As the summer travel season is picking up, the air fares paid by travellers from Nigeria to other destinations have risen by 100 percent as foreign airlines’ trapped funds in Nigeria hit $450 million.
Foreign airlines operating in the country have blocked almost all low ticket inventories on their websites, making it difficult for passengers to buy affordable tickets.
This, according to BusinessDay findings, is in order to mitigate the current difficulties experienced by them in accessing their funds from tickets sold in Nigeria as a result of foreign exchange scarcity.
The airlines are forced to source for dollars in the parallel market at the cost of N590 to a dollar against the official rate of N418 to a dollar.
For instance, the average cost of N350,000 for the lowest economy class inventory for a return ticket on British Airways, Virgin Atlantic or Emirates on the Lagos-London route has been removed, and the available tickets cost at least N650,000 on Wednesday.
The Lagos-US return ticket is also seeing a sharp increase across airlines from N500,000 to about N950,000.
The lowest economy class inventory for a Lagos-Canada return ticket, which used to cost an average of N550,000, cost above N1 million as of Wednesday.
Susan Akporiaye, president of National Association of Nigeria Travel Agencies, told BusinessDay that the trapped funds of foreign airlines have risen in a space of a few weeks from $300 million to $450 million, adding: “This is making the airlines so scared and we hope they don’t stop operating in Nigeria.”
“If this continues, foreign airlines may restrict travel agents in Nigeria from selling tickets, except tickets emanating from their own countries where passengers have to pay in foreign currencies. Already, all the low inventories have been taken away from the airlines’ websites and they only sell higher inventories,” Akporiaye said.
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According to her, if the issue is not addressed and the funds keep increasing, what happened in 2016 when airlines had to exit the country as a result of their $700 million trapped funds may happen again.
She called on the Central Bank of Nigeria (CBN) to intervene in the issue by releasing the funds to the airlines.
In 2016, when airlines funds were trapped in Nigeria, many airlines reduced frequency into the country while United Airlines and Iberia Airlines suspended flights into Nigeria and till date, Iberia Airlines has not returned.
Bankole Bernard, group managing director at Finchglow Group Nigeria, a travel management company, also confirmed to BusinessDay that foreign airlines had closed all lower ticket inventories and started selling tickets that cost more.
He said: “I feel for summer travellers during this period. I wonder how they are going to cope. CBN has to do something to salvage the issue. Funds have been released to other sectors, and I am wondering why a sector as important as travel is not included.
“The travel agents in Nigeria together sell $1bn worth of tickets annually. The travel agents are currently doing about 85 percent of what they were doing pre-COVID era. So, almost all airlines want to come into Nigeria. This is a sector that should not be neglected.”
Kingsley Nwokeoma, the president of Association of Foreign Airlines and Representatives in Nigeria, said if everyone keeps holding on to funds that should be repatriated, there would be no operations.
According to Nwokeoma, the funds are supposed to be used for maintenance, payment of salaries and aircraft.
“The aircraft foreign carriers deploy to Nigeria are purchased with payment structures. If airlines start to sell tickets in dollars, they won’t be having these issues but Nigeria’s regulations do not allow them to sell tickets in dollars. We hope it won’t get to a point where the airlines will start to leave,” he added.
He said the airlines had tried to use diplomatic channels to address the issues, adding that the government, the aviation minister and the CBN should look for ways to resolve the issue.
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BusinessDay gathered that the troubles of travellers have worsened as Nigerian banks put a $20 limit on Nigerian debit cards. This means travellers cannot spend more than $20 daily on their debit cards, making it very difficult to pay for tickets or visa fees using the Nigerian debit cards.
“I wanted to travel to Egypt and I was told that I have to pay for the visa fee in dollars. After sourcing for dollars to pay for my visa, the embassy still didn’t give me a visa. How can the federal government make travellers go through these difficulties because they want to travel?” a traveller who craved anonymity told BusinessDay.
