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The International Air Transport Association (IATA) on Wednesday, June 21, 2023, pegged $1 to ₦770 following the recent decision of the FG to unify the naira.
According to the Vice president of the National Association of Nigeria Travel Agencies (NANTA), Yinka Folami in a discussion with The Sun, the cost of the dollar at the Investors and Exporters (I&E) window is a major factor which determines the rate of international flights from Nigeria.
“Some days ago, naira sold for ₦680 to one dollar and yesterday it sold for over ₦700. The foreign airlines then fix the prices based on what is available from the Central Bank of Nigeria (CBN).” He said.
Nairametrics also reports that the new price range which would depend on the new $1/₦770 rate would kickstart immediately as the IATA has officially updated its members.
The development would see an upward increment in ticket prices for international routes. A ticket costing ₦1.2 million for economy class before the introduction of the new rates will now go for ₦2 million and above, while the business class airfares would hit ₦7 million or more.
As of 2021, the official ticket rate was pegged at ₦444 for one dollar by airlines. This jumped to over ₦577 a dollar in 2022.
The harmonisation of the exchange rate by the new administration has caused the exchange rate at the black market to hit above the ₦700 per dollar mark on Tuesday, June 20, 2023.
While the hike in airfares is a global problem, Nigeria’s situation is unique as the country still has to struggle with the massive debt owed to international airlines.
Nigeria is currently on the list of top five countries with the highest amount of blocked aviation funds which account for over 68% of the global blocked funds.
The IATA as of last month, had warned that Nigeria's air connectivity may be threatened by the country's $812.2 million aviation debt.