International airfares, particularly on Nigerian routes, may increase the cost of economy flight tickets to N2 million for a 6-hour journey.
This is as the International Air Transport Association (IATA) sets the exchange rate at $1 to N770.
According to Nairametrics report on Wednesday, June 21, 2023, the inability of international airlines to repatriate ticket sales for over a year has contributed to high airfares on Nigerian routes.
On the average, a six-hour flight on economy ticket jumped from barely N400,000 in 2021 to about N1.2 million in 2022 and 2023.
In the same vein, business class ticket has jumped to between N4 million and N6 million during the same period, depending on the airline and time of booking.
With the new benchmark, 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.
As at 2021, a dollar was being accessed at the official rate of N444 for one dollar by airlines. But it jumped to over N577 to a dollar in 2022.
With the new regime and the harmonisation of exchange rate by the new administration, a dollar was sold at the black market on Tuesday at N702.
A source close to one of the foreign airlines operating into Nigeria confided in our correspondent on Tuesday that the new regime of N770 to one dollar would kickstart today.
According to the source, IATA had already informed its member airlines of the new benchmark. The source said: “Please, be informed that the IATA Rate of Exchange (IRoE) will increase from tomorrow (today).”
IATA represents about 300 airlines in 120 countries with about 25 of its members operating direct commercial and cargo flights into Nigeria.
An email to IATA by Nairametrics to confirm the new rate did not receive a feedback as at the time of filing this report.
Earlier this month during its 79th Annual General Meeting (AGM) held in Istanbul, Turkey, the organisation had raised the alarm that its member airlines’ blocked fund in Nigeria had increased to $818.2 million as at end of April from $744 million in March.
The association said that the figure put Nigeria as the country with the most trapped funds in the world. A statement by Willie Walsh, IATA’s Director-General put the total trapped funds in the world at $2.27 billion as at April, 2023.
Apart from Nigeria, other countries where foreign airlines’ funds are currently trapped Bangladesh; $214.1 million, Algeria; $196.3 million, Pakistan; $188.2 million and Lebanon; $141.2 million. IATA maintained that the top five countries account for 68% of blocked funds worldwide.