AIR PEACE: Rising to the Challenge in the Global Market

It is no longer news that Air Peace (Nigeria’s top-most local airline) has created a pathway for itself with its operation in flying the Lagos to London route on its service.

As we all know, the airline business comes with a lot of benefits, as well as risks.

In this article, we will be looking at why competition is beautiful, as well as reflecting on the progress made, the downside to avoid, and some recommendations for improvement.

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Let’s delve deeper!

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Air Peace and the Nigerian Airspace

Air Peace as well as other private airlines have contributed to the increased competition and growth in the Nigerian Aviation Industry and African airspace at large, this happens to be a spin-off of the Nigerian government’s “Air Policy” aimed to promote domestic airline operations, which has led to the emergence of new carriers.

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With over 10 years in operation, Air Peace’s contribution hugely to the immense development of the sector as well as the National economy cannot be underestimated. Figures from her 2020/2021 annual reports filed on the UK.gov website show that Air Peace made over ￡72,020,912 in revenue which is over ?40.1Billion projecting her among the top 5 airlines in Nigeria (though, we are not making any comments on their losses even though they do not share in these alone as other airlines equally are in this position).

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See Figure 1 below showing revenue as filed for 2020 and 2021respectively:

Source: www.uk.gov ?website.

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The Air Peace Experience: My Personal View

I have been opportune to fly over 30 times on Air Peace in a period of one year. My personal experience comes with mixed feelings, however, their fleet number, exceptional abilities in fulfilment as well as operational manoeuvrability are strong Firm-Specific advantages (FSA) Air Peace has over other local airlines. However, much is still desired from this carrier knowing well that there have been some lapses and ball-dropping that customers like myself have experienced over the years.

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For example, a more recent issue I experienced while flying locally happened on Monday 15th April 2024, while flying from Abuja to Lagos with a flight scheduled for about 8:30 am, we ended up leaving by past 11 am. I was not the only customer affected as customers, as those who were meant to leave with the first flight were also stuck since 6:30 am. This, of course, does not undermine their operational abilities but could raise some questions as to why these types of ‘unexplained/rationalized’ delays still exist with a prestigious carrier knowing that a lot of pressures would emanate from their international operations too.

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A recent report by the Nigerian Civil Aviation Authority on the information of cancelled flights based on customer complaints from January to March 2023 reveals the below chart to us.

Figure 2: Delayed Flight Analysis

Source: Author’s elaboration from NCAA data on delayed flight. January-March 2023.

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Balancing things up, Air Peace, operates the largest fleet size in terms of numbers so their percentages would be higher than others, however, the need to check against these spikes.

Objectivity is required to ensure some aspects of its entire operations consistently deliver the value expected, but my story line is, these loopholes can be blocked while harnessing the pathway to profitability and sustainability as our ‘New Flying saviour in the international airways.

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Competition in the Airline industry

Numbers they say don’t lie!

Air Peace’s decision to operate the Lagos to London corridor for me was met with mixed reactions. I was excited knowing this would mean a lot for the country, especially in terms of growing the Naira and reviving the economy (even though this may not be enough but it’s a step in the right direction under the able leadership of Mr. Allen Onyema (CEO). On the flip side, the need to re-gig their operational efficiency may come in handy knowing the gaps that exists and need to be bridged and the level of support they would require beyond media vibes is imperative as what would become of our darling Airline if we missed out on this opportunity to create a lasting impression and sustain this PR push for a long time? Then the other angle has to deal with the need to improve customer experience by providing exceptional customer service beyond words. (I still have a pending email un-responded to over 9 days now, international customers may not be so patient, knowing the value they expect to get for every penny spent).

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One of my professors from the Henley Business School would always say, that in business, it is good to be objective beyond sentiments. And here comes my objectivity from some technicalities!

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Foreign airlines plying this route for years (Lagos to London) have developed certain ‘core competencies, something which is beyond their Firm-Specific Advantages (FSAs). Core competencies are the bedrock of a company’s strategy as they speak to the company’s routine and ability to recombine resources. These are a higher level of FSAs that Air Peace needs to identify and harness fast enough to wade the competition off. Prahlad & Hamel's model mentions “the primary role of senior management is providing guidance in developing the strategic architecture as well as cooperation in building and acquiring core competence, either internally (resources within) or externally (acquisition and alliances).

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Businesses succeed and sustain their competitive advantage because they not only depend on Location-bound FSAs, but they also have the ability to recombine their core and non-location-bound FSAs at minimal cost implications. Air Peace needs to deepen their competence both in leadership and results from service delivery.

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Let’s add a bit more technicalities to this write-up while remaining simple!

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Air Peace’s FSAs Vs Nigeria’s Country-Specific Advantages (CSAs)

Air peace in my opinion has developed core FSAs such as:

1.????????????? Fleet Size and Strength

2.????????????? Goodwill

3.????????????? Financial Capital

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Nigeria’s CSAs for airline operators include:

Figure 3: Location / Country-Specific Advantages for Nigeria

Source: Author’s elaboration and inference from International Strategic Management Text by Narula and Santangelo (2012)

Companies thrive better when they not only depend on the CSA or location advantages made available by the countries they operate in because these sets of CSAs are also available to other competitors. The onus is on senior management to look inward and understand their recombination capabilities while playing to that as their strength. For example, Honda understands how to recombine resources in developing different engine types from Motorcycle to cars, to ship-propelled engines etc. This ability would make them last in the market and develop an edge over others. Air Peace needs to look inwards and understand what their abilities are as success is measured in how quickly they innovate continuously in the market.

Air Peace needs to think outside the box and not rely on the above listed in Figure 3 because these are short-lived advantages and the short term does not guarantee success in the long run.

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Airline competition and Low-cost carriers

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The competition in the airline industry has led many airlines to develop low-cost carriers for their businesses, this is also a means to help them not dilute their business/brand because of competition in certain areas. For example, in 2011 Singapore Airlines established Scoot as a low-cost carrier,

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Wisdom from these businesses would help understand the need to focus on specific routes above others. (This article may not focus on their intent; however, I am going somewhere with this example).

Image Credit: www.airlineratings.com

Some Suggestions for Air Peace as they seek to restore Nigeria’s dignity in Air travel and further validate their business decisions to fly the Lagos/Abuja to London corridors:

1. Build trust Locally: Ethiopian Airlines is the strongest airline in Africa (Businessday.ng, 2023) and a member of one of the strongest alliances in the world. The trust built has earned them this reputation. Air Peace for me needs to do more locally as the recent report from NCAA has shown they are in the leading numbers for flight delays and cancellations. I dream of an Air Peace with a lesser amount, maybe single digits if at all any. Ibom Air has been fingered as the best Airline locally, I think there are some lessons Peace needs to learn from them as you can’t give internationally what you don’t have locally.
2. Look into Data of local operations to maintain leadership: We live in a world where big data is everything, Air Peace needs to innovate with the data at their disposal even for their local operations first, as Charity they say begins at home.
3. Missing link: I would have suggested starting from ‘lesser-known’ airports like Stansted as against Gatwick or probably starting as a low-cost airline, competing on specific routes, and service types, while placing a target in the next couple of years to compete with legacy airlines from more prominent airport terminals like they are doing now. This strategy would allow for more experimentation and fine-tuning.
4. Get ready for Competition: Legacy airlines are now very competitive, looking at data for the strongest oppositions Air Peace might likely face would reveal there may be anticipated losses from competition which they might not take likely.
5. Innovate: Innovation is necessary to stay in the game, just like the K-waves, every wave speaks to the reigning innovative paradigm globally, Air Peace needs to understand what innovations are driving the industry to stay abreast as the competition would be looking for little cracks such as ‘lack of timely innovation’ to make a comeback.
6. Don’t Depend on the Government alone: It would be good to gather the support of the government, however, lessons from the failure of Nigerian Airways, Virgin Nigeria would always show you that the dream is for leadership with a bigger heart to take calculated risks. Also, the need to understand that there should be a 10-year plan that may lead to the birth of a new national carrier.
7. Leadership with Process Innovation: Innovation is beyond developing new products or deploying the latest aircraft, processes need to evolve for the better.
8. Technology: The need to revamp the Air Peace booking platform is essential at this point, I hope the Chief Technology Officer can compare their current site with international players and OTCs such as Wakanow, Travel Start and TravelBeta.

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In conclusion, competition in business is a hassle for the survival of the fittest, success is replicating from previous strides and not relenting as competition is a 2-way street. My recent flight on British Airways in April 2024 is a good reminder of this as I was served ‘Jollof rice’ on board, this strongly resonates with what a typical Nigerian may like on his menu, for British Airways to go all the way, means this competition may take a huge turn, not just from pricing of their service but from processes, services, add-ons, etc. Air Peace should strive to develop a better competitive edge beyond price sensitivity, some sort of blue-ocean, above diving into the already existing red ocean. The need to innovate and develop FSAs (core strengths) which may not be easy to replicate by competition, something to endear consumers closer to the warmth of Nigeria, thus increasing loyalty and overall experience.

References

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Alain Verbeke and I.H Ian Lee (2022). International Business Strategy: Rethinking the Foundations of Global Corporate Success. CAMBRIDGE University Press.

Businessday.ng (2023). Africa’s 10 best performing airlines in 2023. Available at: https://businessday.ng/news/article/africas-10-best-performing-airlines-in-2023/. (Accessed: 4th May 2024)

CNBC (2023). Budget airlines like Spirit and Ryanair make up almost a third of global airline capacity. Here’s how they do business. Available at: https://www.cnbc.com/2023/12/20/budget-airlines-spirit-ryanair-how-they-make-money.html (Accessed: 4th May 2024)

Collinson, S., Narula, R., Qamar, A. and Rugman, A.M., 2020.?International business. Pearson UK.

GuardPost (2023). Air Peace Tops Nigeria’s Most Delayed Flights List. Available at: https://guardpost.ng/air-peace-tops-nigerias-most-delayed-flights-list/ (Accessed: 4th May 2024)

Pulse.ng (2023). 7 Nigerian airlines with most flight delays and 3 that stick to schedule. Available at: https://www.pulse.ng/lifestyle/food-travel/the-best-and-worst-nigerian-domestic-airlines/xnzr71x. (Accessed: 4th May 2024)

Poundsterling News (2021). British Pound-Nigerian Naira History: 202. Available at: https://www.poundsterlinglive.com/history/GBP-NGN-2021. (Accessed: 4th May 2024)

Thisday (2024). Stakeholders Express Concern over Nigeria’s Aviation Industry, Seek Profitable Airlines. Available at: https://www.thisdaylive.com/index.php/2023/09/16/stakeholders-express-concern-over-nigerias-aviation-industry-seek-profitable-airlines (Accessed: 4th May 2024)

Uk.gov (2024). AIR PEACE LTD. Available at: https://find-and-update.company-information.service.gov.uk/company/FC040083/filing-history. (Accessed: 4th May 2024)

Wakanow.com (2024). List Of All International & Local Airlines In Nigeria. Available at: https://blog.wakanow.com/airlines-in-nigeria/. (Accessed: 4th May 2024)

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