Foreign airlines raise fares by 100% due to dollar scarcity.

Foreign exchange risk is now a major component
of airfares on Nigerian routes, the country
managers of top foreign airlines have revealed.

Investigation by our correspondent revealed that
the airlines operating on international routes in
the country had increased airfares by as much as
100 per cent as a result of the development.

A survey of all the major Nigerian routes flown by
the foreign airlines in the country showed that the
cost of return tickets had been increased by
between 80 per cent and 120 per cent of the
previous fares, depending on the carrier, time of
booking and the season.

The survey cuts across Nigeria-North America
routes, Nigeria-South Africa route, and Nigeria-
Europe routes. Airfares on the Lagos-London,
Abuja-London, Lagos-New York, Lagos-Atlanta,
Lagos-Houston, and Lagos-Johannesburg routes
were examined.

Findings also showed that local airlines operating
international flights, especially Arik Air and
MedView Airlines, had increased their airfares.
For instance, airfares on the Lagos-London and
Abuja-London routes now cost an average of
N380,000 for the economy class seat, as against
the average of N200,000 a year ago on the British
Airways and Virgin Atlantic Airways. This
represents an increase of 111 per cent.

Similarly, on Air France, an economic ticket on the
Lagos/Abuja-London routes now goes for about
N360,000, while Lufthansa German Airlines
charges N380,000. These represent an increase of
80 per cent and 90 per cent, respectively, when
compared with an average fare of N200,000 on
the routes a year ago.

A Business Class ticket now goes for as high as
N3m as against the N1.5m a year ago on the
Lagos-London route.

On the Lagos-Atlanta and Lagos-Houston routes,
Delta Airlines and United Airlines, which used to
fly Economy Class passengers for between
N270,000 and N330,000 some 12 months ago,
now render the same service at an average fare
of N600,000, depending on the time of booking.
This represents an increase of about 100 per
cent.

South Africa Airways and Arik Air, which used to
fly the Lagos-Johannesburg routes for between
N100,000 and N120,000 for the economy class,
now fly the route for between N180,000 and
N220,000, depending on the time of booking and
the season.

The Lagos-Paris route, which used to go for
N180,000 on the average, now goes for around
N400,000. This represents an increase of 120 per
cent.

Operators link the increment in fares to the
scarcity of foreign exchange to attend to the
operational needs of the carriers and the erosion
in the value of the ticket sales proceeds, which
are now stuck in banks due to lack of forex to
repatriate the funds.

Late last year, the new administration of
President Muhammadu Buhari had unveiled a
fiscal policy, through the Central Bank of Nigeria,
restricting access to foreign exchange and funds
transfer out of the country.

While this has had advantages for some sectors
of the economy, foreign airline operators have
complained of their inability to repatriate revenue
to their operational bases as a result of the new
policy.

An official of one the airlines told our
correspondent that the carrier had close to N90bn
as accumulated earnings in banks, which it had
been unable to repatriate.

He said that the airline industry relied heavily on
cash to meet its commitments, adding that it was
sad that the government was not seeing things
this way.

With huge airline revenue in
the vaults of the banks, some
of the operators nursed fears
of being exposed to risks
should the pressure on the
naira lead to the devaluation
of the currency, which could
erode the value of the funds
by about 35 per cent to 45
per cent.

Following the difficulty in
repatriating earnings from
Nigeria, some of the airlines
initially began restricting
cheap fares on the Nigerian
routes in the last quarter of
last year, leading to an
indirect hike in fares.

At the time, the effect was
felt more on second tier
routes from Lagos-London-
Atlanta, Lagos-London-New
York, Lagos-London-Miami,
Lagos-London-São Paulo,
Lagos-London-Houston; or
Lagos-Frankfurt-New York,
Lagos-Frankfurt-Chicago,
Lagos-Frankfurt-Los Angeles,
and Lagos-Frankfurt-
Shanghai.

Citing Nigeria’s slowing
economy amid forex scarcity,
some international airlines are
now contemplating reducing flights to the country
or operating smaller capacity aircraft as a short-
term measure.

However, following complaints by the airlines,
representatives of the International Air Transport
Association are said to have pleaded with the
CBN Governor, Godwin Emiefele, to intervene in
the matter and make dollars available to them.
But the move has yet to yield any positive results.

The foreign airlines also reportedly met with the
Minister of Transportation, Chibuike Amaechi, and
urged him to look into their case.

A spokesperson for one of the airlines noted that
the difficulty in repatriating revenues was
affecting aircraft leases and fuelling, stating that
the earnings were partly being used for fuel and
renewing aircraft leases.

While the situation persists, the effect on air
travellers and other businesses that depend so
much on air travel has been immense.

A manager with a transport and logistic firm, Mr.
Emmanuel Iruobe , said the company had incurred
more costs than were provided for in the
execution of most contracts this year.
Iruobe urged the government to look into the
situation with a view to resolving it in the interest
of Nigerians.

On their part, stakeholders in the travel industry
under the aegis of the National Association of
Nigeria Travel Agencies have faulted the
astronomical cost of air tickets by the airlines,
especially the foreign carriers.

Describing the situation where taxes that go to
the airlines are higher than base fares as
unacceptable, the group has petitioned the Federal
Government, through the Ministry of Aviation, to
caution the foreign airlines over the alleged sharp
practices.

The Publicity Secretary, NANTA, Mrs. Ngozi
Ngoka, opined that the cumulative effect of taxes
and surcharges by airlines also generated a final
price to the passenger that could be as much as
double the advertised airfare for a short-haul
flight.

Another stakeholder, who is the Chief Executive
Officer, Gadshire Travels, Mr. Gbenga Adebayo,
berated the airlines, describing the excuse of
forex scarcity and multiple taxes given to
increase fares as untenable.

According to him, the arbitrary increment and gap
between what is charged in Nigeria and other
African countries on the same routes are due to
the failure of regulatory authorities to perform
their duties.

[Punch]