank may not likely rise for Operating the route because she will earn foreign currency from the London Route Operations,” Akpan said.

He also noted that Air Peace operating the London route will benefit parents, students, Nigerians in UK, the air travel industry, and the government of Nigeria.

Advising Air Peace, Akpan said the airline should first target travelers who transit through other African countries to UK, observing that these segment of travelers would be easier catch because Air Peace will save them the inconveniences of transit – waiting time, connection issues, overzealous immigration controls at the transit stations, costs associated with multiple stops.

“My point is that Air Peace should aim to first capture these segments as their low hanging fruits. Simultaneously, Air Peace will keep courting various strata of current and potential travelers on the route,” he said.

Akpan also said that Air Peace should dedicate resources to understanding the British Civil Aviation politics. Find out their sensitivities and how they relate with operators. It should also “drag officers of the Nigerian high commission into every issue concerning Air Peace in UK so they appreciate the workings of the airline operations. They will confidently assist with knowledge.”

He emphasized that Air Peace is technically and operationally competent to operate international flights and has proven so, but each environment has its peculiarities, which the operator must contain to remain in operation.

“Air Peace must be clear on her business case for the route. Be clear on the micro vision of London route as it fits into the overall corporate vision of the company.  It’s a journey that requires intentional steps by following a strategic path. It will take time and commitment to build the route. Established operators on the route will not sit back and let Air Peace woo and capture their customers. That some flights may not carry full load initially should not discourage them but should be treated as route development investment.

“The Air Peace team should quickly research on how to link passengers on to connections beyond Gatwick airport. Air Peace already has a strong network of connections in Nigeria and West Africa under the same Air Peace brand. The task now is how the team will integrate these connections to meet the travelers’ needs on the route. For instance, a Nigerian in Ireland would want to travel with Air Peace from Gatwick through Abuja to Kano; or from Gatwick through Lagos to Uyo. It’s better to plan on areas of strength so that you can remain on the route in spite of competition, “he said.

Gatwick

On the choice of Gatwick, Akpan said, “Other operators on the route are established and strong. Heathrow airport offers multiple connections to destinations beyond London. But Air Peace has what it takes to enter the route and carve its niche market on that route. There are possibilities available from Gatwick if strategically well planned. Air Peace has advantage as a Nigerian carrier on the route because most travelers on the Lagos/Abuja – London Route are Nigerians. All Air Peace should do is give Nigerians better offer. Engage native marketers while you offer world class services. Delays and excuses with blame games not acceptable in this arena.”

“Most importantly, Air Peace need financial muscle to stay competitive on the route where mega carriers with access to long tenor single digit facilities operate. They do not need financial grant or bail out, they just need to access funds on terms that allow them remain in business to repay. I repeat that Air Peace has the technical and operational competence for operate international flights and they have been certified, moreso, they’ve repeatedly proven so,” Akpan added.

Schedule integrity

Many who spoke to THISDAY flogged the issue of on time performance, saying that in such competitive environment, it is excellent service that will keep the airline successfully on the route.

Secretary General of Aviation Round Table (ART), Mr. Olumide Ohunayo said schedule integrity is key to retention of passengers on the route and also retain service providers in airport environment, noting that once the airline’s schedules are not reliable, for instance, the airline might have difficulty in meeting with their services because, “if you delay, they would go to another airline and and this will affect the timing on when they scheduled to serve you.”

“So, I expect schedule reliability, which is very important and key for this route that they have started. I am very happy that we have a Nigerian airline on the route that is opening the space and that Nigeria can do it. I think the government should not be far away to respond to every aero political demand and issues affecting operations from Air Peace management. That is our flag carrier and by virtue of that they have to be supported. Again I expect them to talk to airlines to take some of their passengers beyond London and within the UK itself.”

“I think that is also very important. I am sure it will be success story because Nigerians are fed up with the crazy fares that these other airlines have brought. In the beginning, we were made to believe that Virgin was going to lower its fares  when they came to the route and got it approved. But today they are benchmarking these fares with another British operator. So it is only Air Peace that can change the narrative for us. Just like Bellview did before by introducing 2bags and 23kg, I expect some innovations that would make  Nigerians feel happy that a Nigerian airline has joined the route. I am happy for them, I just hope they would work on their schedule reliability,” Ohunayo said. Cutting cost, providing excellent service and on time performance are the keys many believe will unlock success for Air Peace on the Lagos-London route.

MARCH 01, 2024

… as authority sets up committee to reduce skyrocketing fares

Following the intervention of the Nigeria Civil Aviation Authority, (NCAA), Lufthansa German Airlines, KLM, Egypt Air, Ethiopian Airlines, British Airways, Royal Air Maroc, RwandAir, and Turkish Airlines have all released all categories of low inventory tickets while Air France has failed to comply with the directives.

BusinessDay’s checks however show that none of the foreign airlines has reflected market reality fares in their ticket pricing as earlier directed.

Investigations show that currently, a return economy class ticket from Lagos to London cost an average of N3.5million, while Air Peace sells for N1.2million.

A distance of six hours from Ghana to London may sometimes cost about $800 while similar distance with similar operating aircraft cost over $2000 in Nigeria.

In a move to halt the spiraling cost of air tickets in the country and make travelling affordable for Nigerians, Chris Najomo, the Director General of the NCAA has set up a 10-man Committee to look into the high cost of tickets in the country.

The Committee is coming on the heels of a two-day high-level meeting held between NCAA and foreign airlines in Nigeria on the urgent need to unblock all low inventory tickets which were hitherto blocked for over 18 months.

The 10-man committee chaired by Horatius Egua, Director of Special Duties NCAA, is charged with the responsibility of ensuring that the foreign airlines fully comply with the directives of the government to unblock all low inventory tickets as well as recommend appropriate pricing of tickets in Nigeria compared to similar markets in the West African sub-region.

Other members of the committee are: Michael Achimugu, Director Public Affairs and Consumer Protection NCAA; Rotimi Arogunjo General Manager (GM) Licensing and Statistics NCAA; Ogechi Louis-Azode Deputy General Manager (DGM) Legal Services NCAA; Susan Akporiaye, President National Association of Nigerian Travel Agencies (NANTA); Olaoluwa Oladipupo Assistant General Manager (AGM) Fairs and Tariffs NCAA; David-Ojuigo Asst. Director FCCPC; Yinka Folami incoming President NANTA; and Florence Abebe Chief Legal Officer FCCPC while Ifueko Abdulmalik, Senior Special Assistant (SSA) DG NCAA is to serve as Secretary.

In the last several months, Nigerians have been made to pay higher fares on international flights unjustly as all the foreign airlines increased their flight tickets astronomically citing the high exchange rate as well as other sundry issues and also deliberately blocked low inventory tickets making travel unbearable for Nigerians.

“This is very discriminatory in nature. We cannot continue to pay higher fares compared to other countries in the sub-region that have similar distances, using same operating aircraft. We have the market and in some cases we have more liberal taxes? This is unacceptable and we totally reject this,” Egua who represented Najomo at the meeting held between February 12 and 13, 2024, in Abuja, said.

“For instance, a distance of six hours from Ghana to London may sometimes cost about $800 while similar distance with similar operating aircraft cost over $2000 in Nigeria. This is discriminatory and an unfair practice and we reject this in totality,” he further stated.

The NCAA, following the outcry by Nigerians over the astronomical increase in air tickets, convened the two-day meeting with the foreign airlines operating in Nigeria.

The meeting which held at the headquarters of the NCAA, in Abuja, had in attendance representatives from the NCAA, the Federal Competition and Consumer Protection Commission (FCCPC), and the National Association of Nigerian Travel Agencies (NANTA) while the International Air Transport Association (IATA) made presentation on behalf of foreign airlines.

Rising from the meeting the Authority expressed strong reservations over the high cost of fares and discriminatory practices against Nigerians by the foreign airlines and called for immediate reversal of the trend. One of the key resolutions at the end of the meeting between the Authority, FCCPC, NANTA and the foreign airlines was for the reduction in the cost of tickets and for the airlines to unconditionally unblock all lower inventory tickets to the Nigerian market.