19 September 2018

Nigeria: Competition, Hurdles for Local Airlines On London Route

Photo: This Day

Air travellers longing for Nigerian carriers on the London route may wait no further, as at least two operators are warming up to take up the challenge to compete with British Airways and Virgin Atlantic airlines.

With this development, passengers on the route would be in for some exciting times, with competitive fares, more options and improved services.

However, the sustainability of such a route and attendant confusion of having multiple commercial airlines on one destination still bother industry stakeholders.

The guiding Bilateral Air Service Agreement (BASA) between the two countries allows airlines to reciprocate across the board. With two UK airlines coming here, Nigeria would have a tough time choosing two among the contenders to reciprocate.

For instance, Med-View Airlines PLC, which has been in and out of London Gatwick Airport, will soon return, but this time with fully-owned Boeing 777. This is at a time Air Peace is also set to debut with similar aircraft type. Also, if the new national carrier plans, and Arik Air's revival come to fruition, Nigeria may have four carriers contending on the Lagos-London route.

Indeed, the route makes a lot of commercial sense on the face value, as the London route is strategic enough to attract heavy traffic. It is a destination of choice for many Nigerians on business or pleasure. Besides being a gateway to Europe, the travel time of about six hours Lagos-London direct flight also adds to the patronage, earning the airlines an average of 95 per cent load factor.

The revenue is also attractive. Nigerian airlines like Arik and Med-View had charged an average of N200,000 per Economy seat, at a time their European counterparts had doubled or tripled the fares. With 323 passengers in a B777 aircraft at N200,000 per head, the total ticket sale is at least N64.6 million per trip.

The Chief Executive Officer, Med-View Airlines, Mr. Muneer Bankole, said the Boeing777 aircraft would resume on the Lagos-London route after the Hajj operations and the Lagos-Dubai route later this year.

The airline has lately had it very rough operating into London Gatwick Airport. The European Union (EU) last year, temporarily restricted Med-View flight operations to the region over alleged safety concerns and certification audit that has not been updated.

While the operations quickly resumed, it went into turbulent phase of a bad aircraft leasing deal that forced the airline out of the London and Dubai routes early this year. Recent arrival of a self-owned Boeing777 has rekindled the airlines' interest on the route.

President of the National Association of Nigeria Travel Agencies (NANTA), the downstream sector of the industry, Bernard Bankole, however, doubt the economic sense in operating on such "tough route".

Bankole didn't disbelief the market and its heavy traffic, as he observed that at least 80 per cent of Nigerians abroad are in the United Kingdom.

"The problem is that airline's presence on the London route is more of prestige than profitability. Domestic airlines go there to register their presence, and to seem bigger than they actually are in reality. But of what use is perception that does not amount to reality?"

Bankole added that the London route is really tough for airlines, with operators paying heavily for services and in advance, coupled with high cost of aviation fuel and very stringent conditions.

"That is why national carrier plies the route more than private airlines. There is nothing bad in our airlines going there, but government must support them to sustain it. But instead, why not solidify your base first? The local and regional markets are enough for any airline. Doing international operation with weak base is bad business, and we have seen that with our airlines," Bankole said.

The Chief Executive Officer, African Aviation Services Limited, Nick Fadugba, commended the airlines for enhancing their capacity for competition on the international front, although with a note of caution against bad competition.

Fadugba said besides the local airlines, there is also the Nigeria Air that is bound to also ferry passengers en route London and narrow the chances of private carriers.

"Imagine three Nigerian airlines competing against one another on the London route with B777 planes. How sustainable is that? Yes, we need strong airlines, but the creation of a national carrier must not knock off private airlines," Fadugba said.

Aviation Security expert, Group Captain John Ojikutu (rtd), foresaw a rough and turbulent airways for the Nigerian airlines to London.

Ojikutu said the probably options for them is either government reduced the frequencies of British Airways and Virgin Atlantic flights to Lagos and Abuja, or restricted each of the two multiple landings to single destination.

"Otherwise, the Nigerian airlines must start looking into areas of alliances, code and co-sharing with these two airlines. Already, I can see serious competition brewing for the London route between Air Peace, Med-View, the upcoming Nigeria Air and Arik Air that was previously on that route.

"The question is, which of the two major London airports; Gatwick and Heathrow, would be allocated to each of our airlines by the UK authorities or which airline would Nigeria and UK authorities carry or support to Heathrow, and which would they guide to Gatwick? There are other options outside London for the UK authorities to consider for the Nigerian airlines because from experience, UK authorities would not want all the Nigerian airlines in London," he said.

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