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Foreign Airlines Defy FG, Keep Fares High

Nigeria's forex crisis worsens as travelers struggle to afford tickets

by Victor Adetimilehin

Nigeria’s forex crisis has taken a toll on travelers as foreign airlines refuse to lower their fares despite the government’s directive. The Federal Government had threatened to sanction any airline that failed to release low inventory tickets within weeks, following the release of part of the $700m trapped air ticket funds to foreign airlines.

Low inventory tickets are cheaper tickets that airlines offer to attract more customers and fill up their seats. However, some foreign airlines have been accused of blocking or limiting these tickets in the Nigerian market, forcing passengers to pay exorbitant prices or use their dollar cards to purchase tickets.

According to the Nigerian Civil Aviation Authority (NCAA), the average cost of a round-trip economy class ticket from Lagos to London is now over N2m, while some airlines charge as high as N3m. This is a huge increase from the previous average of N1m before the forex crisis hit the country.

The impact of the forex crisis

The forex crisis in Nigeria has been caused by a combination of factors, such as the drop in oil prices, the COVID-19 pandemic, the ban on cryptocurrency transactions, and the scarcity of dollars in the official window. The naira has lost nearly 40% of its value against the dollar in the past three months, making imports more expensive and affecting businesses and consumers.

The aviation sector has been one of the hardest hit by the forex crisis, as most of its operations depend on foreign exchange. Airlines have to pay for fuel, maintenance, spare parts, and other services in dollars, while their revenue is mostly in naira. This has created a huge gap between their income and expenditure, forcing them to increase their fares or reduce their flights.

The government’s intervention

The Federal Government, through the NCAA, had met with foreign airlines, the National Association of Nigeria Travel Agencies (NANTA), and other stakeholders in Abuja last week to address the issue of high fares and low inventory tickets. The government had instructed the airlines to open up their low-inventory tickets and make them available to Nigerian travelers at affordable prices.

The Director of Public Affairs and Consumer Protection, NCAA, Michael Achimugu, said that some airlines had complied with the directive, while others had not. He warned that defaulting airlines risked sanctions from the regulatory body. He also said that the government was working on a suitable pricing strategy for tickets in Nigeria compared to other markets in the West African sub-region.

The airlines’ response

The President of the Association of Foreign Airlines and Representatives in Nigeria (AFARN), Kingsley Nwokoma, confirmed that some airlines had opened their low inventory tickets, while others were still in talks with the NCAA. He said that the decision to open up inventory involved evaluating both commercial and technical aspects, as well as market dynamics and competition.

He also attributed the high fares to the high exchange rate and the challenge of accessing trapped funds. Kingsley Nwokoma said that airlines were keen to recover their funds and operate profitably. He added that it was important to resolve regulatory matters before proceeding with ticket releases, stressing the need for alignment between industry stakeholders and regulatory bodies.

The travelers’ plight

Meanwhile, Nigerian travelers are bearing the brunt of the forex crisis and the high fares. Many travelers have complained of being unable to afford tickets or find available seats on their preferred airlines. Some have resorted to using alternative routes or modes of transportation, while others have postponed or canceled their trips altogether.

A travel agent, Effiom Martins, said that ticket prices had doubled in some cases compared to just two weeks ago. He expressed frustration over the lack of transparency and communication from the airlines regarding their plans to lower fares. He said that travelers were left in the dark and uncertain about their travel plans.

Despite the challenges facing the aviation sector and travelers, there is a ray of hope for a better future. The Federal Government has announced plans to launch a new national carrier, Nigeria Air, by the end of 2022. The new airline is expected to boost the capacity and competitiveness of the Nigerian aviation industry, as well as create more jobs and revenue for the country.

The government has also invested in improving the infrastructure and security of the airports, as well as implementing the Single African Air Transport Market (SAATM) initiative, which aims to create a unified and liberalized air transport market in Africa. These measures are expected to enhance the efficiency and affordability of air travel in Nigeria and beyond.

Source: Punch


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