Airfares for flights from Nigeria to various international destinations, including Europe, North America, and the Middle East, have experienced a significant increase due to the exchange rate reaching N702/$, according to investigations conducted by The PUNCH.
This surge follows the recent decision by the Central Bank of Nigeria (CBN) to float the naira and implement market-determined exchange rates for commercial banks.
In an effort to unify the nation’s exchange rate and address the issue of multiple exchange rates, the CBN introduced new foreign exchange guidelines that collapsed all forex windows into the Investors & Exporters Window.
Shortly after this decision, the naira traded at 664.04/dollar at the I&E window, but it reached 702.19/dollar by the close of business on Thursday.
As a result, the International Air Transport Association (IATA) has adjusted its exchange rate for ticket pricing in Nigeria to N702/$. Previously, international airlines had been using exchange rates ranging from N445/$ to N660/$.
The current move by the CBN has prompted IATA to adopt the exchange rate based on the I&E Window, whereas before, they relied on the NAFEX rate published on the FMDQ Exchange.
The timing of this surge in airfares is particularly concerning as it coincides with the start of the summer travel season. Ticket prices have risen by approximately 25%, causing travel operators to express concerns that the increased exchange rate may disrupt the travel plans of many Nigerians.
Susan Akporiaye, the President of the National Association of Travel Agents of Nigeria, voiced her disappointment, stating that passengers would bear the brunt of the fare increases. She also predicted a decrease in travel due to the higher costs.
Akande Diran, the CEO of Corporate Travels, explained that ticket prices typically increase during mid-June, known as the peak period, as many people take vacations during this time. Additionally, the rising exchange rate further contributes to the higher ticket prices.
While the recent CBN decision is expected to facilitate the repatriation of millions of dollars in ticket sale proceeds by foreign airlines in Nigeria, there have been challenges in repatriation. The trapped funds have reached $812 million as of April 2023, according to Kamil Alawadhi, the Regional Vice President for Africa and the Middle East at IATA, who spoke at the IATA Annual General Meeting held in Istanbul two weeks ago.
