Stakeholders Raise Concern Over High Cost of International Travel

Stakeholders in the aviation industry have raised concern over the uncertainty that has beclouded international travel from Nigeria due to the escalation of airfares in response to the depreciation of the Naira.

Critical stakeholders said that airfares has became unpredictable stressing that the development has subjected travellers to undue suffering.

According to him to the former President of the National Association of Nigeria Travel Agencies (NANTA), Aminu Agoha, it is becoming increasingly difficult to source funds to pay for tickets adding that projections could be off the mark because of the fluidity in the change of fares.

“Depending on destination and route, airfares have increased so suddenly and this is impacting seriously on air travel. As at Wednesday this week, the fares have changed. So, today it is a different fare and tomorrow you get yet another different fares. This is not healthy for the industry and the economy. Customers are groaning. Many of them do not know what to do again. Yesterday we exchanged at N663 per dollar, but today it has gone up to N770. Definitely, it will have negative impact on the tickets,” he said.

Meanwhile, international airlines have indicated that henceforth they would adopt exchange rate at N770 per dollar from N663 per dollar on Nigerian routes, which is about 20 per cent increase.

This is as the International Air Transport Association (IATA), on Wednesday, pegged $1 to N770.

Agoha said the blocked funds have contributed to the high airfares on Nigerian routes.

“Economy ticket from Lagos to London used to cost about N400,000 in 2021 but had increased to about N1.2 million in 2022 and would further increase from the middle of 2023.  Also, business class ticket rose to about N6 million during the same period, depending on the airline and time of booking. This has the potential to increase further, unless the naira stabilizes, “he said.

On his part, the Head of Business Development, Zenith Travels and the spokesman of Aviation Round Table (ART), Olu Ohunayo, told THISDAY that the unification of the official and parallel market exchange rate has impacted on the I & E window and has even risen higher than the previous black-market rates.

He said what this would result to is that fares would definitely increase because the rate of exchange that is used to determine the fares impact mainly on the international airlines, noting that it would also impact on domestic airlines on cost of fuel, insurance and spares.

He noted that the impact of the new exchange rate on international travel would be more drastic because it would catapult the fares both on business class and the economy class, adding that there is no enough capacity, “so, the ones available would be on very high demand so the airlines would use this window of exchange rate unification to jerk up fares.”

Ohunayo said there were also certain regulations they were put in place in Europe, like getting Schengen visa if the traveller would pass through the continent during his trip to other destinations.

He said this has made travellers want to travel directly to their final destinations and this has made direct flights more expensive than those that connect flights from other destinations, like stopping in Addis Ababa from Lagos to connect another flight to China or Dubai.

“So, passengers should look out for non-direct flights if they really want fares that are relatively low. Flights that the passenger can spend some time on the hub airport before he connects his flight are better. Travellers should also strive to buy their ticket early in order to avoid paying highly for tickets because if you buy tickets closer to the time you want to travel you pay more.

“But as we are trying to bridge the gap and have a unified exchange rate, it is important that we provide more capacity. When there is enough capacity that the supply of seats meets the demand, that is when fares can be forced down. We need to throw in capacity and ensure that our flag carriers are designated to international destinations, but not just designating them but pushing to make sure they get all the necessary approvals on the other side. This will enable them to reciprocate the flights by other airlines.

The Ministry of Justice, Foreign Affairs and Ministry of Aviation should work together to ensure that our airlines are designated. It is what is given to your airline that you reciprocate in the Bilateral Air Service Agreement (BASA) and commercial agreement for international airlines. If they give you 21 slots, you give them 21 slots and they should also give your airlines the airports they want. On the equipment side, we need to increase capacity on international routes,” Ohunayo said.

Last month, IATA said that funds belonging to foreign airlines trapped in Nigeria had hit $812.2 million, warning that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.

The industry’s blocked funds have increased by 47 per cent to $2.27 billion in April 2023 from $1.55 billion in April 2022.

The top five countries that account for 68.0 per cent of blocked funds are Nigeria with the highest trapped funds ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million), Lebanon ($141.2 million).

IATA’s Director General, Willie Walsh said: “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”

June 23, 2023