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Economic crunch: Airlines adopt new strategies to sustain operation

By on April 23, 2016

Foreign airlines and Nigerian carriers operating international destinations are adopting various strategies that will help them remain in business as the number of people that travel out of the country has scaled down owing to the economic down turn.

THISDAY learnt that the number of Nigerians that travel overseas in recent times has reduce proportionally, a development that is taking a toll on the load factor of some of the airlines. A similar situation was what forced Iberia, the Spanish national airline to suspend operations to the country.

THISDAY checks revealed that the destinations mostly affected include Dubai, India, Doha and China because importation of finished goods has been curtailed by the struggling economy and low purchasing power.

It was however gathered that there is minimal effect of the poor economy to passenger movement to destination like London, Paris, other European destinations and the US.

Importers are finding it difficult to access foreign currency, especially dollars at the present high exchange rate of N320.00 per dollar in the parallel market.

THISDAY gathered that in order to survive the hard times, some foreign carriers have reduced the size of their aircraft, like British Airways, which now operates Boeing B777 that has about 300 passenger capacity, instead of Boeing B747 that has about 400 passenger capacity, depending on the configuration.

Some airlines have also reduced their frequency, meaning that airlines which hitherto had daily flights to Nigeria have reduced their operations to four or three times weekly while some are even considering suspending their flights.

Competition for market share recently created spat between Nigerian operators, Medview and Arik Air and BA and Virgin Atlantic Airways on the popular Lagos-London route.

The Nigerian operators had alleged that British Airways and Virgin Atlantic Airways were behind the sudden directive by Eurocontrol, which provides airspace services to airlines in Europe, to give them 48 hours ultimatum to offset their debts or they would suspend their operation.

According to a source at one of the airlines, the two English carriers pressured Eurocontrol to stop their operation, but the Nigerian airlines challenged the directive and Arik threatened that it would urge the Nigerian government to reciprocate in the same measure, prompting Eurocontrol to rescind the decision.

Since the two UK mega carriers increased their fares, passengers who could not afford the exorbitant fares have started patronising Medview and Arik, as the two Nigerian airlines record increase in load factor.

It was also learnt that Nigerian airlines are also attracting more passengers on the route because they sell their tickets in Naira and have refused to increase fares, despite the economic pressure to do so.

“When Eurocontrol insisted we must pay our debt within 48 hours I called them and said for nine years we have been operating to London (This 30th October, 2016 it will be 10 years) we have not failed you. He said it was beyond him; that he was told to do what he was doing.

“If we are not flying BA will force government to pay them their money that is trapped in the country or they will stop operation. That is the truth. But because of Medview and Arik they cannot do that. Arik and Medview load factor has gone up in our London service because of the high fares of these other airlines.

“Nigerian passengers have realised that our fares are cheaper and you are spending in naira. Those carriers cannot blackmail Nigerian government anymore.  It was a conspiracy. This is why there is need to have our own carrier but government is not encouraging us,” the Arik source said.

But BA Commercial Manager, West Africa, Kola Olayinka denied such allegation and said that Eurocontrol is an independent organisation that could not be influenced by BA or any other airline.

“We don’t have anything to do with Eurocontrol. I urge you to dig further than what you were told. Eurocontrol is an independent organisation . If you owe, you must pay. We do not have anything to do with Eurocontrol and I know those airlines have paid the debts which they owed Eurocontrol,” Olayinka said.

 

[ThisDay]