President of Aviation Safety Round Table (ASRT), Dr. Gabriel Olowo has stated that what appears to be an exploitative airfare charged Nigerians by foreign airlines was a result of the chances and choices which the country refused to take which invariably led to the consequences of what many referred to as exploitative fares.
Olowo who was reacting to Aviation Metric’s story entitled, “Foreign airlines: Nigerians bear brunt of exploitative fares”, said Nigeria chose to limit payments of travel only to Naira, stressing that whereas fares globally are denominated in dollars.
He pointed out that in Nigeria’s case, Naira payment is enforced despite the glaring weakness of the currency.
According to him, “I beg to disagree that Nigerians are being exploited through the various restrictions on sellable fares at Point-of-Sales (POS) in Nigeria. It is a result of our chances, choices, and consequences”.
“Whereas Nigerian airlines whose major fuel uplift (fuel being the highest cost element) is here at home are bleeding, talkless of foreign airlines whose major cost elements are borne at their head offices outside Nigeria”.
Olowo who is also President, of Sabre Network West Africa noted that the decision by the Central Bank of Nigeria (CBN) to withhold foreign airlines’ over $500 million funds dating back to more than one year has eroded the actual value of the carriers’ trapped funds amid galloping devaluation.
The alternative according to Olowo was to permit payment options in dollars, credit cards, and or any other strong currency but not restricted to the Naira.
“You can be sure the airlines will open all inventory immediately for sale because dollars will be remitted for dollar. Without being an advocate for foreign airlines, the services are highly needed and Nigerian carriers have not evolved to the level of filling the gap, not due to their own fault but that of the state. The state lacks the will”.
He disclosed that until Nigeria births strong airlines, pressure on Naira would persist and restrictions on the Nigeria Point of Sale would remain, adding that no amount of appeal or coercion would solve the problem, describing it simply as “market dictates”.
The International Air Transport Association (IATA) had warned of an impending hike in airfare in countries where airlines’ funds are trapped.
IATA’s Vice-President for Africa and Middle-East, Kamil Al-Awadhi had at the IATA Annual General Meeting (AGM) held in Doha, Qatar July last year warned that carriers could be forced to remove lower fare inventories and replaced them with higher fares.
The government did not heed the warning as airlines’ funds piled up to the chagrin of many stakeholders. Nigerian air travelers are witnessing some of the worst fare disparity in the world and the citizens are bearing these huge costs. The least airfare on an economy class cabin to London from Lagos, for example, goes for N900,000.
The fares are outrageous, to say the least. The fares could even rise to N1.5 million ($3, 300) and N2 million ($4, 400) depending on the time of purchase. A return ticket on a trip to London to Lagos on Air France seen by our correspondent shows a ridiculous fair of $4, 221.40.
This fare and some others are described as outrageous. It cost even more than a Business Class ticket cost a few months ago while Business Class fare on many six-hour flights to virtually all the international carriers is as high as $10, 000 and $12, 000.
The carriers had in the wake of their $465 million funds trapped in Nigeria introduced high and mindless fares. In the heart of the crisis, some international carriers like Emirates issued a statement to quit Nigeria early this month. Many others were secretly planning their exit or reducing capacity on the route.
The pressure from the carriers and the huge implication it was having on the country’s image were enormous. The situation forced the Central Bank of Nigeria (CBN) to quickly release $265 million remaining a balance of $200 million with the promise to release the balance ‘soon.’ It is regrettable that the gesture only emboldened foreign airlines to visit the Nigerian public with the most exploitative response in the name of protecting their businesses.