Airfares for travels from Nigeria to other countries have seen a significant drop, following the appreciation of the naira and the competition arising from Air Peace’s debut on the Lagos-London route.
The pressure on the foreign exchange market has eased as naira on Monday appreciated to 1,340 per dollar on the parallel market, stronger than 1,408.04/$ on the official market.
This represents an 8.21 percent gain against the dollar, compared to 1,450/$1 on Monday at the unofficial market.
The large naira depreciation caused by the FX reforms that started last year had led to a steep rise in the International Air Transport Association (IATA) rate for ticket sales.
As of Tuesday, the IATA rate for ticket sales in Nigeria dropped from almost N1,800/$ a few months ago to N1,468/$.
The drop in the rate quickly saw the prices of tickets drop across several destinations.
For instance, a one-way ticket from Lagos to London on British Airways that was sold for N3 million (Economy Class) and N11 million (Business Class) cost N1.7 million and N6.8 million respectively.
On Lufthansa, the price of a one-way ticket from Lagos to London dropped from N3 million (Economy) and N9 million (Business) to N2 million and N7 million respectively.
On Virgin Atlantic, the price for Economy, Economy Premium and Business Class fell from N2 million, N5 million and N12 million to N1.5 million, N3 million and N6 million respectively.
Stakeholders who spoke to BusinessDay said the reduction in ticket price by Air Peace on the London route also played a significant role in cut in prices by foreign airlines.
BusinessDay had earlier reported that Air Peace’s maiden flight to London slated for March 30, 2024 was already fully booked by Nigerians who have since sought cheaper tickets to London.
The airline had pegged its Economy Class ticket at N1.2 million, thereby slashing fares on the route.
According to the airline, a return Economy Class ticket goes for N1.2 million while a return Business Class ticket sells for N4 million, and Nigerians studying in the UK can access a special 15 percent rebate.
Sindy Foster, principal managing partner at Avaero Capital Partners, told BusinessDay that the increase in seats/capacity by the addition of daily direct flights to London and the competitive fares Air Peace is charging is having a big impact on competitor fares.
“However, it is not in isolation to the clearing of ‘verified’ blocked funds by the CBN and the appreciation of the naira against the dollar. All are very good for the industry,” Foster said.
John Ojikutu, an industry expert and CEO of Centurion Aviation Security and Safety Consult, Nigeria, has earlier predicted that Air Peace’s commencement of Lagos-London flight would bring about competition on the route.
“This is the beginning of the competition for scrapping the exploitation of the foreign airlines on the Bilateral Air Service Agreement routes. We hope those in the administration of our government and the management of the agencies will give the necessary support to Air Peace,” he said.
Bankole Bernard, chairman of Airlines and Passengers’ Joint Committee of IATA, described the Air Peace London flight as a welcome development.
He said: “There will be a bit of balance. Air Peace has been given a daily slot to Gatwick which amounts to seven frequencies, compared to 21 frequencies that the legacy airlines have: 14 in Lagos and seven in Abuja. To an extent, we have something that will balance it up.
“Air Peace is not going to be faced with foreign exchange challenges because the fares will be in naira. It is a welcome idea for travel agents and Nigeria as a whole. We appeal to Air Peace to try its best to sustain the London route. We are willing to give them all the support to ensure this is successful. With Air Peace, travel agents envisage a 50 percent fare reduction.”
Ndukwe Ginika Ogechi, CEO of Geena Travels And Tours Ltd, told BusinessDay that the appreciation of the naira has immediately affected ticket prices and the airline exchange rate for ticket sales.
“There was a time IATA exchange rate for ticket sales rose to almost N1,800 to a dollar. On Monday this week, the rate came down to N1,598 to a dollar. Today (Tuesday), it is N1,468. Tomorrow it may still come down. As the exchange rate is reducing, tickets will also be reducing. Travel agents are really happy about the development and we envisage that ticket prices will further reduce in the coming weeks,” Ginika said.
BusinessDay’s findings show that the prices of one-way Economy and Business Class tickets from Lagos to the United States on Lufthansa dropped from N3 million and N13 million to N1.9 million and N10 million respectively.
A one-way Economy Class ticket from Lagos to the United States on British Airways, which cost N7.5 million last year, was sold for about N6.6 million on Tuesday. (BusinessDay)
