• Wednesday, June 19, 2024
businessday logo


Airfares up by 60% on account of FX shift, summer rush


Passengers travelling from Nigeria to other countries are facing a hard time this period as airfares had gone up by over 60 percent, prompting prospective passengers to either postpone their trips or opt for outright cancellation.

BusinessDay’s investigations show that two factors that had prompted this increment are depreciation of the local currency against the US dollar and the rush for summer holiday.

For long, the naira was pegged at $1 to N197. Airfares are quoted in dollars and Nigerians pay the equivalent in naira at the previous exchange rate of N197. After the introduction of the flexible forex policy by the Central Bank of Nigeria (CBN), the payment is now calculated at an exchange rate of N285.

Akin Olawunmi, a frequent traveller told BusinessDay that as a result of the increase in airfares he had to postpone his trip and that of his children till next year.

“I intended to travel with my family this season as I had always done in the past years but this time, I had to change plans as a result of the spike in airfares,” Olawunmi said.

BusinessDay’s checks show that a return economy class ticket to Johannesburg from Lagos, which used to be between N110,000 and N130,000, now cost about N180,000 and N240,000, representing over 65 percent increase.

Similarly, a return economy class ticket on the Lagos-London route, which previously cost about N250,000 and N450,000, depending on the class a passenger chooses to fly, now cost between N365,000 and N750,000, representing about 57.1 percent increase in fares.

The Lagos-Dubai route that formerly witnessed a return economy ticket costing about N140,000 and N190,000, now goes for between N230,000 and N330,000, depending on the carrier a passenger chooses to fly, representing about 74.1 percent increase.

As a result of low patronage and the biting exchange rate, Emirates Airline stopped one of its flights from coming to Nigeria,” investigations show.

Managing Director of Omni-Blu Aviation Services, Akin Olateru, blamed the government for not managing the situation very well, adding that to encourage the country’s carriers to provide alternative to travellers, government needs to exempt airlines from Value Added Tax (VAT).

Olateru said that it is only in Nigeria’s aviation industry that such taxes are introduced, saying the exercise is killing the carriers.

“Government should provide easy access to foreign exchange to our local airlines. They must devise ways to help. We are the only country that still charges VAT on leisure travel, which makes airfares to be expensive,” he said.

He said government should give the airlines tax holiday, stressing that the $50 international travellers from Nigeria pay that goes to the Federal Airports Authority of Nigeria (FAAN) should be done in naira at an agreed rate.

Abiola Lawal, managing director of Flyboku.com, a travel management company, said travel agencies were groaning, saying the situation was further made difficult because of summer, which he considered as peak of travel. “The airlines do not have reasons to lower fares because demand drives supply,” he said.