Nigeria May Adopt Low Cost Airline Model

There are indications that Nigeria might eventually adopt low cost airline model as a result of low traffic occasioned by tough economic situation rather than the willingness to do so.

Already, because of the huge seat capacity that airlines provide on the domestic scene with low passenger traffic, many of the airlines offer air fares as low as N12, 000 depending on the time of booking.

The operators, investigations revealed, want to concentrate on huge volume to be able to apply the model because Nigeria provides such market to succeed.

They hope that at a very low cost, they would be able to attract more passengers to fill their aircraft, which would make up for the fares they are going to charge.

Vice President, International Air Transport Association (IATA), Raphael Kuuchi in an interview with woleshadare.net said that low cost airlines wherever they exist play a very critical role contrary to thinking by some legacy carriers that low cost carriers have come to take over their market.

He noted that the model has a tendency to stimulate additional demand and come up with a new market segment that in most cases has not been seen before.

He however, lamented that “unfortunately, what we are seeing in Africa is a concentration of low cost carriers still in a few markets,” adding that this was because the low cost business was based on low price and high volumes and in many markets in Africa, they have the volumes.

He said, “The volumes are in South Africa domestic market. To some extent, Nigeria might eventually come up with low cost model in the future. You see that in North Africa, we have low cost model in Egyptian market, in Morocco because of the volumes there.

“Within Africa, it is a huge challenge because the volumes are not there. The second limitation in the growth of the low cost carriers is the existing limited Bilateral Air Services Agreement (BASA).”

It would be recalled that Aero Contractors, seven years ago introduced low fares on all the routes it operated. The fares were as low as N5, 000. The model it adopted led to huge traffic for the carrier and huge cash flow for the airline, as passengers thronged the carrier.

The model entailed that intending travellers made their bookings at least two weeks before their next flight. Low-cost airlines are taking off across the region, serving routes that cater to the continent’s growing middle class.

It hasn’t been easy for them. African nations signed an “open skies” agreement in 1988, similar to the one in Europe that cleared the way for successes such as easyJet. Most countries are yet to actually implement the agreement.

But as the number of potential travellers grows, the new low-cost airlines are slowly convincing governments about the benefits of increased air travel. One of the most ambitious of the new carriers, fastjet took off in 2011 running domestic routes in Tanzania.

Over the last two years it’s expanded to four other countries. The airline has big experience and big backing. Its boss, Ed Winter is a former executive at easy- Jet, which has a stake in the African venture.

The airline has set its sights on cracking the lucrative South African domestic market, while also negotiating new routes across the region. Meanwhile, analysts estimate that low-cost carriers such as Southwest and JetBlue have labour costs 30 per cent to 40 per cent lower than the mainline carriers.

Mainline passenger airline flights include those operated by American Airlines, Delta Air Lines, United Airlines, and now defunct US Airways but it would not include flights operated by regional airlines Envoy Air, Executive Airlines, Piedmont Airlines, or PSA Airlines with regional jets or the services of regional airline marketing brands such as American Eagle, Delta Connection, United Express, or US Airways Express aboard lowercapacity narrowbody jets and turboprop aircraft, such as those produced by Embraer or Bombardier, that do not have transcontinental range.

Wole Shadare