Air fares may rise as Airlines’ exchange rate hits N610/$

Barely a month after the airlines’ foreign exchange rate rose from N462 to N551, the rate has further skyrocketed fuelling fears of increase in international air fares. Daily Trust gathered that the Airlines’ rate of exchange (ROE) changed from 582.00 to N610.00 with effect from Wednesday. Findings by our correspondent revealed that the sharp increase […]

Barely a month after the airlines’ foreign exchange rate rose from N462 to N551, the rate has further skyrocketed fuelling fears of increase in international air fares.

Daily Trust gathered that the Airlines’ rate of exchange (ROE) changed from 582.00 to N610.00 with effect from Wednesday.

Findings by our correspondent revealed that the sharp increase is part of the fall-out of the mounting foreign airlines’ trapped funds which recently crossed over $700m.

From March 22 when the rate increased from N460 to N551/$, the rate has increased twice in a month.
Saudi-bound widower, divorcee arrested at Lagos airport with 14.4kg cocaine

Aviation unions vow total airports shutdown after 7 days

And on Wednesday, it further increased to N610 to a dollar which implies that tickets would be issued at the rate of N610 to a dollar.

Daily Trust learnt that the new exchange rate used for aviation related businesses especially flight booking aligns with the investors’ and exporters’ (I&E) foreign exchange windows that allow for FX trades to be made at exchange rates determined based on prevailing market circumstances.

A travel agent who spoke to our correspondent said the airlines already communicated the development to their trade partners.

“I got a mail from one of the airlines that as from today, flight reservations should be made using the new rate,” the trade partner said pleading not to be named.

The implication is that many classes of tickets would be seriously affected as airlines which recently reinstated some lower inventories may remove them again.

Aviation consultant, Babatunde Adeniji in a chat with our correspondent said the rate changes frequently because of the trapped funds.

“It changes up and down but doesn’t impact the block funds situation. What it was meant to achieve is that the rate at which you sold should be a safe rate for you. It is like a floating exchange rate. But the same CBN that is fixing exchange rate, when it is time to make remittances, you might not get the same rate.

“The big problem with blocked funds is that when I am ready to get my money, the only rate available to me is the black market rate.”

President of National Association of Nigerian Travel Agencies (NANTA), Mrs. Susan Akporiaye, who also confirmed the development said, “The implication is that Air fares would go up again. A fare that was N1.5m yesterday is now N1.7m and report reaching us from IATA indicated that the Airlines are trying to match the rate that CBN is selling to them. CBN is not selling to them at official rate.”