The official foreign currency market has witnessed a 55% devaluation of the naira versus the US dollar, which has resulted in a corresponding decrease in airfares on international routes in Nigeria.
On Monday, the naira depreciated from over 900 to over 1,400 dollars due to a reassessment of the methodology used by the FMDQ Exchange, which maintains records of the official exchange rate of the country.
The review was initiated in response to allegations of misleading reporting by authorized foreign currency traders made by the Central Bank of Nigeria.
However, barely 24 hours after the movement of the official exchange rate, international airlines operating in Nigeria moved the exchange rate for pricing their tickets to from about N900/dollar to N1,421/dollar.
The development led to approximately 55 percent in international airfares on Nigerian routes.
Findings by our correspondent on Wednesday showed that ticket prices on Lagos-London-Lagos, Lagos-New York-Lagos, Lagos-Johannesburg, and Lagos, among other top destinations had increased commensurately.
The President of the National Association of Nigerian Travel Agencies, Susan Akporiaye, who confirmed the sharp increase, said the development would compound the woes of travel agencies.
“We have been feeling the pinch for a long time, and the situation is just getting worse. People who are traveling are not doing so for fun; they are traveling for serious business like medical or even education. It’s no longer about leisure,” Akporiaye said.
Akporiaye explained that travelers were reluctantly parting with money, and given a choice, they wouldn’t pay at all.
“For instance, an air ticket that used to cost $1000 has now surged to N1.5m. The financial strain is a necessity for travelers, forcing them to squeeze their budgets.”
She said the industry operators empathized with their situation, with some passengers resorting to appealing and offering collateral just to pursue their objectives and travel.
The president said the prices would undoubtedly decrease, adding that, “I am optimistic. It’s not the fault of the airlines; rather, it’s a reflection of the country’s economic situation.”
The NANTA leader said at the moment there was no noticeable difference between the rates in the black market and the official window of the forex market.
As such, she advised airlines to open up lower inventory options to encourage travelers already financially burdened.
“I suggest that airlines contemplate offering lower inventory options, enabling customers to access flights for maybe N1m. This customer-centric approach recognises the financial constraints faced by many travelers.
“The higher inventory, nearing almost N5m, shows variations with some options open while others remain closed. It’s crucial to emphasize that airlines are not responsible for setting the exchange rate.”
Price checks revealed that the average airfare ticket to some of the high-traffic international destinations like London cost N2.77m; Dubai N2.65m; New York N3.2667m; and Johannesburg N3.05m.
For the Lagos-Johannesburg-Lagos route, depending on the travel date, Africa World Airlines charges N2.7m, while Turkish Airlines sets the price at N3.4m. The airfare for a round-trip from Lagos to Dubai is N2.3m with Turkish Airlines and N3m with Lufthansa.
An agent at Travel and Tours Limited, Maureen Chimaobi confirmed that the naira’s exchange rate of naira to dollar is getting worse for travelers.
“As of Monday, the exchange rate was $1 to N1450. I don’t know how much it sold today..”
“This ugly development is no longer only limited to the aviation sector, prices of goods and services have generally gone up. Even local commodities are not left out.”
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On June 14, 2023, the naira fell significantly following the decision to allow the currency to fluctuate freely, leading to a significant drop in its value. Since then, airlines and passengers have continued to struggle to bear the surging air ticket prices.
Despite the currency woes, our correspondent could not verify if there is any data to support that travel demands in Nigeria have dropped.
The International Air Transport Association reported that African airlines’ annual traffic rose 38.7 percent in 2023 versus the prior year.
“Full year 2023 capacity was up 38.3 percent and load factor climbed 0.2 percentage points to 71.9 percent, the lowest among regions. December 2023 traffic for African airlines rose 9.5 per cent over December 2022.”
