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Prior to this development, travellers had to pay relatively expensive fees to move between Nigeria and the United Kingdom. Until a couple of weeks ago, economy class tickets cost about ₦4 million. Fares have since dropped sharply; those same tickets now go for between ₦1 million and ₦1.2 million as of this report. Given the importance of the Lagos-London route and its status as a benchmark for other routes, it’s worth asking whether the decline in ticket prices will extend to other flight paths. And, if it does, what sort of effects could this have on Nigeria’s economy? First, here’s a brief run through how Air Peace’s foray into one popular travel channel may have helped disrupt the status quo of air travel for good.
Shaking Things Up with Lower Fares
At the time Air Peace was preparing its package, the Lagos-London route was dominated by two British airlines—Virgin Atlantic, and British Airways. This duopoly ensured they could fix prices at will, without fear of being out-competed by rivals. Other players did fly this route, but they operated limited shifts and, consequently, could not challenge the lead of the UK-based carriers. When Air Peace disclosed that it was starting direct flight operations to Gatwick Airport in London, they ignited expectations from travellers who could barely afford to move at current fees. Air Peace’s offer was competitive: its tickets were to cost ₦1.2 million. On Saturday, the airline commenced flights to Gatwick on a Boeing 777, with 260 passengers on the 274-seater aircraft. Several airlines have since towed Air Peace’s path, by shrinking their rates. British Airways, which had flown one-way to London for about ₦2.7 million at the mid-point of 2023, has adjusted its one-way ticket price to under ₦1.3 million as of this report. KLM, which only a few weeks ago flew for $1,500, has now pegged its rate at about $641. Aviation industry analysts see the entry of Air Peace into the Lagos-London route as signalling healthy competition in that space. Some have said that existing airlines may be forced out of the market if they do not match their rival’s price-cutting moves. The result would be reduced airfares, as it’s already being seen.Sign up for the Connect Nigeria daily newsletter
There’s More Going On
However, airfares aren’t plunging for a single reason. It’s rather been the result of a combination of factors which have played out almost at once. One instigator has been the threat issued by the Nigerian Civil Aviation Authority (NCAA) for international airlines to release low-cost tickets to the travelling public. According to the Federal Government, this order had become necessary because the airlines had been holding these tickets or selling them for dollars, and issuing higher-priced naira-denominated tickets instead. Although many airlines were initially slow to comply with the Federal Government’s directive, there’s evidence that they have now begun to follow the instructions.How Would Falling Airfares Affect the Nigerian Economy?
It’s hard to tell the extent to which dropping air ticket prices would impact the Nigerian economy. But one thing is clear: if it’s sustained, it will portend good things for the country. As we’ve already noted, the Lagos-London route is perhaps the most important path for international air travel in Nigeria. It’s frequented by thousands of businesspeople, students, and tourists per annum. With ticket prices lower, we could see a significant increase in traffic along that route. The result would be growth in trade and tourism, among other things. An increase in travellers may spur new international business partnerships, boost tourism, expand bilateral trade, and the emergence of more travel agencies. That ultimately means greater employment and better GDP numbers.Register to attend the CN Business Mixer
Most Nigerians hope for lower airfares. And that’s understandable. The benefits they’ll confer on individuals and the country are potentially immense. Are the falling ticket prices the birth of a new normal? Time will tell.
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