The rate of exchange (RoE) for foreign airlines has risen to N582/$1 for the third time in less than a month, leading to an increase in the cost of international air travel. The new RoE has caused prices for international airfares to vary widely depending on the airline, place and time of booking.

The six-hour Lagos-London economy class ticket now ranges between N1.1 million and N2.97 million, while its business class variant averages between N3.36 million and N4.8 million.

The international segment of the aviation sector has been in a fund crisis for over a year, with effects on inventories, asking prices and the near-collapse of local travel agencies. The Central Bank of Nigeria (CBN) had intervened earlier in August 2022 with $265 million, leaving a balance of $200 million. However, the stranded funds kept piling up daily, leading Emirates Airlines to quit the Nigerian route in late October 2022.

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The authorities have recently conceded a shift from the official CBN window to the volatile Investors’ and Exporters’ (I&E) FX window for the repatriation of foreign airlines’ funds in Nigeria. This has resulted in the exchange rate volatility, which hit a new high of N582/$1, making airfares more expensive.

Travel operators and experts agree that the new rates are a good omen in the current market realities but also pass extra costs to consumers. However, President of the National Association of Nigerian Travel Agencies (NANTA), Susan Akporiaye, said the new pricing is partly solving the problem of stuck funds and accessibility of tickets to Nigerians, as foreign airlines are beginning to repatriate funds from tickets sold in the local currency, leading to a chain reaction in reopening inventories to travel agencies.

Chairman of the Airlines and Passengers Joint Committee (APJC) of the International Air Transport Association (IATA), Bankole Bernard, said foreign airlines accessing the I&E window might be the permanent solution to the perennial problem of stuck funds, and unleashing the commercial viability of the international segment.

Bernard said that the government was indecisive on what to do with the FX liquidity crisis and its effects on foreign airlines. He suggested that when airlines can sell at the RoE and repatriate their monies easily, they can do more trips and make more money, leading to a commercially lucrative airline industry.

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However, travel expert Sunday Olumegbon noted that the approach would disenfranchise average Nigerians from the aviation industry further. Olumegbon suggested that the recent surge in airfares would make air travel beyond the reach of average Nigerians, further reducing the demand for international travel.