More Nigerian air travelers are opting to travel to neighbouring countries like Ghana and Cotonou to book international flights after being forced to pay thrice cost of flights in other countries to same destinations.
Fares advertised on the websites of foreign airlines show that Nigerians now pay three times what travelers in other countries pay to the same destinations. Nigerian travelers now pay as high as N3, 000,000.00 to purchase an economy ticket while date changes on some airlines go as high as between N1, 500,000.00 to N1, 800,000.00. For business class tickets, passengers pay about N7 million.
In the past one year, foreign airlines removed lower inventory tickets on their website for travelers from Nigeria because they say they have been unable to repatriate funds generated from sale of tickets deposited in Nigerian banks. These airlines insist on getting their funds in foreign currency but owing to the biting forex scarcity, that has been difficult. They then took the decision to remove lower inventory tickets from their website, making cost of flights expensive for Nigerians.
To combat this, many Nigerian passengers now prefer travelling to countries like Ghana to book tickets at lower costs and this development has almost crippled the Nigerian travel industry leaving many travel agents losing their clients to the high cost of flight tickets..
The International Air Transportation Association (IATA) had at a recent meeting with the Minister of Aviation, Hadi Sirika, said that funds generated by sales of tickets by foreign airlines trapped in Nigeria has hit $743,721,097 million from $662 million in January 2023 and $549 million in December 2022. IATA said that for over a year, Nigeria has been the country with the highest amount of airline blocked funds in the world.
Foreign airlines exploiting Nigerians
The National Association of Nigeria Travel Agencies (NANTA) which is the umbrella body of all travel agencies operating in Nigeria, revealed that Nigeria’s travel market has lost about $500 million due to exploitation by foreign airlines and that unless the government intervenes and ‘put its foot down’, foreign airlines will continue exploiting Nigerians.
NANTA’s president, Susan Akporiaye, said recently that the travel market contributes billions to Nigeria’s economy and that if these issues are not resolved, it will create more problems as the sector has already lost between $450 and $500m including 720,000 job losses in 2022 alone.
“As we speak, it is only in Nigeria that a traveler is made to cough out over two thousand dollars for an economy ticket and also change the date of the flight itinerary for whatever personal reasons with about N1.5million to N1.8 million.
“To put this in perspective, all low-fare inventories of the airlines have been deliberately blocked to our members and to this market. This now means, Nigeria is at a disadvantage since the airlines seems to have mastered the art of exploiting the forex issue to their advantage. Agencies are now forced to fold, leave the country or trying to use other neighboring countries to sell to their customers. Nigeria Travel market continues to be at the losing end with the airlines being indifferent to the plight of travelers and as a body we are left with no option than to call on the government to be more strategic, deliberate and direct in resolving this multifaceted dilemma.
“Just to be clear, in the aviation downstream sector, businesses are currently folding up and more will follow suit which will add to the unemployment challenge that the Federal Government is wrestling with if urgent and precise actions are not taken to nip this development in the bud before it is too late.
“The reaction of airlines is grossly unfair to the Nigerian travelling public, as well to us as a nation in general with a seeming disdain to the available cordial business relationship. This of course gravely threatens our survival as travel practitioners in Nigeria. The suffocating profiteering practices by majority of the foreign airlines is unbelievable and unexplainable in a Nigeria market that is ranked by many indices of IATA as one of the best in Africa and with the best post-covid recovery rates across Africa and Middle East, the Nigerian Market should be applauded, but the reverse is the case.
“For emphasis, being one of the biggest market for any airline that operates within it, we expect airlines to respect and appreciate the impact of the traffic our market offers and seek better ways to ensure there is mutual benefit in tandem with the current reality. The trade rules are obnoxious, not consistent with global best practices and fares are unjustifiably high, all in reaction to trapped funds. We at this stage have reasons to believe there is more to it.
“We hold the stand that government still retains the responsibility to commit to agreements with airlines to protect the sector and call airlines to order when there are obvious excesses from the airlines that puts the entire industry in jeopardy; because the current fare structure and practices are exploitative to the Nigerian Traveler as well as agencies who provides a reasonable number of jobs for our great nation.
“To add, the National Assembly also heard our cry and called for a peaceful resolution of the trapped funds impasse. Save for initial adjustments by one or two airlines, no significant impact was achieved as airlines continue with even higher fares as though they determine what happens in Nigeria. Today, a willing prospective Nigerian traveler needs about N3,000,000.00 to purchase an economy ticket while date changes on some airlines go as high as between N1,500,000.00 to N1,800,000.00. This has crippled our businesses, drove our clients away, and made Nigerians to travel across our borders at huge security risk to connect cheaper flights.
“Our questions are: At what point will this stop? What is the cost of trapped funds to airlines? Do the costs equate to the extreme fare hikes that are exclusive to this market? Will extreme fares of airlines and resultant increased revenue (at no additional cost) not place future compound burden on the forex reserve of government? Serious questions need to be asked around these actions, because the more airlines generate, the more they claim for repatriation, and the pile of trapped funds grows.
“We are pained, anxious, and worried; we cannot over-emphasise the consequences of job losses, the security risks to Nigerians travelling across borders to connect cheaper flights, and the shame of a parallel dollar monetary policy in the travel sector, against established national naira monetary policy. On our part, we advise the new government to follow up keenly on Bilateral Air services Agreement (BASA) and other extant aviation laws which will open our economy to serious local and foreign investors,” Akporiaye said.
FG’s intervention needed
The Minister of Aviation Hadi Sirika, on Tuesday, met with IATA and foreign airlines’ representatives, to discuss the issues affecting the travel industry.
While stating Nigeria’s commitment to the Bilateral Air Service Agreement, he assured them that the ministry is concerned, and will do its best to resolve the matter of blocked funds as soon as possible.
He stated further that the issue of blocked funds sits with the Central Bank of Nigeria and it is not what the ministry can handle alone else it would have been resolved immediately and urged foreign operators to be very considerate when dealing with the issue bearing in mind the effects of COVID- 19 and recession the country had experienced.
IATA’s Area Manager, West and Central Africa, Dr. Samson Fatokun, who led the delegation expressed gratitude to the minister for his concern and said the global airline community would like to appeal to the him for special intervention in resolving of airline blocked funds issues in Nigeria. He said the airlines are facing the collateral damage and the average Nigeria is bearing the brunt of this issue.
At the meeting, Akporiaye said: “Is a very difficult time for us as some of us are already giving up on the industry and going into other business. It is our loss and also the loss of the country as we don’t sell more ticket like we use to, and this will further increase the unemployment situation if this issue is not attended to.”