Nigerians travelling out of the country are being squeezed by foreign airlines, many of which are now insisting that passengers in this country purchase their tickets in dollars instead of in the local currency, the naira.
Industry watchers say that apart from being improper because the naira, not the dollar, is the medium of exchange in Nigeria, the request is also coming at a time that there is a scarcity of dollars, causing the currency to exchange for about N320/$ in the parallel market, while it goes for N197/$ in the official market.
BusinessDay findings show that these airlines now charge an average sum of $1,100 for a Lagos-US economy class return ticket.
Industry watchers say that the implication of this is that passengers who are unable to access forex at the official rate will be left with the option of paying for tickets in dollars using the elevated black market rates.
Other passengers who are unable to pay for tickets using elevated black markets may have to fly local carriers such as Arik to other countries.
BusinessDay’s findings show that some of the airlines’ booking and payment platforms, particularly, that of Delta Airlines and United Airlines’ could not be accessed as intending passengers could only pay directly in the airline’s offices with dollars or pay outside the shores of Nigeria.
“I have been trying to book online for a Lagos-US economy class return ticket through Delta Airline for the past two days but the site has not been responding. When I went to their office to complain, I was told that I can either pay in their office, using the US dollars or pay outside the shores of the country,” Abel Chidozie, a frequent traveler on the Lagos-US route told BusinessDay.
Chidozie explained that the rate of elevated black market is not a rate he can afford and the situation may leave him with no option than to travel using Arik Air.
Nogie Meggison, Chairman, Airline Operators of Nigeria told BusinessDay that this unhealthy development is driven by the biting dollar shortage and elevated black market rates, leaving foreign airlines facing losses on their routes and struggling to acquire foreign exchange for routine and scheduled maintenance.
“Passengers who often will not book Arik or Medview to travel outside the country, may be faced with no option but to travel using these airlines, since the local airlines still collect naira,” Meggison said.
Travel Management Companies (TMCs) were likewise irked by the development and report that passengers, who usually patronised them for their travel needs, called endlessly for assistance. For instance, passengers in Nigeria, who intended to travel to New York via Delta Air, made frantic efforts to make payment, but all to no avail.
Abiola Lawal, Managing Director of Ashton Dave Travels and Tours, said the situation portended serious crisis for the travel industry in Nigeria, adding that what was playing out would limit choices for travellers.
The situation, he said, was counterproductive for the sector, adding, “It is not good for all stakeholders across the value chain. It is not good for airlines and it gives the country a bad image. It affects our reputation as Nigerians.”
Lawal said that there is need for a stakeholders’ meeting on how to resolve the problem which has seriously affected them, culminating in a sharp drop in passengers for the carriers.
According to him, “This situation has a lot of implications for Nigeria and one that affects the value chain. When I look at the Global Distribution System (GDS), everything reads zero down. All the discounted fares have been taken off.”
He said no economy develops well where there is no free movement of people and services.
“It is not good when tickets are being restricted. This is a very strategic industry and we have no choice than to make it better,” he added.
Industry experts say the customers will have to bear the brunt, as airlines have increased fares to cushion declining sales and strains from the FX scarcity. They add that such a move could result in a further decline in demand from passengers, even as the status quo is clearly unsustainable.
As the dollar crunch bit harder, foreign airlines started by raising the naira cost of tickets. BussinessDay had reported a fortnight ago that British Airways, which had previously charged about N350,000 or less, for an economy class return ticket from Nigeria to London when the exchange rate was N150 to a dollar, progressed to charging N834,976.
Likewise, Virgin Atlantic, which previously charged below N300,000 for a Lagos – London economy class return ticket, moved to charging N801,796 while local carrier, Arik Air, charged N400,000 for the same destination.
British Airways and Virgin Atlantic which had previously charged below N500,000 for premium class return tickets from Nigeria to London, went up to N939,756, while Virgin Atlantic charged N903,006 .
The airlines hinted that the new policy on forex by Nigeria has hindered them from transferring their salaries to their respective home countries.
A growing challenge for international airlines operating in Nigeria is the repatriation of funds. Given Nigeria’s acute foreign exchange shortage, airlines have struggled to repatriate their sales proceeds to their home countries.
According to stakeholders, a weekly clearance plan for the blocked funds was put in place by the authorities.
This, they said, has had very limited impact on the backlog of funds trapped in the country.
Spanish Airline, Iberia Plc, said it would from May 12, 2016, halt flight operations into and out of Nigeria due to low passenger traffic it has been recording in the past few months.
The airline, in a letter dated April 19 with title: Re: suspension of operations, to its trade partners and signed by Kola Olayinka, its Regional commercial manager, West Africa, told the trade partners that though the decision was hard to take, it could no longer continue on the route due to low patronage.
Wole Shadare, an industry expert said passengers going to Spain will experience difficulty because there will be no direct flight to Spain anymore and that passengers would have to take a connecting flight, thereby requiring more money and time for the trip.
Although, Virgin Atlantic has not stopped flights into Nigeria, it has sacked all Nigerian crew. This is the second foreign airline in about one year that will be citing difficult times as reason for either restructuring or stopping operations.
Commenting on the development, John Ojikutu, a former airport commandant noted that the economic downturn, especially as it affects Nigeria, would surely tell on the operations of the airlines, foreign and local.
Ojikutu said as long as even bigger airlines are not breaking even at this time, smaller ones like Iberia would definitely have problems.
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