Travel News

By Isaac Anyaogu

LAGOS, Feb 21 (Reuters) - Nigeria's tanker drivers ended a strike to protest rising operational costs after agreeing to an increase in freight charges with fuel marketers following talks, a union official said on Wednesday.

The airline could struggle to meet demand for travel during the peak season due to problems with aircraft at Boeing and Airbus, says Ryanair chief executive Michael O'Leary.

Holidaymakers face higher air fares this summer due to a lack of available aircraft, Ryanair has warned.

Ryanair chief executive Michael O'Leary has predicted the budget airline's ticket prices could be up to 10% more expensive compared with the same period last year.

He said problems with aircraft at Boeing and Airbus - delaying the delivery of aircraft - will constrain capacity for passengers.

Mr O'Leary said: "Fares in summer 2024 are going to be up again on summer 2023.

"Our average air fares in summer 2023 rose 17%.

"We don't think we'll see that kind of double-digit fare increase this year.

"We're doing our budgets based on a fare increase of 5-10%, which to me feels kind of reasonable."

Citing the uncertain climate, Mr O'Leary added: "It could be higher than that, it could be lower than that, we really don't know.

"If capacity was growing, I think fares would be falling."

Passenger capacity to slump due to lack of aircraft

Ryanair originally forecast it would carry 205m passengers in the year to the end of March 2025 - up from 183.5m during the previous 12 months.

But Mr O'Leary told reporters at Ryanair's Dublin headquarters: "With less aircraft, maybe we'll have to bring that 205m down towards 200m passengers."

Citing the uncertain climate, he added: "It might be a scratch below 200m, we just don't know at this stage."

Ryanair has a contract with Boeing for the delivery of 57 new planes by the end of March.

However, Mr O'Leary said he expects to receive between 40 to 45.

He said the US aircraft manufacturer "has (US regulator) the Federal Aviation Administration (FAA) crawling all over them" since a Boeing 737 Max 9, operated by Alaska Airlines, suffered a mid-air blowout on 5 January.

The FAA grounded 171 aircraft, most of which are operated by Alaska Airlines and United Airlines, until inspections of the jets were carried out.

Major concerns over quality control have seen production of the new Boeing aircraft slow down.

It follows an announcement last summer that more than 1,000 Pratt & Whitney-built engines would need to be removed from Airbus aircrafts due to a safety recall.

As a result, airlines including Wizz Air, Luftansa and Air France "will be grounding upwards of 20% of their A230 fleets", Mr O'Leary said.

"If we could get all 57 aircraft deliveries from Boeing in advance before the end of June, we would make out like bandits all summer long, because we have airports at the moment beating the door down to us," he added.

(Bloomberg) -- Ryanair Holdings Plc warned that it could be forced to pare back its schedule in the peak summer travel season amid fresh delays in jet deliveries from Boeing Co.

The Irish discount carrier may receive fewer than 40 Boeing 737 Max jets before the end of June, Chief Executive Officer Michael O’Leary said. A shortfall of that magnitude would force Ryanair to cut its annual passenger forecast to 200 million people from 205 million for the coming fiscal year, he said at a media briefing in Dublin.  

Aircraft shortages are likely to drive up European fares this summer, O’Leary added, as competitors such as Wizz Air Holdings Plc and Deutsche Lufthansa AG ground planes to address an engine issue on some Airbus SE jets. 

“We’re doing our budgets based on a fare increase of between 5 to 10%, O’Leary said. “To me it feels kind of reasonable.” 

Read More: Ryanair Plans Growth in Central, East Europe as Wizz Cuts Routes

As recently as last month, Ryanair remained “reasonably confident” Boeing would deliver 50 new jets by summer, after a near-disaster in early January forced the US planemaker to slow output. The airline originally was due to take 57 Max jets between summer 2023 and 2024.

“Our growth has been constrained because at this point in time we don’t really know how many aircraft we’re going to get from Boeing,” O’Leary said. “I think 40 looks like the most realistic number but that’s moved down from 50 in the last two weeks.”

Bonus, Boeing Crisis

Ryanair makes most of its money in the summer season and cuts to its schedule mean lower revenue. O’Leary said the carrier had based its planning on the expectation it would receive 50 planes, and it will have to make some schedule cuts if it doesn’t receive at least 40 by March, its fiscal year-end.

“There is a debate with Boeing as to whether we’re entitled some compensation for these delayed deliveries,” O’Leary said.

Ryanair shares rose 1.1% to €20.67 at 8:43 a.m. in Dublin. The gains puts the stock near the €21 threshhold that, if sustained, would hand O’Leary a massive €100 million bonus payout. 

Boeing has lost 23% this year, the worst performance on the Dow Jones Industrial Average.

The midair blowout on a 737 Max jet on Jan. 5 has led to withering scrutiny of manufacturing quality at the US planemaker. Factory output has slowed as Federal Aviation Administration inspectors review quality controls at Boeing and its fuselage supplier. The agency has barred Boeing from increasing production rates of the Max until they’re confident quality has improved.

“We are communicating with customers that some delivery schedules may change as we take the necessary time to make sure that every airplane we deliver is high quality and meets all customer and regulatory requirements,” Boeing said in a statement. The company is working to address Ryanair’s concerns “and taking action on a comprehensive plan to strengthen 737 quality and delivery performance.”

Last week, Boeing announced it ousted Ed Clark, the head of the 737 Max program. Katie Ringgold succeeds him, while production chief Elizabeth Lund has been made the senior vice president of quality at Boeing Commercial Airplanes. 

O’Leary said he wasn’t happy with the changes, saying Boeing should have one person responsible for producing 737s without quality flaws.

--With assistance from Siddharth Philip.

(Updates with Boeing comment in 11th paragraph)

Air Peace on Wednesday,  announced N1.2 million and N4 million respectively on its London route for Economy and Business classes, effective March 30.

This is contained in a statement in Lagos by the airline’s Corporate Communications Lead, Mr Stanley Olisa.

Recall that flight tickets for London in Nigeria are between N2.3 million  to N4.2 million  for economy and N6 million for business class.

According to Olisa, the flight schedules for  Air Peace London route is now available on our website, and we are crashing the price of  flight tickets.

”A return economy class ticket goes for N1.2 million, while a return business class ticket sells for N4 million.

”Nigerians studying in the United Kingdom can also now access their special 15 per cent rebate on the already reduced economy fares.”

The airline had announced a special fare for Nigerian students in the UK when it hosted travel agents in Lagos in preparation for the launch of the London route.

Olisa also disclosed that London would be the airline’s seventh international destination since kicking off operations,  almost 10 years ago.

Nigeria has imposed a mandatory annual levy for organisations employing expatriate workers, requiring them to pay $15,000 (£12,000) for a director and $10,000 for other employees.

The move is meant to encourage foreign companies to employ more Nigerian workers.

Staff of diplomatic missions and government officials are exempt.

President Bola Tinubu has warned that the levy should not be used to frustrate potential investors.

He spoke while launching the Expatriate Employment Levy (EEL) handbook on Tuesday, adding that the government was expecting to improve revenue and indigenisation.

He said that its aim was to balance employment opportunities between Nigerians and expatriates.

"The goal is to close wage gaps between expatriates and the Nigerian labour force while increasing employment opportunities for qualified Nigerians in foreign companies in the country," he said.

There are more than 150,000 expatriates in Nigeria, according to local media citing data from the interior ministry.

They mostly work in the oil and gas, construction, telecommunication and hospitality sectors.

Nigeria is one of Africa's biggest oil producers. Its oil and gas exports account for 90% of foreign exchange earnings, according to the International Monetary Fund.

It already costs companies in Nigeria $2,000 a year to obtain a residency permit for each foreign employee.

The move comes as Nigeria is experiencing its worst economic crisis in a generation, which has led to widespread hardship and anger in recent months.

Labour unions and government workers on Tuesday held demonstrations to protest against economic hardships.

Mr Tinubu acknowledged that Nigerians were going through a difficult period.

He said efforts were being made to improve the country's finances and grow the economy.

The levy applies to employees who work for at least 183 days in a year.

The scheme imposes fines of up three years and jail terms of up to five years for a person or organisations that do not comply, including failure to provide accurate information.

The Nigerian Immigration Service will be responsible for enforcing the levy.

Local media quoted Interior Minister Olubunmi Tunji-Oj as saying that it would be operated on a public-private partnership model between the government, the immigration service and a private firm.

Nigerian economist Abubakar Abdullahi says the levy is good for the country and won't frustrate potential investors as "they'll love to see the country grow as well"."I believe Nigeria stands to benefit from this levy as more companies will start looking inwards as there are qualified Nigerians from all sectors," he says.

Additional reporting by Mansur Abubakar

BY Karl Lester M. Yap and Ram Anand, Bloomberg News

, Bloomberg

(Bloomberg) -- Malaysian businesses are paying a high price for their country’s weak currency that is making importing material and servicing foreign debt more costly.

With the ringgit hitting a 26-year low, industries from airlines to raw material-intensive sectors are particularly at risk, according to S&P Global Ratings.

The ringgit has slid to its lowest level since the Asian financial crisis in the late 1990s and the government has assigned the central bank to closely monitor the currency, Malaysian Prime Minister Anwar Ibrahim said Friday. 

The local currency last week slipped past 4.8 against the dollar, the weakest level since January 1998, during the height of the Asian financial crisis.

“We have already been feeling the impact as the ringgit has been falling,” said Chin Chee Seong, national secretary general at the SME Association of Malaysia. “Now it will be even more severe. Those of us in the services sector that import materials and products will lose even more.”

The weak ringgit could add strain to Malaysia Airlines Bhd., still recovering from restructuring its debt in 2021, as well as budget-carrier AirAsia. 

“The airline sector is the most exposed to risks due to currency mismatch in operations,” said Xavier Jean, S&P senior director for corporate ratings in Singapore, adding that they have expenses, including fuel and leases, in dollars and revenue in ringgit.  

“Debt in these companies is often denominated in dollars,” Jean said. “They have the double whammy of operating and financial exposure to currency depreciation.”

Malaysia Airlines declined to comment about the impact of the currency weakness on the company’s bottom line. 

AirAsia Group CEO Tony Fernandes said in an interview he isn’t concerned about the ringgit “as it’s mostly sentiment.” While 70% of the carrier’s costs are paid in dollars, “we have good ancillary income and fares are strong,” helping to buffer the company against the weak local currency, he said. 

Construction companies that depend on imported raw material, as well as telecommunication firms, whose capital spending are in dollars, also face a financial fallout, S&P said. 

For Axiata Group Bhd., Malaysia’s biggest wireless carrier, the biggest concern is the rising cost of servicing debt. The company has about $3.6 billion of dollar debt.

“The real concern is we have a large dollar debt, about 50% of that is hedged already,” said Vivek Sood, the company’s chief executive officer.

Some companies, such as state-owned oil and gas company Petroliam Nasional Bhd., are in a position to benefit from the plunge in the ringgit. A significant amount of its operations is either in foreign markets or pegged to the dollar, S&P said.

Sime Darby Plantation Bhd. said the weak ringgit is beneficial for the company, as well, because its revenue is in dollars.

“That is actually very promising for us,” said Chief Financial Officer Renaka Ramachandran. “We bring in dollars and convert them into ringgit.”

--With assistance from Finbarr Flynn and Anuradha Raghu.

BY Ifeoma Okeke-Korieocha & Chigozirim Enyinnia 

Competition has commenced on the Lagos-London route as Nigeria’s largest carrier, Air Peace, has pegged its economy class ticket at N1.2 million, slashing fares by 66 percent on the route.

BusinessDay’s findings show that foreign airlines charge an average of N3.5 million for economy class tickets from Lagos to London.

British Airways, which had an exclusive advantage of operating direct flights from Lagos to London, now has Air Peace to contend with as the local carrier would operate flights from Lagos to Gatwick London.

Air Peace went live on Wednesday, with its flight schedules for its London service billed to commence on March 30, 2024.

According to the airline, a return economy class ticket goes for N1.2 million, while a return business class ticket sells for N4 million, and Nigerians studying in the UK can now access a special 15 percent rebate on the economy class fares.

The airline had announced a special fare for Nigerian students in the UK when it hosted travel agents in Lagos last week preparatory to the launch of the London route.

British Airways’ economy class return ticket from Lagos to London cost $2,698, or about N4.7 million, using the N1,778 to a dollar International Air Transport Association (IATA) rate on the airline ticketing platform. British Airways’ business class cost $8,598, or about N15.2 million.

For Virgin Atlantic, economy class ticket cost $1,745 or N3.1 million; economy delight cost $1,797 or almost N3.2 million, and economy premium cost $3,442 or N6.1 million.

Business class on Virgin Atlantic cost $7,578 or N13.5 million.

The economy class return tickets on Qatar Airways cost between $973 and $2,095, or N1.7 million–N3.2 million, depending on the ticket class.

The business class ticket on Qatar Airways cost between $3,826 and $4,757, or N6.8 million–N8.4 million.

Ndukwe Ogechi, CEO of Geena Travels And Tours Ltd, told BusinessDay that Air Peace’s fares are good, adding that she envisaged intense competition on the route soon.

“My clients are already excited, although they expected the fares to be cheaper since Air Peace is a Nigerian carrier and the foreign exchange pressure is not so much on them. However, IATA’s exchange rate on the platform as at Wednesday is N1,778 to a dollar, which is really high. This exchange rate will continue to be a key consideration when airlines fix prices,” Ogechi said.

She pointed out that on Monday, the exchange rate on the IATA platform was N1,805/$. This also pushed ticket prices up on Monday.

John Ojikutu, an industry expert and CEO of Centurion Aviation Security and Safety Consult, said: “Competition has started. I hope that the foreign airlines and their multiple frequencies and destinations in our country can gradually get reduced.

“This is the beginning of the competition for scrapping the exploitation of the foreign airlines on the Bilateral Air Service Agreement routes. We hope those in the administration of our government and the management of the agencies will give the necessary support to Air Peace.”

Airfares in the last two years have risen by over 400 percent as a result of accumulating trapped funds of foreign airlines in Nigeria caused by the scarcity of foreign exchange in the country.

Last year, the Central Bank of Nigeria floated the naira after years of sticking with a hard peg that spooked investors and drained dollars from the economy.

For two years now, airlines blocked low ticket inventories, leaving high inventories to be sold in naira only, while the low ticket inventories on most airlines’ websites can only be bought with dollar cards only. This was in a bid to cushion the effect of their trapped funds in Nigeria.

Bankole Bernard, chairman of Airlines and Passengers’ Joint Committee of IATA, said Air Peace’s London flight is a welcome idea, especially as Nigeria would now have its own carrier.

He said: “There will be a bit of balance. Air Peace has been given a daily slot to Gatwick which amounts to seven frequencies, compared to 21 frequencies that the legacy airlines have; 14 in Lagos and seven in Abuja. To an extent, we have something that will balance it up.

“Air Peace is not going to be faced with challenges of foreign exchange because the fares will be in naira. It is a welcome idea for travel agents and Nigeria as a whole. We appeal to Air Peace to try its best to sustain the London route. We are willing to give them all the support to ensure this is successful. With Air Peace, travel agents envisage a 50 percent fare reduction.”

Oluwatoyin Olajide, chief operating officer at Air Peace, during the launch of the Lagos-London flight with travel agents, said the service will be operated with the airline’s Boeing 777 aircraft and the Boeing 787 Dreamliner aircraft, one of the most modern and efficient aircraft in the skies.

She said the airline will be launching with special promo fares and attractive plans for agents.

“Operating daily, this service will also offer several other benefits which give Air Peace an edge over the competition. It’s a direct flight without stop-overs and offers unbeatable fares. The specifics of these offers and other unique selling points will be presented as this engagement progresses.”

London will be Air Peace’s seventh international destination since kicking off operations less than 10 years ago.

Air Peace currently leads Nigeria’s aviation industry with a rapidly expanding network of 21 domestic routes, 10 regional routes and 6 international destinations with a growing modern fleet of over 30 aircraft.

Nigeria’s Ministry of Interior has entered into talks with IDEMIA, a multinational technology company to explore the possibility of producing passport booklets within Nigeria. Led by Olubunmi Tunji-Ojo, the interior minister, the discussion opened Thursday.

“The Minister of Interior, @BTOofficial-Ojo on Thursday engaged in discussions with @IdemiaGroup to explore opportunities for localizing passport booklet production in Nigeria,” the ministry announced on its X handle. No further explanation was offered after the X post. Reacting to the announcement, X commentator, @Solomon_dynasty described the move as good for industrialisation, however, he feels other agencies of the country could also be explored.”This part of industrialisation, we need to do more in terms of homemade things and I would have thought Nigeria mint and print would handle the passport booklet production,” the X user noted. Other commentators described the move as good for the ailing naira as buying locally is always good for the domestic market.

IDEMIA, a multinational technology company headquartered in Courbevoie, France, specializes in providing identity-related security services. The company offers a range of products and software, including facial recognition and other biometric identification solutions, catering to private enterprises and government entities.

Last year, it was reported that Idris Jere, former comptroller-general of the Nigerian immigration service, lamented that the country lacks a domestic production facility; highlighting that travel documents are manufactured overseas.

“We generate forex from the sale of passports but we do not have access to buy the same booklets, and that is a challenge for NIS,” Jere had said.

“The factors responsible for the scarcity of passports include the inability to set up passport-producing factories in Nigeria, as its production is done abroad. The major seven components used for producing passports are sold in the international market and the assemblage and production are done in Malaysia.

“This makes the production process solely dependent on forex and the scarcity of forex due to the fall in Naira value is of major concern.”

The discussions between the Minister of Interior and IDEMIA signify a potential collaboration aimed at enhancing Nigeria’s passport production capabilities.

Localizing passport booklet production could bolster efficiency and security measures within the country’s passport issuance process. It will help alleviate passport booklet shortages to some extent.

Previously, shortages of booklets resulted in reports of corruption during the passport issuance process in Nigeria, with agents taking advantage of desperate applicants. However, by localizing passport booklet production in Nigeria, such abuses will be minimized.

As discussions progress, citizens await further developments and potential outcomes of the collaboration between Nigeria’s government and IDEMIA in the realm of passport production.

There are seven airlines with scheduled flights from Europe to Nigeria.

SUMMARY

•  Nigeria has scheduled flights from 12 intercontinental destinations, with nearly 40% of flights from Europe.
•  British Airways is the top European carrier to Nigeria, followed by Turkish Airlines, Lufthansa, and Air France.
•  Virgin Atlantic and KLM are also among the airlines serving Nigeria, with different flight frequencies from Europe.

This summer, Nigeria has scheduled non-stop flights from 12 intercontinental destinations in the Middle East, Europe, North America, and Asia. While its two main airports are among the most expensive to fly to, they are also among the busiest on the continent. According to data from Cirium, an aviation analytics company, nearly 40% of Nigeria's intercontinental flights are from Europe.

The country's largest carrier, Air Peace, is the latest airline to schedule flights to Europe. It will start serving London Gatwick (LGW) from Lagos on March 30, initially with Norse Atlantic's Boeing 787s after signing an ACMI agreement earlier this week. There are six other airlines with scheduled passenger flights between Europe and Nigeria. Let's take a look at the top carriers and routes.

British Airways is the top European carrier in Nigeria

British Airways is the top carrier between Europe and Nigeria this summer (April-October), with 420 scheduled flights and 103,110 seats (one-way). The carrier serves Lagos Murtala Muhammed (LOS) and Abuja Nnamdi Azikiwe Airport (ABV) from London Heathrow (LHR). It has 210 flights and 53,760 seats to Lagos and 210 flights and 49,350 seats to Abuja.

Photo: Sudpoth Sirirattanasakul | Shutterstock

Lagos is served daily with the Boeing 787-10, while Abuja is served daily with the B777-200. In terms of its Africa network, Nigeria is British Airways' fourth-most popular destination by number of flights after South Africa, Morocco, and Egypt. Through its main fleet and subsidiary, BA Euroflyer, it serves two destinations in each of the top four countries.

British travelers can now seamlessly connect to more destinations in Southern Africa.

Three other airlines serving Lagos and Abuja

With a total of 360 flights and 102,245 seats, Turkish Airlines is the second-largest European carrier to Nigeria this summer. It has scheduled 210 flights and 59,520 from Istanbul to Lagos and 150 flights and 42,725 seats from Istanbul to Abuja. It operates daily flights to Lagos and five weekly to Abuja with the Airbus A330-200 and A330-300.

Photo: Kevin Hackert | Shutterstock

Lufthansa is the third top carrier from Europe, with 308 flights and 83,148 seats. It also serves Nigeria's two primary airports, operating flights from its hub at Frankfurt Airport (FRA). Abuja is its top Nigerian destination this summer with 162 flights and 45,198 seats, followed by Lagos with 146 flights and 37,950 seats. Abuja sees the A340, while Lagos sees both the A340 and A330.

Check out more African aviation news here

The fourth and final European carrier serving Nigeria's two main airports is Air France. It has a total of 270 scheduled flights, offering 81,448 seats to the West African country. There are 210 flights and 68,008 seats on the Paris-Lagos route and 60 flights and 13,440 seats on the Paris-Abuja route. Lagos will be served with the A350-900, while Abuja is served with the A330-200.

Virgin Atlantic and KLM

Virgin Atlantic is the third airline flying between Nigeria and the UK this summer. It is also the fifth top airline between Europe and Nigeria, with 210 flights and 68,220 seats. It currently operates daily flights from Heathrow to Lagos with the A350-1000. Meanwhile, Air Peace will be the only airline flying between Gatwick and Lagos.

Photo: Bradley Caslin | Shutterstock

The sixth top airline for Europe-Nigeria flights is the Dutch national carrier KLM. It has 176 scheduled flights and 46,464 seats on its route from Amsterdam Schiphol (AMS) to Lagos. It currently operates six weekly flights with the A330-200. The Federal Airports Authority of Nigeria (FAAN) recently reopened Lagos' main runway for international flights. The airport is currently served by about 29 airlines.