Air Peace’s entry into the Nigeria-London route and the recovery of the local currency have sparked intense competition among international airlines.
Aviation industry analysts and experts suggest that Air Peace will need government support and a strategic approach to maintain its competitiveness in the market.
Air Peace made a bold statement on March 31, 2024, with its inaugural flight from Lagos to London, using a Boeing 777 aircraft with a capacity of 274 seats. The airline offered tickets at a significantly lower price compared to other foreign carriers operating on the same route, which had previously resulted in exorbitant fares for Nigerians traveling to London.
However, industry experts caution that sustaining this momentum will require more than just offering low prices. Air Peace will need to adopt a strategic approach and overcome various challenges to establish itself in the highly competitive international market.
Just two weeks after entering the market, Air Peace’s Chief Executive Officer, Allen Onyema, expressed concern about foreign airlines undercutting prices to push Air Peace out of the market. He highlighted the need for government support, as these foreign carriers are allegedly receiving backing from their respective governments, with Nigeria historically being a lucrative market for international airlines.
A comparison of air ticket prices reveals the competition Air Peace faces. For a flight scheduled on April 29, 2024, from Lagos to London, Ethiopian Airlines, with 75 years of experience, offers an economy ticket priced at around N679,375. In contrast, Air Peace prices the same ticket at N1,090,750, promising a shorter 6-hour non-stop flight compared to Ethiopian Airlines’ 16-hour journey with a stopover.
The decline in air ticket prices can be attributed to the strengthening of the Nigerian naira against the US dollar and the Central Bank of Nigeria clearing airlines’ trapped funds (foreign exchange backlogs) amounting to approximately $160 million.
Beyond the ongoing price war, Air Peace’s chairman also highlighted challenges with ground handling and space allocation at London Gatwick Airport, emphasizing that no other airline has faced such obstacles before. These operational hurdles add to the airline’s challenges as it strives to establish itself in the international market.
The President of the National Association of Nigeria Travel Agencies, Susan Akporiaye, attributes the drop in air ticket prices to the appreciation of the naira and the resolution of trapped funds. She points out that high fares had driven many Nigerians to seek cheaper travel options in neighboring countries like Ghana and Togo, resulting in a loss of tax revenue for Nigeria.
Stakeholders in the industry, including the President of the Association of Foreign Airlines and Representatives in Nigeria, Kingsley Nwokoma, emphasize the need for patriotic support from both Nigerians and the government to ensure Air Peace’s sustained entrance into the market. Nwokoma suggests that government officials should set an example by choosing Air Peace for their foreign trips, as it would demonstrate confidence in the airline and contribute to its growth and sustainability.
While the government cannot dictate prices for foreign airlines, Nwokoma believes that collective support from Nigerians for Air Peace can make a significant difference. Increased competition and passenger options can ultimately benefit air travelers.
Air Peace has expressed gratitude for the support received from the Nigerian government but continues to call for further assistance as the price war persists. During the inaugural flight, prominent government officials, including Aviation Minister Festus Keyamo, Minister of Industry, Trade and Investment Doris Uzoka-Anite, and acting Director-General of the Nigerian Civil Aviation Authority Chris Najomo, were present to offer their support.
As Air Peace expands its operations and the naira continues to rebound, the airline faces an arduous journey to establish itself in the competitive international market. With strategic planning, government support, and overcoming operational challenges, Air Peace aims to provide Nigerians with more affordable and convenient international travel options.
The statements from various industry experts and analysts highlight the challenges and strategies that Air Peace should consider to establish itself in the competitive international market. Here are some key points:
Government Support: The CEO of Air Peace mentioned that the Nigerian government is behind the airline, but he called for more support. Analysts suggest that the government should provide incentives such as tax breaks specifically for the London route to help Air Peace compete effectively against larger foreign carriers. Similar to how foreign airlines receive support from their governments, targeted assistance can bolster the competitiveness of Nigerian airlines.
Expansion to Other Destinations: While Air Peace focuses on the Nigeria-London route, experts recommend that the airline should also target other international destinations such as China, the US, India, and regional routes. By expanding its operations, Air Peace can position Nigeria as a hub for their operations and increase their market presence.
Strategic Planning: Experts emphasize the need for Air Peace to have a stronger strategy beyond pricing to become resilient in the market. Merely relying on low prices will not be enough to sustain their presence. The airline should consider factors such as cultural background and additional benefits to make their offerings more appealing to Nigerians.
Confidentiality of Strategies: Analysts caution against revealing key strategies to the market. Air Peace’s chairman was criticized for disclosing certain plans on national television. It is suggested that the airline should assemble a team of marketing experts to ensure they stay afloat in the market and avoid unforced errors.
Government Incentives: To help Air Peace navigate the price war, analysts propose that the government should provide support in the form of tax breaks for the London route. This would give Air Peace leverage to compete effectively against larger foreign carriers. Subsidies or incentives are common practices in many countries to make their firms more competitive.
Overall, Air Peace faces intense competition in the international market, and sustaining its presence will require strategic planning, government support, and measures to differentiate itself from competitors. By implementing effective strategies and receiving necessary assistance, Air Peace aims to establish itself as a leading Nigerian airline on international routes.