ABUJA, Nigeria – International passengers might have to dig deeper into their pockets to pay for airfares due to the rising foreign exchange rates of airlines.
The airlines’ Rate of Exchange, RoE, has increased from N582 per dollar to N610 per dollar, which marks the second rise in two months.
In March 2023, the rate increased from N460/$ to N551/$, and in April, it rose to N610/$. The foreign airlines’ trapped funds have surpassed $700 million, causing the RoE to rise.
According to Susan Akporiaye, the President of the National Association of Nigerian Travel Agencies (NANTA), the increase in RoE would lead to another hike in airfares.
“Airfare that was N1.5 million on Wednesday, April 26, 2023, is now N1.7 million, and a 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 the official rate,” she said.
An anonymous travel agent also confirmed that the airlines had notified their trade partners about the development.
“I received an email from one of the airlines that flight reservations should be made using the new rate,” the agent said. “The implication is that many classes of tickets would be seriously affected as airlines which recently reinstated some lower inventories may remove them again.”
The frequent fluctuations in the exchange rate are due to the trapped funds, according to Babatunde Adeniji, an aviation consultant.
“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,” he said.
The rise in foreign exchange rates might impact international travel as airlines struggle with trapped funds. It remains to be seen how airlines will adjust to the new rates and the long-term impact on airfare costs.
