Understanding Foreign Airlines’  Price War with Air Peace

Two things happened in the last few weeks: the naira started rapid appreciation over major currencies and Nigeria’s indigenous carrier, Air Peace started flights from Lagos to London with the lowest airfares among airlines on direct flights to London from Nigeria. These two events have prompted foreign airlines to review their airfares downwards, but industry analysts posit that the rapid drop in prices of tickets to London is prompted by the desire to push Air Peace out of the market, writes Chinedu Eze

Foreign airlines have exposed how they exploited Nigerians in the last six years with the current crash of their fares. Before the naira depreciated to about N1,700/$1 British Airways had charged N11 million for a one-way Business Class ticket from Lagos to London but currently return ticket goes for about N6 million.

What happened? Before Air Peace started its Lagos-London flight on March 30, 2024, airfares were still very high, prompting the Nigeria Civil Aviation Authority  (NCAA) and the National Association of Nigeria Travel Agencies (NANTA) to urge foreign airlines to open the low inventory of their tickets for Nigerian passengers.

Before Air Peace’s inaugural flight to London, the market showed that a one-way economy class ticket from Lagos to London on British Airways used to cost about N3 million 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.

By February 29, 2024, Air Peace had started selling its return economy ticket for N1.2 million, while the other two airlines on direct flights to London from Lagos sold an average of N3.5 million for return economy tickets.

But last week, all the airlines crashed their ticket prices. EgyptAir 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 Maroc ($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.

Industry insiders said that the strategy is that by reducing the cost of the tickets temporarily, the foreign airlines would force Air Peace to under sale tickets, incur losses, and close its operations to the route. Within 48 hours the airlines would doubly increase prices and continue the exploitation of Nigerians, which they have been doing for over six years.

To avert this, some Nigerians in response to the advertised low fares have responded that even if the other airlines crashed their fares to $100 they would still fly Air Peace because they know the foreign carriers are setting a trap for them.

An aviation industry stakeholder who pleaded anonymity said: “Well in truth, you cannot go wrong supporting your own. I see most of the fares and a simple analysis is just like I said previously, the price war should be a matter of convenience too. The only three airlines here in direct competition because of the Bilateral Air Service Agreement (BASA) are Air Peace, Virgin Atlantic Airways, and  British Airways. This is due to both flying directly to the UK albeit different aerodromes but UK nonetheless.

He also noted: “The others are basing their competition on price, which although good, but does not eliminate the time factor. While Air Peace, Virgin Atlantic, and BA would do six hours tops, others would do a minimum of 15 hours.  Some will even arrive, at times, they need to stay a night meaning a transit hotel (additional cost). So it’s a no-brainer tie between cost and speed (which is the forte of aviation). This also implies a subtle safety parameter no one likes to talk about. ‘The longer you’re in the air the more liable you are to unforeseen circumstances (I hear the God forbids and finger snaps across the head)   but this is reality. I should go directly instead of worrying about the next plane forward to my destination.  So take your pick.”

In other words, it is only the three aforementioned airlines: Air Peace, British Airways, and Virgin Atlantic Airways that fly for about six hours to London; others spend from 15 to 36 hours flying to the destinations, which is cumbersome and exposes one to safety fears.

Industry analyst and Chairman/CEO Qwikio West Africa Limited, Dr. Alex Nwuba, said that the price war with Air Peace was not necessary, noting, “Air Peace has forced fares down, isn’t that for our benefit? Even if BA charges £50 to the UK, will they carry everyone? The concept of a fare war is also best for the consumer.  Sometimes when we see these quarrels, I am forced to ask, do we care about the consumer? 

“Without Air Peace, there will be no succour for the Nigerian traveller. First, the fare war doesn’t exist, the fares we see are the result of long travel dates, promotions, and even manipulation. It is not even possible for BA and Virgin Atlantic to collude, if they do,  they’ll both be breaking the law, and they won’t play with the law. Why don’t we wait a while and see how the service goes before declaring its failure?”

Also, economic analyst, Kalu Ajah, in his verified X handle, @finPlanKaluAja1 said that Air Peace should have known that other operators to that destination would not allow it to gain market share without a fight, remarking that the airline would fight for every seat and that is simply, competition.

“They have their advantage; they can use their currency to pay for maintenance and insurance. Air Peace has an advantage, it can do local flights. Air Peace should start its loyalty programme immediately. I fly from London to Lagos; I get 25% off Lagos to Abuja. Make that loyalty transferable, or even better a cash transfer. So if I pay foreign exchange, Air Peace will either give me a 25% discount on local travel or 10% cash back paid in Naira. That’s transferable to a beneficiary of my choice. Fight them by bundling your services with local services for a start. Then next get the aviation fuel sold to you on credit payable after 36 months. So, you fight them with a unique home advantage. No one will see a cheap flight and ignore it, so your flight has to be the cheapest,” he said.

Over the years, British Airways and later Virgin Atlantic Airways have been making a kill on the Lagos-London route. They usually use subtle but firm tactics to drive off competition from Nigerian carriers. But until now they always had what Nigerian airlines did not have: capacity, good in-flight service, reliability, and predictability. For the first time, these two British carriers are getting a match in a Nigerian airline, Air Peace.

In addition to the aforementioned, good in-flight service, better homemade meals, a humble and efficient crew, and on-time performance. So, the battle may be long-drawn or each carrier among those that fly direct service should just carve out its slice of the market and let peace reign.