Is Air Peace Growing Too Fast?

Air Peace, one of the few surviving airlines in the country, which currently flies to Accra, Ghana, has disclosed that it will be expanding its international operations in a few months. The new routes to be added include China, Dubai, Mumbai, and Atlanta. A representative of the founder of the airline stated this at an event over the weekend. With Arik out, it’s hard to argue that there is a yawning gap waiting for a local airline like Air Peace to fill. Except that it could get swallowed like Arik before it. 

For an airline that is barely four years old, starting international operations is a bit premature. The aviation sector in Nigeria has a quick mortality rate. The industry is besieged by several issues such as multiple charges, difficulty in accessing foreign exchange and the poor state of Nigerian airports. Has the airline being able to surmount all these issues? What will it do differently from Arik Air and AeroContractors who both also went international, but were unable to sustain the momentum?

A better strategy would have been for the firm to expand its operations across Nigeria, and then step into the space previously occupied by Arik Air. That would give it leverage to negotiate for possible tax breaks and other grants from the Federal Government and the Ministry of Aviation that can help it sustain throughout an economy that’s not symphathetic to the sector. Nothing has been said about the airline having a hub of its own like Arik Air does, at the Local Airport Terminal (or MMA1). Aside getting additional aircraft, competent staff familiar with international operations have to be recruited. They don’t come cheap.

Aviation is a business with thin profit margins and a long gestation period before breakeven and profits. Can Air Peace afford to run at a loss on international operations?

The proposed expansion will create jobs, key for a country struggling to recover from a recession; the government will also benefit from the extra revenue; the increased competition on the new routes, could lead to lower prices and better services in a bid to retain customers. That is, if Air Peace gets everything right.

The aviation sector cannot afford another airline shutting down.