Dollar Scarcity: Foreign Airlines Increases Fares By 100%


Currently, the scarce-dollar-crisis has impact difficulties for foreign airlines to repatriate their ticket sales proceeds from banks for several months, thereby forcing the carriers to increase their fares by almost 100 per cent.

According to investigation, the airlines operating on international routes in the country had increased airfares by as much as 100% 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. From the findings, local airlines operating international flights, such as  MedView and Arik Airlines had increased their airfares.

The Significant 100% – 120% Airlines Fare Increase

Lagos-London and Abuja-London routes airfares, now cost an average of N380,000 for the economy class seat, against the initial airfare of N200,000 a year ago on the British Airways and Virgin Atlantic which simply 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.

On Lagos-London route, the Business Class airline ticket is currently as high as N3m against N1.5m a year ago. While 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 respectively, 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, representing an increase of 120 per cent.

What Causes the Increment in Airline Fare

The outrageous increase in airfare, the operators said, is linked to the scarcity of foreign exchange to proceed with the carriers’ operation in the country. Plus the erosion in the value of the tickets sales proceeds, which are still stuck in banks due to lack of forex repatriate the funds.

This also is in connection with the fiscal policy imposed by the new administration of President Buhari last year, through CBN, which restricts 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.

One of the airlines officials told correspondent that the carrier had close to N90bn as accumulated earnings in banks and with such huge airline revenue in the vaults of banks, they nurture fear that should there be devaluation of naira, it would erode the value of the funds by about 35% – 45%.

Therefore, following the difficulty in repatriation of earnings from Nigeria, some of the airlines initially began to restrict cheap fares on Nigerian routes in the last quarter of last year, causing 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.

Meanwhile, a plea by the representatives of the International Air Transport Association to CBN Governor, Godwin Emiefele, to make dollars available to them is yet to yield any positive result.

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