• Wednesday, May 22, 2024
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BusinessDay

What Air Peace can learn from past Lagos-London route attempts

Stakeholders in the aviation sector have raised concerns that Air Peace and other local carriers looking to enter the Lagos-London route may not be able to compete with legacy carriers in price and would need to learn from failed attempts of others.

They also said that the government would have to support local airlines for them to thrive on the route.

These concerns come at a time when the coast is clear for Nigerian airlines to fly to the United Kingdom and Europe following the Third Country Operator (TCO) certificate obtained by the Nigeria Civil Aviation Authority (NCAA) for airlines.

With the TCO, the airlines designated to the UK or some of the EU nations can apply to operate without much hassle.

Apart from Air Peace that recently commenced flights from Lagos to London, Omni Blu Airline, another Nigerian carrier, has also secured the TCO, even as United Nigeria Airlines had also been designated to fly to the UK.

However, other stakeholders have raised concerns that just as Arik Air, Medview and Virgin Nigeria faced aero politics and could not sustain operations on the Lagos-London route, Air Peace and other local carriers may suffer the same fate if they do not deploy the right equipment and get the necessary support on the route.

Olumide Ohunayo, an industry analyst and director of research at Zenith Travels, told BusinessDay that beyond pricing, Air Peace will need to learn from the mistakes of those that operated the route in the past and must keep to schedule and avoid flight delays as this will affect its rating.

Ohunayo said Air Peace would need to improve on their services and offering to passengers, in terms of allowances and waivers that can entice more passengers.

“Air Peace should also look for partners that can take passengers beyond London, whether by air, rail or road. They should work with hotels and other service organisations that can be linked to their flight,” he said.

According to him, Nigeria Airways, one of the local operators that flew to London in the past, was just operating to satisfy the yearnings of the government and the Nigeria people and it collapsed along the line.

Ohunayo said Arik did well but had a problem with the cost structure, adding that its cost of operations was high.

“Arik also had issues of cash flow which resulted in the delay of its insurance package, fuel refilling for its aircraft and payment for other service providers which inevitably affected the schedules and integrity of its operations until the Asset Management Corporation of Nigeria stepped in.”

He said Medview had issues with its corporate governance, the type of aircraft used and the costs.

He said Medview grappled with flight delays, luggage misplacement issues and a not-so-good business class.

He said these airlines didn’t have support from the government as they battled with unfriendly policies from the UK authorities.

Seyi Adewale, chief executive officer of Mainstream Cargo Limited, told BusinessDay that local carriers that operated the Lagos-London route in the past did not have the financial capacity to effectively manage an efficient cash flow.

According to him, the capital outlay for running these routes are heavy and even though their respective business plan may indicate the sustainability level of the route, not having adequate capital or cash flow will hinder the best of business plan.

Borrowing at local banks with high and erratic interest rates to manage the cash flow needs or projections is also telling, Adewale added.

This challenge, he said, is usually accentuated when any of the long haul aircraft needs to undergo maintenance checks that will require significant foreign-denominated cash outflows.

This, according to him, creates two main issues: inability to maintain flight schedules or plans in order not to disappoint passengers because of few aircraft in their fleet and the challenges of lack of adequate cash to meet or support due obligations.

Adewale said: “Regarding the capacity, the fleet size of these prior airlines are too few and none were able to arrange reasonable or effective (airline) partnerships to meet lagging needs or to create or develop new routes to other regions or destinations.

“Important to this point is the ability to manage spare part supply chain needs in order to avoid downtimes or ‘aircraft on ground’ due to lack of effective procurement planning or lack of good spare parts storage buildup.

“The administrative aspect will have to do with their limited government or its agencies/departments liaison capabilities, inability to promote or develop new routes, develop critical partners to promote or manage their affairs in destination countries, the one-man-show ownership structures, etc.”

He said that for Air Peace to succeed on the route, the government, through the NCAA, should agree to the base price for all international routes with the buy-ins of all concerned that no airline should go below.

Ibrahim Mshelia, a captain and owner of West Link Airlines Nigeria and Mish Aviation Flying School, said past airlines failed on the Lagos-London route because they did not have government support as regards fighting aero politics.

He said: “British Airways and Virgin are always supported by their government. The government including the airport authorities are working for British Airways.

“The former minister of aviation took it upon himself and designated multiple entry points for foreign airlines. This was not a good decision. It is not patriotic and this destroyed Nigeria airlines.

“Government is supposed to protect our indigenous airlines. It took Air Peace so long to start the London flight. The current minister seems to be taking the bold steps in this regard and I am more than impressed.”

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