The price of airfares on International airlines on Nigerian routes increased by over 20 per cent shortly after foreign airlines adjusted the exchange rate for ticket sales from ₦462 per dollar to ₦551 per dollar.
Currently, Nigerians who ply international routes pay higher airfares as most of the foreign carriers that operate in the country have stopped selling the lower fares inventory in Nigeria as a means to cushion the effects of their trapped funds in the country.
A few days ago, it was reported that the foreign airlines had adjusted their exchange rates on the international flight Global Distribution System, GDS from ₦462/$1 to ₦551/$1.
It was earlier predicted that the 16% increase in the exchange rate would result in a hike in airfare prices as the airline operators would adjust their ticket prices to reflect the new exchange rate.
According to a report by The Punch, multiple travel companies confirmed that the GDS companies had notified them of the latest increase.
The price increase caused by the adjustment in the foreign exchange figures comes amid the difficulty faced by foreign carriers in repatriating funds accrued from ticket sales worth over $700 million out of Nigeria.
Foreign airlines operating in Nigeria had about $743m in trapped funds in Nigeria as of January 2023. The International Air Transport Association, IATA also revealed that Nigeria has the highest amount of foreign airlines’ trapped funds globally.
Some travel agents privy to the development confirmed that the increase in the exchange rate has led to an over 20 per cent increase in the price of international airfares.
“Virgin Atlantic which has a promo of about N800,000. This same promo is going for about ₦1.1m as a result of the increase in the exchange rate,” a staff of a travel agency said.
While speaking on the issue, the Managing Director of Financial Derivatives Company Limited, Bismarck Rewane, argued that foreign airlines should not be blamed for the price hike in ticket fares.
According to Rewane, foreign airlines don't have to keep losing funds thus they need to adjust their ticket prices to suit the exchange rate. Rewane also added that when compared in dollar terms, airfares remain the same and are still the same amount.
He noted that the increase would only affect those who buy their tickets in naira while canvassing the need for the FG to expedite actions in repatriating the accumulated funds due to the airlines.