By AYOOLA OLAOLUWA
The entry of Green Africa into the nation’s aviation industry has sparked off a bitter price war among airlines, Business Hallmark investigation can reveal.
Bothered by Green Africa’s business strategy of crashing its air fares in order to gain customers, and the possible effects on their own profitability, rattled airlines, particular market leaders, also rolled out mouth watering price offers to ward off the new competitor.
Founded on 15 June 2015 by business tycoon Babawande Afolabi, who also serves as the chief executive officer, the Nigerian airline headquartered in Lagos is a low-cost carrier targeting the local air travel market.
To ensure continued access to funds, which used to the headache of most airlines, the new airline had signed a strategic partnership with Nigeria’s First City Monument Bank (FCMB), which gives the firm access to short- to medium-term liquidity.
As part of the agreement, FCMB will provide Green Africa with up to $31 million in a combination of working capital and credit during the pre-sales period beginning early 1Q21.
However, revenue from customer sales will be deposited exclusively at Green Africa’s operating account with FCMB, while the bank’s payment solution is integrated into Green Africa’s ticketing platform.
Originally billed to start operations in 2019 after receiving the necessary operating licenses from the Nigerian Civil Aviation Authority (NCAA) in June 2018, the new airline, it was gathered, made some tactical mistakes which effectively prevented it from meeting its take off date.
One of the mistakes, an aviation expert told BH, is the unwise decision of Green Africa owners to frontally take on already established and wealthy airlines like Peace Air, Dana and Arik money for money and strength for strength.
For instance, the airline decided to enter the Nigerian aviation space with the purchase of 50 Boeing 737 MAX 8s, valued at $11.7 billion, with an option for a further 50 aircraft. It was the largest order intention Boeing had ever received from an African airline.
However, the deal between the airline and Boeing collapsed in February 2020 when Green Africa withdrew its letter of intent.
Rising from the disappointment, the airline again signed a memorandum of understanding for 50 Airbus A220-300s, which also was the largest order intention Airbus received from an African airline, with deliveries dates fixed for 2021
Unable to wait until late 2021 when the new planes will start arriving, the management of Green Africa decided to lease three A220-300s from GTLK Europe to kick-start operations in 2020. Unfortunately, the three A220-3003 aircraft are still being awaited several months behind scheduled.
The decision to start big, aviation experts told our correspondent, worked against the airline. “Even if the airline had taken delivery of the huge and fuel guzzling planes, there is no way it could have survived beyond a few years before closing shops like others before it.
“These aircraft (Airbuses, Boeings) are for long-hauled trips, I mean international flights spanning over five hours. They are not built for short trips like the Lagos-Abuja flight which is just 40 to 45 minutes.
“The fuel the jumbo airplanes use in taking off alone can be used by smaller planes to complete the whole Lagos-Abuja trip. The big birds make up the loss (fuel) on the remaining thousands of miles in the trip when they consume less fuel. Using them for local trips is uneconomical and would have killed off the new airline eventually”, noted Captain Teju Elias, a retired pilot with KLM.
Probably learning from initial hiccups, as well as advice from experts, the board of Green Africa, which consists of industry veterans like the CEO of Interjet William Shaw; former chairman and CEO of American Airlines, Tom Horton; founder and CEO of Kuramo Capital, Wale Adeosun; Chairman of Aluko & Oyebode, Gbenga Oyebode and former CCO of American Airlines, Virasb Vahidi decided to change tactics.
This time, rather than going for the expensive and fuel consuming Airbuses and Boeings, Green Africa decided to purchase the smaller, but fuel efficient and propeller driven Avions de Transport Régiona (ATR72-600) aircraft.
Barely two months after it ordered for the first sets of the planes, the airline took delivery of two ATR72-600 aircraft (with registrations 5N-GAE and 5N-GAA) in April 2021, while a third aircraft (5N-GAD) expected by the end of the month.
The planes, which arrived the Murtala Muhammed International Airport in Lagos have a capacity of 70 passengers in an all-economy, 2-2 layout.
The airline further expects to increase its fleet of the less fuel consuming propeller airplanes to 15 aircraft by 2022.
Having fulfilled all necessary requirements, NCAA granted the airline licence to commence certification flights in April 2021 and later full license to start commercial operations.
Armed with the license, the Lagos-based airline recently opened its online reservations system, with flights originally billed to commence on Thursday, June 24, 2021.
“Today is a great day for every member of the Team and we are thrilled that our customers can now book their trips with us. We are building a value carrier that will connect customers to their opportunities and be a catalyst for positive change across the region.
“The ongoing “gFlyer Special Offer ‘’ which takes 10 percent off ticket prices will last till 11:59pm WAT on June 23rd, 2021. Corporate package known as “gBusiness” is planned to roll out within the coming weeks to cater to SMEs and corporate travelers.
“Flights as low as N16,500 are available on the website with flight dates starting from June 24th, 2021. Three products are available- gSaver, gClassicTM and gFlexTM giving customers the flexibility of purchasing the product that suits their travel plans. gFlyers who register on the booking website – greenafrica.com get a unique code that gives 10 percent off their first booking to celebrate this milestone.
“We are thrilled that our customers can now book their trips with us. We are building a value carrier that will connect customers to their opportunities and be a catalyst for positive change across the region”, declared the elated Chief Executive Officer of the airline during the ticket launch.
The airline is starting with seven domestic destinations originating from Lagos (LOS) to Akure (AKR), Ilorin (ILR), Abuja (ABV), Owerri (QOW), Port Harcourt (PHC) and Enugu (ENU), while more cities would be added later.
While there are levels of fares, Saver, ClassicTM and FlexTM, the icing on the cake is the fare on Lagos to Abuja (economy class) fixed at N16,500 from the average N60,000 market rate.
Also, flights to Ilorin and Akure which is around N50,000, is fixed at N16,500 respectively.
However, BH checks revealed that despite the delay in operations of the airline by NCAA till July 2021 and the temporary suspension of new bookings on its site, all seats on the yet operational routes, particular those on the Lagos, Abuja, Owerri and Port Harcourt routes have been sold up, with no available spaces until September 21.
Speaking at the end of a joint meeting between top officials of NCAA and senior executives of Green Africa where it was concluded that the airline’s Air Operator’s Certificate (AOC) will not be available till July 2021 due to unforeseen circumstances, its CEO, Babawande Afolabi, said: “This is certainly a bump in the road, and we are mindful of the impact especially on our customers and other stakeholders.
“However, we are confident of the NCAA’s support and commitment to get Green Africa into service, and we have also put plans in place to compensate our affected customers.
“All customers who have booked flights with Green Africa will be able to move their flights to future dates starting August 2021 at no extra charge.
“Further, in appreciation of the trust from the airline’s early customers and in recognition of the inconvenience of rebooking, each customer will receive an automated email with 50 percent of the value of their booking in a credit shell within seven days. This can be used to purchase another ticket with Green Africa,” Afolabi assured.
Meanwhile, despite the temporary suspension of the commencement of Green Africa’s operations, its fare offering has sparked a competition among airlines, with other local carriers also reviewing their fares to ward off any encroachment into their territories.
The biggest airline in the country, Air Peace, has reduced its fares across some destinations like Ilorin, and Abuja, Port Harcourt and Akure, among many other routes.
For instance, the airfare from Lagos to Ilorin which starts from N52,500 depending on the class, has been slashed to N32, 700. While the fare from Lagos to Abuja dropped to N23,000 from the N60,000 it sold in May and early June.
Unlike Green Africa which fixed the date for the commencement of the new price regime for June 24, Air Peace moved its own date a little backward to June 17.
Spokesperson of the Air Peace, Stanley Olisa, said that the airline’s Abuja-Ilorin-Abuja and Lagos-Ilorin-Lagos flights further exemplifies its unwavering determination to interconnect various cities across Nigeria while filling the gaps in Nigeria’s air travel connectivity.
“The flying public can book on our website and mobile app,” Olisa advised
Other airlines are also planning to slash their air fares in order not to lose out to early starters. The airlines include United Nigeria Airline which began operations in April with five 145 50-seater regional jets.
Owned by Obiorah Okonkwo, the chief executive officer of Abuja based The Dome Entertainment Limited, the airline operates from Enugu, but has an office in Abuja and currently operates scheduled flights between four cities, namely Enugu, Asaba, Abuja, Asaba and Lagos.
BH findings show, has slashed its fares on all routes by between 25% and 50%.
Another airline spokesman who did not want his identity disclosed, said his company was ready for the competition.
“We have our fare regime and very ready for competition. We have been here for 11 years despite the challenges and we believe it’s about service. Whoever has the best service or is able to satisfy the customers wins. No issues at all,” he assured.
He however, said there may not be available hangar space for the new planes been brought into the country considering the huge number already on ground.
“Where will they park them? MMA2? No space for such and is the industry now profitable for such order which is likely to come at once or with little spacing? They might have their strategy no doubt, we are watching,” the airline spokesperson declared.