• Monday, April 22, 2024
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BusinessDay

Dollar ticket sales grow as airlines sidestep trapped funds

Air fares to rise further as foreign airlines FX rate hit N634/$

Foreign airlines operating in Nigeria have deployed several means to avoid collection of ticket sales proceeds in naira so as to reduce the amount of money trapped in Nigeria.

The National Association of Nigeria Travel Agencies (NANTA) told BusinessDay that these measures have seen airlines recoup over 50 percent of their ticket sales in foreign currencies, thereby reducing the amount of money trapped in the country.

Since last year, airlines have stopped travel agents in Nigeria from issuing tickets emanating from other countries into Nigeria in a bid to reduce the amount of money that would be trapped.

The development has forced Nigerian travellers to bypass travel agents in the country to purchase tickets from agents in Ghana and other African countries over skyrocketing fares as a result of their inability to repatriate up to $744 million.

Airlines also blocked low ticket inventories, leaving high inventories to be sold in naira only while the low ticket inventories on most airlines’ websites can only be bought with dollar cards only. This is in a bid to cushion the effect of their trapped funds in Nigeria.

Delta Airlines, the only US carrier flying into Nigeria from its base in Atlanta Georgia, has been selling air tickets to travellers in dollars. Jimmy Echelgruen, the airlines sales director for Africa, the Middle East and India, confirmed the development.

Susan Akporiaye, president of NANTA, told BusinessDay that the measures deployed by the airlines have seen airlines realise over 50 percent ticket sales in dollars.

“Since airlines deployed these measures, travellers are forced to pay with their dollar cards instead of buying through the travel agents. Buying through agents will mean you pay about N1.8 million for an economy ticket to the United States and over N1.2 million to London. Buying with dollar cards costs less,” Akporiaye said.

She said most people now buy directly from the airlines’ websites, which means they have to use their dollar cards to make ticket purchases.

The NANTA president explained that while Emirates and Etihad Airlines suspended passenger flight operations into Nigeria, some airlines have found ways to mitigate the current foreign exchange crisis and are still making huge sales from tickets sold out of Nigeria.

She said some foreign airlines even requested to operate more frequencies into Nigeria because sales have been good for them in recent times.

In the last one year, foreign airlines have been finding it difficult to access their funds from tickets sold in the country as a result of foreign exchange scarcity and have resorted to buying dollars from the black market for as high as N700 to a dollar as against the Central Bank of Nigeria’s rate of N429/$1.

The trapped funds grew from $100 million in February 2022 to over $744 million last month, according to the International Air Transport Association, making it very difficult for airlines to operate seamlessly.

Read also: Nigeria Air: Airlines operators to know fate April 25 in suit against FG

“People are still travelling, even though our sales are not showing the volume, it is cheaper for people to buy tickets outside Nigeria than buying from Nigeria because the naira exchange rate is very high. The airlines are opening cheaper ticket inventories outside Nigeria but closed these inventories in Nigeria,” said Bankole Bernard, managing director/founder Finchglow Travels and former NANTA president.

“If you enter the aircraft coming into Nigeria, they are still full. People are coming home and the Nigeria Civil Aviation Authority is losing five percent on every ticket that is not bought from Nigeria. If we are losing five percent and the plane is full, it means Nigeria is like a dumping ground,” he added.

According to him, a return flight from Lagos to London cost over one million naira, and even though airlines have opened up more inventories, ticket prices are still high and airlines do not want to add to their funds already tied down.

Chijioke Okeke, a student who recently travelled from Nigeria to Turkey to study, told BusinessDay that the best travel deals were accessible using his dollar card.

“All my friends use their dollar cards to buy air tickets. Before now, we would buy from travel agents but currently, we have to do it on our own because buying through travel agents costs us over 100 percent more,” Okeke said.