The recent reduction in airfares on the Lagos-London route has been welcomed by many Nigerians who had previously decried the exorbitant ticket prices charged by foreign airlines. However, the narrative being pushed by some airline representatives about what triggered the fare crash warrants closer examination.
Dr. Kingsley Nwokoma, President of the Association of Foreign Airlines’ Representatives in Nigeria (AFARN), has claimed that the fare reductions are primarily due to the federal government’s partial payment of trapped funds owed to airlines and a more favorable exchange rate, rather than competition from new entrant Air Peace on the route.
While the clearing of some trapped funds and a stronger naira could have played a role, this explanation seems incomplete and convenient for foreign carriers. A few key points to consider:
- Trapped Funds Resolution Long Overdue The issues around blocked funds have persisted for years with little to no fare relief for Nigerian travelers until just recently when Air Peace announced its Lagos-London service. This seems like an awfully timed coincidence if the trapped funds clearing was the main factor.
- Exchange Rate Argument Doesn’t Hold Water Yes, the naira has regained some ground from its lows, but the current rate of around N1,300 to $1 is still significantly weaker than the N300-N400 range airlines were operating with just a few years ago. Exchange rates fluctuate regularly – did fares adjust commensurately each time?
- Power of Competition Air Peace’s entry on the lucrative Lagos-London route has unquestionably disrupted the market by introducing lower promotional fares. The foreign airlines have been forced to match these lower prices to remain competitive. This is simply the market forces of competition at work.
While trapped funds and forex realities present operational challenges for airlines, one cannot ignore the impact a new competitor like Air Peace brings in terms of pricing discipline and consumer choice. By Dr. Nwokoma’s own admission, more Nigerian airlines on international routes would be welcome.
Rather than diminishing Air Peace’s role, stakeholders should appreciate the consumer benefits their Lagos-London flights have catalyzed through competitive pricing. Customers ultimately get to decide which airlines offer the best value proposition.
Reference
Air Peace Not Responsible For Crashed Fares On London Route – Expert published in daily trust