By Kenneth Ehigiator Vanguardngr.com
THE Federal Government, yesterday, remained adamant over its decision to ban foreign airlines operating in the country for refusing to dismantle fare disparity between what they charge Nigerians and their counterparts in other countries in West Africa, even as Aviation Minister, Princess Stella Oduah, is expected to speak on the issue today.
Aviation minister, Stella Oduah
This is as the airlines, including British Airways, Virgin Atlantic Airways, KLM-Air France, Lufthansa, among others, have stuck to the fares offensive to the government less than 24 hours to expiration of the ultimatum. Government had on March 25, 2012, issued the airlines a 30-day ultimatum to do same and the ultimatum expires midnight today.
Although other foreign airlines had been silent on the issue, even as Vanguard gathered that most of them were disposed to heeding government’s request, British Airways had been quite vocal in dismissing government’s threats, saying its fares were determined by the forces of demand and supply.
Statement from the minister
One of the minister’s aide, Mr. Toyin Okpaise, said last night that Nigerians should be patient till today to await a statement from the minister.
Aviation Minister, Princess Stella Oduah, had in the heat of the Arik Air-Heathrow imbroglio, threatened to clamp down on British Airways’ operations into the Murtala Muhammed International Airport in Lagos, if Arik’s slots at Heathrow were not restored.
However, good reasons prevailed and Arik had the slots restored, though temporarily but the minister insisted that all issues relating to Nigeria’s Bilateral Air Services Agreement, BASA, with Britian must be reviewed, especially with regards to slot and frequency allocations and, especially, fares charged by both British carriers which considered skewed against Nigerian travellers.
Princess Oduah wondered why British Airways should ask Nigerians to pay over $10,000 for a first class ticket to fly 5 hours 45 mins to London, while his Ghanaian counterpart is paying less than half of that amount to fly 6hrs 45mins to the same destination from Accra. The tension that followed the federal government’s request for fare disparity by foreign airlines caused the intervention of its British counterpart, which set up a negotiation team to discuss with the Nigerian authorities. That team asked for ample time to enable it carry out an independent study of the fare structure of the two British carriers in Nigeria and promised to get back to the negotiation table December 31, 2011.
However, that date passed without words from the British government, and this aroused the anger of the Aviation Minister who accused the British government of deploying delay tactics to wear down the federal government on the matter.
Warning that Nigeria could not wait endlessly for a response from the British government, Princess Oduah on march 25, 2012, issued a 90-day ultimatum to all foreign airlines to dismantle their fare disparity or face ban. She said: “We are seriously concerned and worried by the reluctance to restore parity within the region by the foreign airlines. They have been using all kinds of delay tactics, this is unacceptable and will no longer be tolerated. Nigerian passengers do not deserve this kind of exploitation and we are willing and ready to stand up for their rights. In the interim, we encourage Nigerian travellers to avail themselves of other competitive alternatives while we try try to address and resolve this issue once and for all.”
The minister’s ultimatum drew the response of the British High Commission in Abuja, whose spokesman warned that any ban on particularly the two British carriers would erode the bilateral relations between Nigeria and Britain. This was followed by a declaration by the Deputy High Commissioner, Giles Lever, that the federal government had no legal rights to ban foreign airlines, arguing that the airlines were private enterprises, which operations were determined by market forces.
The High Commissioner, Andrew Lloyd, maintained his government stance on the matter, insisting they were standing by their position. But the aviation minister said there was no going back on the ban should the airlines fail to do the needful, warning them to dare the government and face the consequence. Also holding a public hearing on the matter, the two chambers of the National Assembly concurred that foreign airlines’ fares in Nigeria were exploitative, citing particularly the fares of British Airways and Virgin Atlantic Airways to reflect the BASA between Nigeria and Britain.
In the public hearing by the Senate, Senate President, David Mark, blamed the regulatory agency, Nigerian Civil Aviation Authority, NCAA, and other relevant agencies for not being alive to their responsibilities, stressing that the high fares charged by the airlines wouldn’t have been possible had the agencies did their jobs well. He said: “It (high fares) have been on for a long time and our regulatory agencies are, in fact, part of the problems because they have refused to act in anyway that would force British Airways to reduce its fares. It is exploitative and no body should be allowed to exploit Nigerians. The prices given are completely out of range; it is unreasonable; it is exploitative and nobody should tell us to sit down here and not do anything about it because Nigerians are willing to pay.”
Although British Airways tried to convince the lawmakers the reasons its fares were high in Nigeria, nobody appeared to have bought its argument apparently because of its statement at the onset of the crisis. The airline’s initial response had been that its fares were high in the First Class and Business Class compartments because Nigerians were willing to pay.
It was later to hold on to the argument that its fares were competitive, determined only by the forces of demand and supply. BA said in its defence: “The market in Ghana is smaller than Nigeria and has lower premium traffic as a proportion of total traffic. Premium passengers in Nigeria tend to book closer to the date of travel which results in higher fares, and once revenue management principles are applied British Airways allocates a number of seats to each fare class and cheaper fares are available for bookings made in advance of the travel date but these will necessarily be limited to ensure that there are still seats available for purchase closer to the date of travel.
“This will, therefore, have an impact on prices, as it would do in any high demand/capacity restricted market. The capacity stipulated under the ASA for Ghana, unlike for Nigeria, has not been reached and in any case the government of Ghana has already shown a willingness to move towards an ‘open skies’ policy with no restrictions on frequencies in order for the economy of Ghana to benefit from the fast growing aviation market.
“An open skies policy will also attract other airlines to operate new services to Ghana, in the knowledge they will be able to increase services to match demand in the future, helping Accra to develop an aviation hub for West Africa. It is not correct to state that all of BA’s fares on the Lagos/London and/or Abuja/London routes are higher than those on the Accra/London route. In reaching this conclusion it appears that the highest premium fares from Lagos have been directly compared to the lowest premium fares from Accra. Furthermore, no analysis has been given to economy fares, which account for by far the larger portion of our sales in Nigeria.
“Our fare offering on the Nigeria -London routes is extensive. In total, on the Lagos-London route British Airways offers up to 40 different fares across all classes of travel at any one time, each with different conditions such as dates for travel, pre-booking periods and length of stay, which are designed to meet the needs of different passengers.
In addition, we have many special offers throughout the year. Our cheapest Lagos – London Club class fare is currently $3507, ($3147 ex -Abuja) which compares to the cheapest Accra -London Club fare of $2956, a difference of only $551 ($191 for Abuja), of which $227 is made up of higher Nigerian tax compared to Ghana.
“So the relative fare from Abuja is actually cheaper than Accra, and only $324 more expensive from Lagos once additional Nigerian tax is taken into account. The cheapest economy fare from Lagos to London is $1051 and $999 from Abuja compared to the cheapest economy fare of $1,164 from Accra to London. In short, many of our Lagos and Abuja economy fares are either cheaper or only marginally higher than fares from Accra despite the problems of constrained capacity out of Nigeria.”
It was learnt that government’s special focus on the two British carriers in achieving fare parity is informed by the fact that both airlines control up to 80 percent on the Lagos-London and Abuja-London routes, which are their prime routes in the country and Africa.
