Fresh fare hike looms over stranded $600 million airlines’ fund
Travel agencies seek CBN’s intervention
Air travellers on the international route may face fresh fare hikes as part of the ripple effects of foreign airlines’ unrepatriated $600 million in Nigeria.
Travel agencies, yesterday, said the upward adjustment would be inevitable should airlines withdraw promotional and least fares, coupled with the preference to sell Nigerian air tickets overseas (in foreign currencies) rather than in Nigeria (in naira).
The International Air Transport Association (IATA) recently raised the alarm over the steady rise in the number of unrepatriated funds in Nigeria and other countries. The funds, which stood at $283 million as of March, increased to $450 million in May and are estimated to reach $600 this month.
IATA noted that the funds in Nigeria were about 25 per cent of similar funds stuck in other countries as of April. Nigeria was in a similar condition in 2016, when stranded foreign airlines’ funds from ticket sales rose to $600 million.
Nigerian air travellers are already paying more than their counterparts overseas due to naira devaluation and risk another upswing in airfares on account of unrepatriated funds.
President of the National Association of Nigerian Travel Agencies (NANTA), Susan Akporiaye, expressed concern over the development, describing it as a bad omen for the industry and its operators.
Though the problem is not new, Akporiaye noted that NANTA had consistently appealed to the government to prioritise the repatriation of airlines’ funds. She said the current situation presents a real threat to the industry and the continuity of their businesses as travel professionals.
“The foreign airlines may resort to taking out lower inventory in the system, resulting in high cost of tickets from the Nigerian market. For instance, a six-hour trip to London may attract a fare rate of about $2,000 or more and also encourage tickets sold outside the country to flood Nigeria, thus affecting the survival of Nigerian travel agents and consequent loss of taxes and levies from such transactions,” Akporiaye said.
The NANTA president noted that thousands of the association’s members remain patriotic and have represented the country well in the global travel industry and rightly feel disturbed that Nigeria is on the brink of a wrong narrative, following the just concluded IATA Annual General Meeting in Doha, Qatar.
She said: “We, once again, appeal to the Central Bank of Nigeria (CBN), the ministry of aviation and the office of the Vice President to speedily intervene to bring down the number of trapped funds, to help resolve the operations of these airlines.
“Indeed, a bleak future that is worse than the effects of the pandemic awaits Nigerian travel trade operators, if nothing concrete and effective is done urgently to address this disturbing situation.”
IATA’s Regional Vice President (Africa and Middle East), Kamil Al-Awadhi, said airfares charged by international carriers are three times higher than what is obtained in other countries that do not retain airlines’ revenues.
He expressed fear that the fares might continue to rise until Nigerians would not be able to afford international travel, consequently weakening the nation’s economy.
Other countries in Africa that hold on to huge amounts of airlines’ revenues include Zimbabwe ($100 million); Algeria ($96 million); Eritrea ($79 million) and Ethiopia ($75 million).
Al-Awadhi explained that airlines are charging higher fares to Nigeria so that they could make a profit from one leg of the trip, as most trips are charged on return tickets.