Finance

Cost of international flights soars over naira depreciation 

Cost of international flights soars over naira depreciation

Cost of international flights have increased by at least 15 percent following the recent  depreciation of the naira on the back of the Federal Government’s convergence policy.

Vice president of the National Association of Nigeria Travel Agencies (NANTA), Yinka Folami, told Daily Sun that the cost of international flights from Nigeria is dependent on what the cost of the dollar is at the I and E window at every given time. 

“Some days ago, naira sold for N680 to one dollar and yesterday it sold for over N700. The foreign airlines then fix the prices based on what is available from the Central Bank of Nigeria (CBN).

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“However, despite our repeated plea, foreign airlines have adamantly refused to unblock lower inventories and it is making the cost of tickets very expensive,” he said. 

In the past, an economy ticket from Lagos to London used to cost about N400,000 in 2021 but had increased to about N1.2 million in 2022 and 2023. 

Also, business class ticket has risen to about N6 million during the same period, depending on the airline and time of booking.

With this development, a N1.2 million economy ticket may rise to N2 million and above, while for the business class, the fares may rise to N7 million or more.

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The International Air Transport Association (IATA) had few weeks ago warned about the inability of international airlines to repatriate their ticket sales for over a year, saying the blocked funds have contributed to the high airfares on Nigerian routes.

IATA also said that blocked funds belonging to foreign airlines trapped in Nigeria had hit $812.2 million, warning that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.

The industry’s blocked funds have increased by 47 per cent to $2.27 billion in April 2023 from $1.55 billion in April 2022.  

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The top five countries that account for 68.0 per cent of blocked funds are Nigeria with the highest trapped funds ($812.2 million), Bangladesh ($214.1 million), Algeria ($196.3 million), Pakistan ($188.2 million), Lebanon ($141.2 million)

IATA’s Director General, Willie Walsh said, “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets.  “Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”

Sunnews

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