Increasing competition is making domestic air travel cheaper and more flier-friendly in Ghana, reports TOMA IMIRHE.
Over the past six months, airfares charged domestic flights within Ghana have plummeted dramatically, giving some respite to air travelers who have long complained that the cost of ticketing by air, not just within Ghana, but between the country and other parts of the world too, are far too expensive.
Thank Starbow, one of the latest Ghanaian airlines flying locally, domestic route prices. The airline, which is owned by shareholders who are all domiciled in Ghana, commenced operations in October last year, flying between Accra and the three other largest cities of Kumasi, Tamale and Takoradi; at what were, at that time, cut-price fares. Ever following a slight increase in fares early this year, in response to a rise in fuel prices and the depreciation of the cedi, Starbow, still offers one way fares between Accra and Kumasi for as low as GH¢110, between Accra and Takoradi for as little as GH¢99 and between Accra and Tamale for just GH¢165. If a customer books at least seven days before departure, Starbow will take him or her far even less.
At the time Starbow started flying the two established domestic route airlines charged considerably more; for instance City-Link was charging GH¢139 between Accra and Kumasi, and between Accra and Takoradi, and GH¢250 between Accra and Tamale. Antrak’s fares were quite similar.
Instructively, since Starbow introduced its own domestic flights at considerably lower fares, the two airlines have slashed theirs to about the same as what Starbow charges. Late last year a fourth domestic airline, Fly 540 also started operations, sensibly introducing its services at about the same prices as the others.
“We’ve proved you can bring affordable flying to Africa” says Dr. Brock Friesen, a former Canadian Airlines International Vice President who is now co-Chief Executive of Starbow. “Air travel in Ghana is far more expensive than in say, North America or Europe but we are trying to charge this.”
Now that domestic airfares have come down somewhat, do not expect a sustained price war through. “Starbow has found a reasonable pricing level and will stay there” says Dr. Friesen. “Rather than engage in a price war, we will rely on our competitive advantages to win further market share.”
To be sure Starbow has several of those competitive advantages Dr. Friesen adduces. Firstly it is the only domestic airline in Ghana that uses jet aircraft rather than propeller – driven planes, which means quieter flights in more modern aircraft than its competitors’ use. Secondly the two BAE-146 aircraft it uses are bigger than its competitors’ with 94 seats configured to carry eight business class passengers and 86 economy class passengers.
The planes its older competitors use carry barely half as many passengers, and even Fly 540, which offers a newer version of propeller aircraft, only provides 66 seats on each flight. This allows Starbow to enjoy better economies of scale than its competitors, which is largely why it started out with lower fares in the first place.
Another advantage is that it uses just one type of aircraft which allows it to use the same pilots, spare parts and maintenance services on all its routes, providing further economies of scale.
Even with its bigger aircraft; Starbow has been able to at least match its competitors fight frequencies and in some cases do even more. Currently the airline does 27 flights a week up from 12 initially and is adding more flight weekly between Accra and Kumasi in March. Combines with its bigger passenger capacity thus has given Starbow the biggest market share on domestic routes within barely five months of its starting operations.
However Starbow assures that it will not use this as an opportunity to increase its fares. “We will not jock up our fares because we dominate in terms of market share” says Dr. Friesen. “Rather we will add more flights and make bigger profits from more economies of scale rather than wider profit margins.”
Here Starbow’s business model has put it in good stead. “We purchased the most efficient aircraft, deployed superior IT, and the most effective operational processes and procedures and we are deriving the best economies of scale” asserts Dr. Friesen. “We come here, saw that the economy was underserved so we offered an alternative using the right planes, the right schedules and the right people.”
In May Starbow will go to the next level, using the same successful business model to start flying sub-regional routes to 12 other West African cities, starting with Abidjan, Cotonou, Monrovia and Ouagadougou this year.
However as the airline begins its expansion beyond Ghana it will have to watch its back, at home. This year, Africa World, an airline founded by Togbe Afede XIV, a successful traditional ruler, investment banker and entrepreneur, is to start operations, offering the same flights as Starbow, targeting first time fliers and Chinese immigrants.
Domestic air travelers in Ghana will have no worries though; local air travel in the country just get cheaper, and is getting better too.
Comments