• Foreign airlines ditch lowest fares, adjust exchange rate to hedge devaluation shocks
• Average travellers lament weak naira to dollar rates, fares
• ‘Demand still resilient’, top travel agencies say
For the third year on the bounce, there will be no summer travel overseas for average holidaymakers in the country. No thanks to the prevailing foreign exchange liquidity crisis that has further raised airfares by at least 200 per cent and average Economy Class tickets above the N1 million-mark.
Findings show that foreign airlines are just as hard-pressed by harsh economic realities as their Nigerian customers that have been looking forward to the season. Quite a number of airlines that had earlier positioned capacity in readiness for the summer peak period are now deploying backend-pricing mechanisms to weather the effects of the forex crisis, invariably passing the cost to consumers.
Travel agencies were not unanimous on the extent of attendant dip in demand among average travellers. Undisputed, however, was the upward movement in fares, yet with resilience in patronage, especially among die-hard holidaymakers that would not mind surging costs.
Emerging from two years of pandemic disruptions, the world is fully reopening to summer travels this year. Besides the chaotic scenes at major airports in Europe and America over staff shortages, there is another disincentive for summer travellers in Nigeria – high airfare.
The Guardian survey of booking platforms of major airlines showed a major spike in available tickets to European, United States and Canadian routes among other holiday destinations. On the platforms are the traditional least airfares quoted, though not available for purchase.
Consequently, a Lagos-London-Lagos Economy Class ticket that earlier sold for an average of N350, 000 on platforms of European carriers is now available at higher layers of N1.1 million-plus. Early June 2022, the same tickets were sold for an average of N600, 000 and N650, 000 as at this time last year. Their Business Class variants, where available, were quoted for between N3.5 million to N4.8 million per seat, depending on the airline of choice and time of inquiry.
Lagos-Atlanta-Lagos Economy Class ticket was offered for between N500, 000 to N850, 000 as at June. It now sells for N1.3 million-plus where available. The Business Class fares hover between N3.6 to N5 million per person.
African and some middle-east carriers are offering fairly affordable deals for leisure travellers that would not mind hours of layover at transit airports. On their platforms are an average of N750, 000 fares to major destinations in the Middle-east and Europe.
Some air travellers have described the foregoing quotations as ‘ridiculous’. Abuja-based systems engineer and travel freak, Hameed Ailero, said air travel had gone beyond the middle class earners in Nigeria going by the rates airlines are offering tickets.
Ailero, who also traded-off summer travel last year due to high cost, said the Nigerian authorities should query the foreign airlines for “the discriminatory airfare.”
“For me, that is ridiculous and typical of countries where there are no consumer protection measures. Aviation is supposed to be the business of freedom where almost everybody should be able to fly. But how does one explain a six-hour return ticket that now goes for N1 million and in a country where minimum wage is N30, 000? How many people can afford that? That is what I mean by discrimination against average Nigerians, by both the airlines and complicit regulators.
“In June, when I was planning for a holiday trip, I got a quotation of about N680, 000 to London. Because I was calculating for a family of seven, I felt it was too much. Barely a week later, the rates jumped to over N900, 000. Such leaps in price should be questioned by a government that cares. It does not sound good even for our economy. Whatever could have caused the leap, it is sheer discriminatory against the travelling public,” Ailero said.
Another traveller that would be missing the summer party abroad, Yemisi Ogunleye, said she was banking on summer promo fares on two of the foreign carriers. “I have been travelling for summer holidays for about nine years before the pandemic, and had always got fairly good tickets. This time around, the more I hunt for promo fares, the higher the tickets keep going.
“This N1 million ticket to the UK sounds like a joke to me. Unfortunately, it is not the airlines’ fault. They know that there are categories of people that will still afford it. But if the country is better secured and people can move around on holidays, why should I bother about foreign airlines’ flight tickets?”
Publicity Secretary of the National Association of Nigerian Travel Agencies, Yinka Ladipo, however, said that the airlines did not increase the airfares, but for the rate of exchange that rapidly spiked for reasons not unconnected with decline in the value of the naira and airlines’ funds currently stuck in Nigeria.
The International Air Transport Association (IATA), the clearing house for over 280 airlines globally, recently raised the alarm over a rise in the amount of unrepatriated funds in Nigeria, put at $450 million as at April this year.
Findings showed that the stuck fund, from accumulated sales of flight tickets in local currencies, was in excess of $800 million in November 2021. It was brought down to about $283 million as at March this year, but further increased to $450 million in May, and is estimated to have reached almost $600 million in June.
In that circumstance, foreign airlines had adjusted its perpetually fluctuating Rate of Exchange (RoE) from N411 to as high as N450-plus per dollar, raising airfares some notches to mitigate losses of having funds tied down in a volatile economy.
Ladipo, a travel expert at Dart Travels and Tour, added that the foreign airlines have also blocked layers of affordable airfares for the Nigerian travelling public. “On the platforms, you will, for instance, see fares of N300,000 for London, but it is not available, except for those of N650,000 upward. It is really tough on everybody,” he said.
Chairman of the Airline Passenger Joint Committee of the International Air Transport Association (IATA), Bankole Bernard, added that Nigeria was reaping the dividend of its failure to accord priority to foreign airlines and their cash-calls.
Bernard explained that airlines made monies either by volume or by yield. “Volume is when they sell their cheap tickets so that a lot of people will be able to travel because they are given access to cheap fares. In the absence of volume, they turn to yield and the money they are supposed to make from five people, they will make it from one person and deny the other four that want to travel. So, the airlines did not increase the fares, they only removed the cheap ones for the expensive ones.”
Bernard, who is also the Chief Executive Officer of Finchglow Holdings, added that people, especially the well-off Nigerians, are still braving the odds to travel, though with a tweak in choices of destinations and budget size.
“There are people that will do everything possible to travel because movement has become inevitable. The only difference is that instead of two or three destinations on a summer trip, they will do either two or one. So, the market is booming for summer travel, though people are paying through their nose,” he said.
President of Skal Nigeria, Daisi Olotu, affirmed that without government making allowances for the travelling public, airfares have become cut-throat and even Basic Travel Allowance (BTA) are not readily accessible at the banks.
“Should we then blame the airlines if they insist that they want to sell in dollars? We can’t blame them, but the cost will eventually be passed down to the travellers. Yet travelling is part of education.
“The entire world is moving while we have decided to remain on self-imposed lockdown. That is unfortunate. Yes people are still breaking their banks to travel, but the industry has not grown the way it should and the authorities should be worried,” Olotu said.
IATA’s Regional Vice-President, Africa, and the Middle East, Kamil Al-Awadhi, had described efforts to persuade the Central Bank of Nigeria (CBN) to reduce the backlog as “a hectic ride”.
Al-Awadhi, however, warned that countries with foreign airlines’ trapped funds are sure to have airfares that are three times higher than global rates, to enable airlines to make profit from one leg of the trip instead of on return.
“It is sad that Nigeria owes the bulk of the entire blocked funds. This is very unacceptable. We heard that there is a shortage of dollars. Airlines are scrambling to get more flights to Nigeria. Nigerian travellers are willing to pay for it. But the trapped fund is not helping the airlines and not helping other Nigerians to travel. The prices are ridiculously expensive, more than twice the price. We urgently need the funds for more work,” Al-Awadhi said.