The Association of Foreign Airlines and Representatives in Nigeria (AFARN) has debunked reports implying that foreign airlines in Nigeria reduced fares because of Air Peace’s debut flight to London.
Kingsley Nwokoma, the president of AFARN told BusinessDay that the reduction in fares on the London route and other destinations is not because of competition by Air Peace but a drop in the foreign exchange rate and the repatriation of trapped funds.
“Competition is good, but before Air Peace came onboard, foreign airlines had been speaking to the International Air Transport Association (IATA) and the government about releasing low inventories. This discussion has been going on for a while now.
“A substantial amount of trapped funds have been paid to foreign airlines, and that was why foreign airlines released lower fares. The reason why fares went up in the first place was because low inventories were shut down.
“Now the government has shown enough goodwill to make payments, so it is in the interest of airlines to also show some goodwill to Nigerians by making low inventories available. To the best of my knowledge, CBN has cleared all the backlog, the only outstanding payments are with the bank,” Nwokoma said.
He stressed that it was at the same time CBN cleared the trapped funds, that naira gain strength. This, according to him, made fares drop. “Fortunately, all these happened at the same time Air Peace commenced its Lagos-London flight,” he added.
Nwokoma said if the trapped funds were cleared during the last administration, passengers wouldn’t have to pay high fares in the first place.
Susan Akporiaye, president of the National Association of Nigerian Travel Agencies (NANTA), explained that shortly before Air Peace started flights to London, the Nigeria Civil Aviation Authority (NCAA) had threatened to sanction foreign airlines that failed to release low ticket inventories.
Akporiaye also stated that the reason tickets were expensive was because airlines were selling only the highest ticket inventories.
“When the exchange rate was as high as N1,850 to a dollar, ticket inventory available on the Lagos-London route was between N5 million and N6 million. The NCAA had to engage the airlines to reduce fares because these prices were out of reach for many Nigerians. Some airlines release low inventories 48 hours after the NCAA asks them to, while others plead that they be given one week and some two weeks to release low inventories.
“However, whatever the rate of exchange is, that is what you see in naira. The rate of exchange determines the price of tickets. Now that the rate of exchange has dropped, BA and Virgin Atlantic are charging as low as N1.1 million and N1.2 million for a return ticket from Lagos to London.
“As the naira gains more strength, fares will continue to drop. Air Peace will also have to further reduce fares, if not, they will not be able to compete on the route,” Akporiaye explained.