The International Air Transport Association (IATA), the clearing house for over 290 global airlines would from Wednesday quote ticket prices at N770/$1.
The implication is that airfares on international routes would jump astronomically by over 50 percent.
A top official of a West Coast airline who pleaded anonymity told Aviation Metric, “Please, be informed that the IATA rate of Exchange (IROE) will increase from tomorrow”.
Former President of, the National Association of Nigeria Travel Agencies (NANTA), Mr. Bernard Bankole said the implication is that tickets sales or fares would be out of reach, stressing that the already high fares had been worsened by the instability in the airline business occasioned by the recent monetary policy of the Federal Government.
He said he expected strong leadership from the NANTA executive on reaching a middle ground on the stability of the IROE, stressing that there had been four IROE adjustments in one week which does not do the sector any good.
At the new IRoE, registered by the Global Distribution System (GDS), a six-hour Lagos-London Economy class ticket sells for between N1.3 million to N2.5 million plus – subject to airline of choice, place, and time of booking. Its Business class variant sells for between N3.36 million to N4.8 million.
While stakeholders regretted that the development has further pushed international air travel beyond the reach of average Nigerians, they acknowledged the inherent respite on foreign airlines that are patronising the Investors and Exporters (I&E) FX window for fund repatriation, and reopening of naira inventories to travel agencies in the countries.
The clearing house in a statement recently reiterated that airfares for international flights from Nigeria are denominated in U.S. Dollars and converted into Naira, the local currency, for sale in the Nigerian market.
“These conversions use the official prevailing exchange rate provided by the country’s financial system.
“IATA simply applies the spot rate at which the Central Bank of Nigeria sells USD through banks to the market, at its fortnightly retail foreign exchange auctions. The rate is not static, i.e. if the rate at which the CBN sells USD goes up, the exchange rate applied to airfares will follow and vice versa,” IATA said.
There are high hopes that foreign airlines’ stuck funds issues with Nigeria may be a thing of the past following the new I&E.
Kamil Al-Awadhi, Regional Vice President of Africa & Middle East for IATA who spoke recently at the IATA 79th Annual General Meeting (AGM) in Istanbul, Turkey said that the rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets, noting that the industry’s blocked funds had increased by 47% to $2.27 billion in April 2023 from $1.55 billion in April 2022.
The IATA chief disclosed that Nigeria was cooperating with IATA and showed readiness to address the matter until six months ago when the CBN backpedaled on the matter, thereby, putting the carriers in a tough situation.
He said, “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”
He listed the top six countries that account for 68.0% of blocked funds as Nigeria ($812.2 million); Bangladesh ($214.1 million); Algeria ($196.3 million), Pakistan ($188.2 million), Lebanon ($141.2 million), Ethiopia ($125 million)
IATA ?????urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate these funds arising from the sale of tickets, cargo space, and other activities.
Al-Awadhi appealed to President Bola Ahmed Tinubu to direct the Central Bank of Nigeria (CBN) to hasten the release of airlines’ funds, stressing that the whole process to help the carriers to repatriate their funds stalled six months ago when all arrangements had been put in place by the administration of former President Muhammadu Buhari and the attitude of former CBN Governor, Mr. Godwin Emefiele.