Fakoyejo OlalekanInternational airline operators have increased the cost of tickets due to the naira devaluation, as the International Air Transport Association (IATA) adopted the N702/$1 exchange rate for ticket pricing in Nigeria.
Prime Business Africa had reported that the Central Bank of Nigeria (CBN) devalued the naira, allowing supply and demand to determine the foreign exchange rate.
The devaluation, which occurred last week Wednesday, increased the dollar rate to N702/$1 the next day in the Investors’ and Exporters’ window, before dropping to N663.04/$1 on Friday. However, the naira to dollar exchange rate closed Monday’s trading with N770.38/$1.
International airlines have applied the increase in the dollar rate to ticket fares using the N702/$1 rate. Note that the IATA previously used the NAFEX rate between N445/$1 and N660/$1, indicating the flight ticket will rise by about 27%.
Commenting on the impact of the naira devaluation on flight tickets, the President of the National Association of Travel Agents of Nigeria, Susan Akporiaye, told The Punch: “Fares will definitely increase and passengers have to pay more. As a result, Passengers won’t travel as much as they should and this will affect travel agents.”
The Chief Executive Officer of Corporate Travels, Akande Diran, noted that: “Around mid-June, ticket prices always go up. We call it peak period. This is so because many people often go on vacation during this period. Apart from this, the rising exchange rate will lead to higher ticket prices.”
Prime Business Africa understands that the increase in international flights came at a time foreign airlines in Nigeria were complaining that they are unable to repatriate $812 million in revenue from ticket sales as of April 2023.
President Bola Tinubu, during his inaugural speech, promised to resolve the revenue of foreign airlines trapped in Nigeria, “We shall ensure that investors and foreign businesses repatriate their hard earned dividends and profits home,” he said.
Nigeria accounts for 35.7% of the global airline trapped funds, with Bangladesh, Algeria, Pakistan and Lebanon completing the top five list.
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