Airfares, particularly on the Nigerian routes, is expected to increase, following the decision of International Air Transport Association, IATA, to peg a $1 to N770.
Currently, international airlines have been unable to repatriate their ticket sales back to their countries in the past one year, a development that may be linked to the high airfares on Nigerian routes. But on the average, a six-hour flight on economy ticket jumped from barely N400,000 in 2021 to about N1.2 million in 2022 and 2023.
It would be recalled that in 2022, a 6-hour economy ticket skyrocketed to about N1.2 million, from the previous N400,000 in 2021.
Similarly, business class ticket rose to between N4 million and N6 million during the same period, depending on the airline and time of booking.
Following this new benchmark set on Wednesda, a N1.2 million economy ticket may witness an increase to N2 million and above, while for the business class, the fares may rise to N7 million or more.
As at 2021, a dollar was being accessed at the official rate of N444 for one dollar by airlines. But it jumped to over N577 to a dollar in 2022.
With the new regime and the harmonisation of exchange rate by the new administration, a dollar was sold at the black market on Tuesday at N702.
A source close to one of the foreign airlines operating into Nigeria said that the new regime of N770 to one dollar would kickstart on Wednesday.
According to the report, IATA had already informed its member airlines of the new benchmark. The source said: “Please, be informed that the IATA Rate of Exchange (IRoE) will increase from tomorrow (Wednesday),” it said.
IATA represents about 300 airlines in 120 countries with about 25 of its members operating direct commercial and cargo flights into Nigeria.
Earlier this month during its 79th Annual General Meeting (AGM) held in Istanbul, Turkey, the organisation had raised the alarm that its member airlines’ blocked fund in Nigeria had increased to $818.2 million as at end of April from $744 million in March.
The association said that the figure put Nigeria as the country with the most trapped funds in the world. A statement by Willie Walsh, IATA’s Director-General put the total trapped funds in the world at $2.27 billion as at April, 2023.
Apart from Nigeria, other countries where foreign airlines’ funds are currently trapped Bangladesh; $214.1 million, Algeria; $196.3 million, Pakistan; $188.2 million and Lebanon; $141.2 million.
IATA maintained that the top five countries account for 68% of blocked funds around the globe.