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Business News of Saturday, 30 July 2022

Source: vanguardngr.com

International travels airfare rise 282% to N2.1m per trip

File photo to illustrate the story File photo to illustrate the story

International travels traffic from Nigeria has been hit with a major blow, as foreign exchange, blocked foreign airlines funds, amongst others have pushed the price of airfare tickets to 282 per cent in one year.

This development has impacted summer travels negatively following the dynamics in the nation’s economy as passengers pay between N2.1 million to N2.3 million for a round trip outside Nigeria on economy ticket.

Saturday Vanguard gathered that, currently, Nigeria has Bilateral Air Services Agreements with over 78 countries. From Nigeria, air travellers can fly directly to many of the world’s business centres such as London, Paris, Frankfurt, New York, Johannesburg, Atlanta, Amsterdam, Dubai and Jeddah to mention a few.

With the attainment of America’s Federal Aviation Administration (FAA) International Aviation Safety Assessment (IASA) Category One Certification, Nigerian registered carriers can now fly directly into the United States of America (USA)

However, a survey by Saturday Vanguard showed that an economy class ticket for a round trip from the Murtala Muhammed International Airport, Lagos to the George Bush International Airport Houston, IAH, which was sold between N500,000 to N550,000 in 2021, is now sold at N2.1 million.

Also, a round trip on an economy class ticket from Nigeria to London Heathrow Airport, which is less than 2, 000 pounds, is now 3,000 pounds and above. A round trip from Lagos to Johannesburg, South Africa, now sells for N500,000.

A breakdown of the charges that make up the total cost of an air ticket using the United States as a case study, includes Airfare, which varies, U.S. transportation tax, $38.20, September 11th security fee, $5.60, international surcharge, $400.00, U.S. APHIS user fee, $3.96, U.S. Customs user fee, $5.99, U.S. Immigration user fee, $7.00, Nigeria airport service charge, $100.00, Nigeria security charge, $20, U.S. passenger facility charge, $4.5.

Passenger Laments skyrocketing price

Meanwhile, in a chat with Saturday Vanguard, a passenger in Lagos who preferred anonymity, told Saturday Vanguard, that he had just come back from the United Kingdom, and wanted to change his return ticket date and they charged him N546,000.

“Following this development, I contacted my travel agent to get an economic ticket from Lagos to London, to understand the rationality, I was amazed when he told me that it would cost me N1.9 million.

“I exaggeration I screamed, this is out of this world, I asked him why, and he gave me many reasons among which he disclosed that the issue of aviation fuel, along with the fact that airlines cannot repatriate their money back to their country. Right now they are been forced to buy an air ticket in dollars.”

But in a swift reaction, the Principal Managing Partner, Avaero Capital Partners, Sindy Foster told Saturday Vanguard that, “At the original time of booking the fares were lower, as they probably did not take into account the five factors above. It’s not the change of date which they have charged N546, 000 for, it’s the difference between fare costs from the time of booking to now, which is why the apparent ‘change’ fare is so now.

Similarly, a former Military Commandant at the Murtala Muhammed International Airport, Lagos, Group Capt John Ojikutu lamented that the aviation industry is collapsing because of debts and it is affecting the foreign airline.

He said: Foreign airlines cannot take their money back to their country and if foreign airlines stop operations here there will be a huge catastrophe. We acquire 80 per cent minimum of our earnings from commercial aviation from foreign airlines.

“If they cannot repatriate their money back to their country then there will be a problem. I just got a message from the House of Assembly, asking the Central Bank of Nigeria, CBN, to return their money so they can change themselves through the parallel market. There is more dollar there today than in the CBN. “If they have to change it, then you will have to pay for it and that is why the air ticket has gone up. There is no magic about what is happening.”

Factors responsible for the hike

While highlighting the factors driving the surge in the price of international flights, Foster, noted that, seasonal demand, plus pent-up post covid demand has driven up the price of international tickets. According to her, “During covid many airlines provided vouchers to passengers in respect of flight cancellations, these vouchers had expiry dates in 2022/2023 in many cases. She said: “This summer was the first summer where covid restrictions had been relaxed or removed entirely. So this year, many people planned overseas trips and destination weddings amongst others.

“Also, aviation fuel has increased dramatically over the last few months. To try to claw back some of this increase airlines have added fuel surcharges to the cost of tickets which have pushed up the cost of tickets.

“There are also increased airport charges to claw back some of the losses during the covid lockdowns and the subsequent lack of passenger demand created by varying vaccination and testing requirements between countries, airports increased charges to airlines, some of which will have resulted in higher fares for passengers.

“Nigeria owes Foreign Airlines over $450 million in unremitted revenue. To compensate for this situation the airlines have removed the lower class fares from their tickets. Airlines are forced to source funds on the parallel market, so any fare which would not generate the anticipated ticket price when converted to dollars was apparently removed.

“Also, there are Forex differentials, the Naira has depreciated against the dollar. So all fares will be higher in terms of Naira required to purchase the tickets which will have originated from dollar cost/revenue calculations.

“Until the above is no longer the case the situation will remain as it is.”