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 fares reduction 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 have been speaking to the International Air Transport
Association (IATA) and the government on 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 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 the ones 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 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 won’t have to pay high fares in the first
place.
Susan Akporiaye, president 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 why 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 to
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 asked them to, while others pleaded that
they be given one week and some two weeks to release low inventories.
“However, whatever the rate of exchange is, is what you see
in naira. The rate of exchange determines the price of tickets. Now the rate of
exchange has dropped, BA and Virgin Atlantic are charging as low as N1.1
million and N1.2million 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.