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Controversy over price war on London route

There are indications that price war has commenced on the highly lucrative London route following the entry of Air Peace. The Chief Executive Officer of…

There are indications that price war has commenced on the highly lucrative London route following the entry of Air Peace.

The Chief Executive Officer of Air Peace, Allen Onyema, has alleged that foreign airlines have crashed their fares drastically with a view to frustrating Air Peace.

Onyema who spoke during a Channels TV interview said foreign airlines which used to charge exorbitant fares prior to the entry of Air Peace have now brought down the prices so significantly.

This is just as the immediate past President of Aviation Roundtable, Dr Gbenga Olowo, advised Air Peace to be prepared for the aero-politics that would trail his flight to London.

Daily Trust reports that Air Peace, Nigeria’s largest domestic carrier, commenced the Lagos-London route on March 30, almost seven years after a Nigerian carrier flew the route.

Many Nigerians had complained about the exorbitant fares on the route even as Onyema confirmed that a Business Class return ticket was being sold for N17m at some point.

But Air Peace’s entry crashed the fares with a one-way ticket coming down to as low as $600 (N738,000 at N1,230/$) from over $2000 it was initially sold.

Onyema however stated that foreign airlines are now crashing fares despite that there has not been a significant reduction in the rate of exchange.

He said, “The foreign airlines were taking between N15-N17 million for business class, N6 million for premium economy, and N5 million for economy.

“Then Air Peace came on, charging N4.5 million for business class, and economy class starting from N1.2 million.

“Now Air Peace did this, everybody has come crashing their prices from N18 million to N5 million. Dollar did not change.”

He accused foreign airlines of “devilish conspiracy” by crashing their fares to the lowest rate possible.

“It is a very devilish conspiracy. All of a sudden, airlines are underpricing. The idea is to take Air Peace out. The moment they succeed in taking Air Peace out, Nigerians will pay 20 times over,” he added.

He called for action against foreign airlines that are slashing fares below their break-even points, aiming to force Air Peace out of the Nigeria-UK route prematurely even as he commended the federal government through the Minister of Aviation and Aerospace Development, Festus Keyamo, for its support.

Why fares are crashing – AFARN

But speaking with Daily Trust, aviation analyst and President of Association of Foreign Airlines’ Representatives in Nigeria (AFARN), Dr Kingsley Nwokoma, denied that fares were coming down because of Air Peace.

He attributed the reduction in international air fares to the engagement of the federal government with the foreign airlines on the need to reduce lower ticket inventory following the partial payment of trapped funds as well as the reduction in rate of exchange.

Daily Trust reports that the airline’s rate of exchange peaked to N1,900 in February but presently hovers around N1,300.

Nwokoma stated that while the foreign airlines are not afraid of competition, the Air Peace’s entry was a mere coincidence, adding that as the foreign exchange market stabilises, air fares would continue to reduce.

He said, “It is a good thing that Air Peace is in the route and we also want more Nigerian airlines to come in also as flag carriers, the more the merrier.

“But apparently the fares going down wasn’t basically because Air Peace came on board. Before IATA and airlines have been meeting with the government and parts of the trapped funds have been cleared. So, it is logical for the airlines to release the lower fares. If there is coincidence, and people want to read the meaning into it, no problem but the more the merrier.”

Be prepared for the aero-politics, Olowo tells Air Peace

Olowo on his part commended Air Peace for blazing the trail on the route but advised that he should be prepared for the aero-politics which implies the interplay of forces among foreign airlines to outsmart one another to gain commercial advantage.

He said, “While I commended Air Peace for blazing the trail to London, they must be reminded that understanding the aero-politics is key and be prepared to handle it more maturely while enjoying government support.”

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