The load factor for airlines on the popular Accra-Lagos route has diminished. Some of the airlines are reconsidering the route. Without official announcement, some have started withdrawing their service through unexpected cancellations. Four Nigerian airlines and one Ghanaian airline have shown consistency on the route; now that consistency is slipping.
In the last 10 years, many Nigerians have seen Ghana as investment destination. This took a notch higher in the last six years as Nigerian economy grew and became the largest in Africa, Nigerians became attracted by Ghana’s good political atmosphere and business climate and started investing hugely in the fellow West African nation.
This multiplied the movement between the two countries and made Accra-Lagos route one of the most lucrative routes in the West Coast. This was enhanced somewhat by homogeneous language, political and cultural affinity that Ghana became an extension of Nigeria in many ways; yet politically it remained more stable.
The major reason why traffic has diminished on that route is Nigeria’s economic downturn. Since last year when Nigeria’s economy took ill in response to the low oil price, which started in 2014, investment had since lost its velocity and naturally it has affected business between the two countries.
The problem was exacerbated by the prolonged dilemma over the devaluation of Naira, which lasted almost a year that saw the Naira plummet in value and became pariah in bureau de change boxes in Ghana’s capital Accra; to the extent that the currency, which used to command so much respect was shunned by all and sundry. About three years ago, one could spend the Naira at the eateries and other business centres at the Accra airport.
THISDAY learnt from one of the operators on Tuesday that the major reason why some airlines might have decided to cut down or stop their operations to Ghana from Nigeria is because of the expenses, which you must pay in dollars. These include charges and other expenses.
“If you are making enough sales in the foreign currency you will be able to pay for these charges but in a situation whereby you don’t earn enough foreign currency to pay for these charges you will be forced to subsidise the route from your earnings elsewhere and it will be difficult, knowing the current exchange rate,” the source told THISDAY.
Industry analyst told THISDAY that the problem is really the Nigerian economy and expressed optimism that the traffic between the two countries would eventually peak, but for now some airlines could withdraw their service, while others could reduce their frequencies.
“Some will have to review their flights. They can even pull out and later come back. After all, Iberia some time ago pulled out of Nigeria and later came back before the recent exit. But the route will continue to be an important one for the two countries,” the analyst said.
Travel expert, Ikechi Uko who literally lives in Nigeria and Ghana has explored the factors responsible for the low passenger traffic on the Accra-Lagos route. He recently narrated how a passenger booked a Business Class ticket on one Nigerian airline from Accra to Lagos and when he turned up at the airport on Sunday morning he found out the flight has been cancelled and nobody informed him about the cancellation.
“He had to buy an Arik ticket for $315 to get back home to Lagos. That probably was a sign of things to come. Today (last week) it would have been worse as an economy ticket from Lagos to Accra is between $200 and $300 depending on whose exchange rate you are using. The bottom has finally fallen out of the once lucrative Lagos Accra market. As Arik and Aero are now the only regular Nigerian Carriers on the route complemented by the dogged but surely growing Ghanaian carrier Africa World Airlines (AWA).
Uko noted that even Arik and Aero have scaled down operations to once a day in some instances and the use of a smaller aircraft, but Arik management said it still maintains its operational status on the route without reducing its frequency or aircraft type that services the route.
“Medview and Dana the other Nigerian carriers on the route have become somewhat epileptic. The biggest winner on this route is turning out to be the Ghanaian carrier AWA. It had applied right equipment, an Embraer 45 and changed schedules many times to find the right spot and timing. It established smart schedule integrity for its evening flight always leaving almost on time. Now with the Forex crisis in Nigeria and AWA price stability it is only disadvantage, which was the fact that most Nigerians don’t like small planes has turned into an advantage as Aero now uses a Dash-8 and Arik sometimes a CRJ all small crafts. Arik because of its multiple connections and network is also surviving added to its new lower pricing as compared to Aero,” Uko said.
The travel expert attributed the now unprofitable route to the oversupply of passenger seats and noted that the airlines were initially carried away by the frenzy of the huge market on the route. Now that the traffic has ebbed, the airlines inevitably would have to make adjustments. He said there is over supply now with about 1500 seats.
But many industry experts strongly believe that the lucrative Accra-Lagos route would bounce back.
THISDAY
