• Saturday, April 20, 2024
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BusinessDay

How foreign airlines hide under ‘low inventory tickets’ to exploit Nigerians

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

Following the outcry by Nigerians over the astronomical increase in air tickets, the Nigeria Civil Aviation Authority (NCAA) recently convened a two-day meeting with the foreign airlines operating in Nigeria and called for an immediate reversal of the trend.

The NCAA’s intervention forced airlines such as Lufthansa German Airlines, KLM, Egypt Air, Ethiopian Airlines, British Airways, Royal Air Maroc, RwandAir, and Turkish Airlines to release some categories of low inventory tickets.

Despite claims by airlines to release their lower classes of tickets, fares have remained high.

The question then is: how come fares remained high despite the release of low-ticket inventories?

Airlines played a smart one: rather than face the sanctions of the regulator, they released a few lower inventories and fixed prices slightly lower than the old prices.

Also, findings show that these low inventory tickets released are in trickles compared to the number of seats on the aircraft.

For instance, an aircraft with a seat capacity of 450 could have about 30 or 40 seats that are sold as low inventory, a number that can be described as insignificant.

Travellers have since remained glued to airline websites, watching and waiting for cheap tickets to pop up on the system—a wait that could last a whole day, and sometimes cheap tickets are never seen on airline websites.

Foreign airlines have continued to hide under trapped funds to rip off Nigerians with high fares and wreak havoc on the nation’s economy.

Airlines played a smart one: rather than face the sanctions of the regulator, they released a few lower inventories and fixed prices slightly lower than the old prices.

Recall that for two years now, foreign airlines have 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. This, according to the airlines, was in a bid to cushion the effect of their trapped funds in Nigeria.

Last year, the International Air Transport Association (IATA) disclosed that Nigeria owes $812.2 million out of $2.27 billion in trapped funds globally.

BusinessDay had earlier reported that an economy class ticket from Lagos to London and Lagos to France and most European countries, which cost an average of N350,000 two years ago, now costs between N3 million and 6 million, depending on the airline.

Since airlines withheld these cheap classes of tickets, Nigerians have had to pay through their noses to travel.

Travel agents had called on airlines to consider the poor travelling public to release low ticket inventories, but all pleas have fallen on deaf ears as airlines continued to raise fares, citing reasons for high fares as ‘trapped funds.’

But in January 2024, the Central Bank of Nigeria disbursed $61.64 million to foreign airlines in Nigeria, clearing forex obligations and stabilising the market, a move that signalled commitment to resolving pending obligations and fostering a functional foreign exchange market.

According to Hakama Sidi Ali, the Acting Director of CBN’s Corporate Communications Department, this payment was expected to provide relief to airlines facing delayed forex access.

The foreign airlines have continued to receive their funds consistently in trickles. Despite this respite, Nigerians continue to pay three times more than other travellers for the same destinations.

Again, how low are these recently released inventories?

A one-way Lagos to UK economy class ticket on British Airways, which cost between N300,000 and N400,000 two years ago, now costs $2698. Using the International Air Transport Association’s (IATA) exchange rate of N1,660 to a dollar, this amounts to N4.4 million.

BA’s premium economy class ticket on the Lagos to UK route cost N11.1 million; business class also cost N11.1 million; and first class cost N14.2 million.

The same British Airways for the same period sells its Ghana to London economy class ticket for N2.9 million.

For British Airways, one-way economy class tickets from Lagos to the USA, which used to cost N500,000, now cost N2.9 million for premium class (5 million) and business class (13 million).

The same airline charges N2 million for economy class tickets and N6 million for business class tickets for the Ghana-London route.

For Virgin Atlantic, a one-way economy class ticket from Lagos to the UK cost N2.9 million, the economy premium cost N5.7 million, and the upper class cost N12.5 million.

The same Virgin Atlantic puts economy class ticket prices from South Africa to London at N990,000, economy delight at N1.1 million, economy premium at N2,878,887, and upper class at N4.1 million.

A Lagos to USA economy class ticket on Virgin Atlantic cost N4.3 million, a premium ticket cost N9.7 million, and an upper class ticket cost N11 million.

A Virgin Atlantic economy class ticket from South Africa to the USA cost N1.9 million, a premium ticket cost N3.4 million, and an upper class ticket cost N6.8 million.

For Turkish airlines, a Lagos to London Economy flexible ticket costs N4.2 million, and a Business semi-flexible ticket costs N5.8 million.

The same Turkish Airlines from Ghana to London: economy flexible cost N2 million, while business flexible cost N2.7 million.

From all indications, fares from Nigeria remain the most expensive.

No wonder last year, the National Association of Nigeria Travel Agencies (NANTA) stated that most of the foreign airlines have mastered the art of exploiting the forex challenges to their advantage by removing all low-fare inventories from Nigeria and transferring them to neighbouring countries.

This, according to the association, has enabled most of the neighbouring countries to earn more revenues, which ought to have come to the federal government in terms of taxes and charges.

These exploitative fares have crippled travel agent businesses and forced Nigerians to travel across the nation’s borders at huge security risk to connect cheaper flights to international destinations.

It is only in Nigeria that a traveller is made to cough out over $2,000 for an economy ticket, and if a passenger wants to change the date of the flight itinerary for whatever personal reasons, they would have to pay over N1.8 million.

The fares are totally unacceptable, exploitative, and hostile to the survival of the Nigerian aviation downstream sector.

It’s a good thing that the federal government, through the NCAA, has threatened to sanction foreign airlines that fail to comply with the directive to release low inventory tickets within weeks.

There is indeed a need for sanity in the travel sector and a return to the best inventory practices and deployment.