New Exchange Rate: Economy Tickets Of Most Foreign Airlines May Hit N2m
With the new exchange rate arranged by the Central Bank of Nigeria (CBN) pushing the floating Nigerian currency, the naira from N663/$1 to N770, the International Air Transport Association (IATA) has alarmed that some One-way Economy class tickets on international routes from Nigeria may hit N2 million.
Also, the inability of international airlines to repatriate ticket sales for over a year has contributed to high airfares on Nigerian routes.
According to a report, the new IATA Rate of Exchange (IRoE), registered by the Global Distribution System (GDS), a six-hour Lagos-London Economy class ticket sells for between N1.3 million to N2.5 million – subject to airline of choice, place, and time of booking. Its Business class variant sells for between N3.36 million to N4.8 million.
Recently, the Economy ticket price roving for a long time around N400,000 jumped to about N1.2 million, while business class tickets ranged from N4 million to N6 million, depending on the airline and booking time. With the new exchange rate, fares are expected to rise further to N2 million.
Speaking to the media, the Former National Financial Secretary, NANTA, Daisi Olotu, said the increment is affecting the stability of the travel market and the exchange rate has brought down the numbers of foreign travellers, thereby urging the airlines to adopt a weekly exchange rate system.
“The change in exchange rate doesn’t go down well with travelers and travel agents because it reduces the number of people traveling. It also leads to instability in the market. We give a price today and the price changes the following day.
“So, to create stability in the system, they shouldn’t change the exchange rate daily, rather they should adopt a weekly exchange rate system,” Olotu stated.
Also speaking, the Former President, National Association of Nigeria Travel Agencies (NANTA), Mr. Bernard Bankole, however, rued the new exchange rate saying tickets sales or fares would be out of reach.
He stated that the already high fares had been worsened by the instability in the airline business occasioned by the recent monetary policy of the federal government.
He said he expected strong leadership from the NANTA executive on reaching a middle ground on the stability of the IROE, stressing that there had been four adjustments in one week which did not do the sector any good.
The clearing house in a statement recently reiterated that airfares for international flights from Nigeria are denominated in U.S. dollars and converted into Naira, the local currency, for sale in the Nigerian market.
“These conversions use the official prevailing exchange rate provided by the country’s financial system.
“IATA simply applies the spot rate at which the Central Bank of Nigeria sells USD through banks to the market, at its fortnightly retail foreign exchange auctions. The rate is not static, i.e. if the rate at which the CBN sells USD goes up, the exchange rate applied to airfares will follow and vice versa,” IATA said.