Airfares out of the Nigerian market would continue to rise inasmuch as the country’s currency, naira, continues to depreciate.
Dr. Alex Nwuba, the President, of the Aircraft Owners and Pilots Association of Nigeria (AOPAN) in an interview with Nairametrics observed that the unification of the exchange rate was yet to save the naira from crumbling.
He explained that airfares have remained the same in dollars, but the consistent collapse of the naira against major currencies led to the high airfare rates being experienced in Nigeria.
The AOPAN President also observed that charges, levies and handling rates out of Nigeria remained high when compared to other countries, especially in the West African countries, stressing that these contributed to the high rates.
He regretted that Nigeria has continued to lose businesses to other neighbouring African countries, especially Ghana due to high levies and charges and appealed to the government to cut down on some of these charges in order to embrace more air travellers.
He said: “It is only obvious mathematically that airfares would increase because the value of naira has dropped, charges have increased and it is only obvious that the charges would increase. Airlines don’t only have to look at the exchange rates as it is today because they buy tickets and get money in the future.
- “So, they have a projection of what direction the naira would go and that is reflected in the airfares that we are seeing.
- “If you still do the same airfares and price them in dollars, you will see that the increase is not coming from the airfares themselves, but coming from the exchange rate and so these are the factors that are contributing to the increased fares that Nigerians have to pay and obviously, what we are seeing some people do is to fly to Accra (Ghana) to get a cheaper fare.
- “Doing business out of Nigeria is very expensive. Departure tax, personal service charges, handling charges and others get added to the ticket.
- “To actually look down at your preferred breakdown on your ticket, you will find out that the charges are very high and so this is impacting on the prices.”
On the allegation of some airlines pricing tickets in dollars, Nwuba said that airfares are always priced in dollars, but sold at the equivalent of naira.
He explained that before the unification of the exchange rate, the foreign airlines were still getting dollars at the official rates, but said the current policy had stopped all that.
- “We got it at market-controlled rates initially when the Central Bank of Nigeria (CBN) established its own policy rate. Everybody was taking advantage of that. Now, we have unified the exchange rate.
- “The fare is still the same fare in dollars, but what you observe in aviation is that prices are based on the market.”
Recall that the International Air Transport Association (IATA) earlier in the week informed travel agencies that foreign airline tickets would be sold at a new rate of N803.90/$1.
IATA adjusted the exchange rate for international airlines from N776.90/$1 after the naira slumped consecutively against the dollar in the Investors’ and Exporters’ (I&E) window.
The adjustment may have taken effect as IATA advised travel agencies to ensure they sell off their outstanding international tickets before the close of business on Monday. (Nairametrics)
