With the rate of exchange for foreign airlines going up for the third time in less than a month to N582/$1, an economy class ticket for a six-hour Lagos-London flight now cost between N1.1 million to N2.97 million, while a business class fare is between N3.36 million and N4.8 million. The variation depends on the airline of choice.
The Guardian reports that stakeholders regretted the development that has further pushed international air travel beyond the reach of average Nigerians, but they acknowledged the inherent respite on foreign airlines that are patronising the Investors’ and Exporters’ (I&E) foreign exchange window for fund repatriation, and reopening of Naira inventories to travel agencies in the countries.
The international segment of the aviation sector has been in a stuck fund crisis in the last one year, with knock-on effects on inventories, asking price, and near-collapse of local travel agencies.
One of the issues at the heart of the crisis is the repatriation of foreign airlines’ funds from Nigeria, which resulted in Emirates Airlines, for instance, quitting the Nigerian route last October. Industry sources said the accumulated was well over $800 million as at the last check.
Following a negotiation to end the logjam, the authorities reportedly conceded a shift from the official Central Bank of Nigeria (CBN) window to the volatile I&E window for the repatriation of foreign airlines’ funds in Nigeria.
The push-pull effect has been evident in the applicable rate of exchange, and attendant cost of travel. At this time last month, the RoE was pegged at N462/$1. About a week later, the rate climbed to N500/$1. Some days afterwards, it reached N551. Last week, the high vicissitude window hit a new high of N582/$1, with airfares tagging along.
Varying price range now applies among international carriers on the Nigerian route. For instance, Qatar and Ethiopian Airways have some of the cheapest airfares en route London destination – being one of the most popular for Nigerian air travellers.
Last weekend, a Lagos-London-Lagos economy class ticket seat on Qatar (with stopover in Doha) cost an average of N1.2 million. Its business class was sold for N4.8 million. The flagship African carrier, Ethiopia (via Addis Ababa) offered the two cabins for N1.1 million and N3.36 million, respectively.
Legacy carriers like British Airways (BA) and Virgin Atlantic are on the higher side. Direct Lagos-London-Lagos flight ticket on BA costs an average of N1.8 million in economy cabin and N4.41 million for business class travellers. Virgin offered the economy class for an average of N2.2 million.
American carrier on the Lagos-Atlanta-Lagos route, Delta Air, charged an average of N4.64 million for economy, and N8.36 million per seat in the business cabin. Similar route on Qatar (via Doha) averages N3.24 million for economy and N4.53 for business class travellers.
Travel operators and experts were unanimous that the new rates were inevitable and partly a good omen in the current market realities.
The President of the National Association of Nigerian Travel Agencies, Susan Akporiaye said that the new dispensation in fare pricing is partly solving the problem of stuck funds, and accessibility of tickets to Nigerians.
She told reporters that foreign airlines were beginning to repatriate funds from tickets sold in local currency, with a chain reaction in reopening inventories to travel agencies.
The Chairman of the Airlines and Passengers Joint Committee of the International Air Transport Association, Bankole Bernard said that foreign airlines accessing the I&E window might be the permanent solution to the perennial problem of stuck funds, and unleashing the commercial viability of the international segment.
He reiterated that the stuck fund crisis had regrettably dragged on for too long because the government was indecisive on what to do with the foreign exchange liquidity crisis, and its effects on the foreign airlines.
“The government has been neither here nor there. If you are telling the airlines not to sell at the Nigerian Autonomous Foreign Exchange rate, but in Naira, and they are not getting their equivalence for repatriation, then the government is the creator of the problem.
“But the airline has started getting their money because they are not waiting for the CBN anymore. They are doing I&E window, though it is higher, but it is good for the airlines, and even the government. The only people that are suffering in all of this are the masses.
“But when you do not subsidise airfares, the airlines will become commercially lucrative because they can sell at the RoE and repatriate their monies easily. Instead of doing one flight, they can do three trips, and make more money. In transport, the real income comes from volume and not yield”, Bernard said.
A summary of 2022 industry performance by the Nigeria Civil Aviation Authority showed a market rebound of over 16.17 million passengers recorded on both the domestic (12.7 million) and international (3.5 million) market segments.
The 2022 total traffic figure showed a 13 per cent increase when compared with 2021 figures (14.2 million), and the highest passenger traffic since the COVID-19 post-pandemic era.
Travel expert, Sunday Olumegbon said: “In a country of over 200 million, that less than seven per cent of the population travels by air is nothing to be proud of in modern aviation. It used to be eight per cent; so we are retrogressing in our numbers. With the new pricing, how many Nigeria residents will be able to afford international travel? That is the issue.
“Technically, we have solved a problem by creating another one. Aviation globally is the business of freedom. Here, we have further made it elitist, and only for the rich that can afford routine trips”, he said.
Credit: The Guardian
