Airfares to destinations such as Europe, North America and Middle East have soared as international airlines adopted the new exchange rate of N702 per dollar after the Central Bank of Nigeria, CBN, floated the currency last week.
As part of its moves to end multiple exchange rates that have left to the exit of several investors from Nigeria, the CBN last week introduced new forex guidelines aimed at unifying the nation’s exchange rate.
Among others things, the CBN said all forex windows should be collapsed into the Investors &Exporters Window.
About 24 hours after the decision, the naira traded at 664.04/dollar at the I&E window. Two days later, the local currency closed at 702.19/dollar at the close of business on Thursday.
Following the development, the exchange rate adopted by the International Air Transport Association, IATA, for ticket pricing in Nigeria rose to N702/dollar.
In previous months, the exchange rate adopted by international airlines for ticket pricing had risen consecutively from about N445/dollar to about N660/dollar about two weeks ago.
However, the latest move by the CBN has made IATA to adopt the exchange rate on the I&E Window. Prior to the latest development, IATA used to adopt NAFEX rate published on the FMDQ Exchange.
The development came as summer travel season began a week ago with ticket prices rising by 25 percent.
Travel operators told PUNCH correspondents that ticket prices had gone up significantly with several operators raising concerns the hike in the exchange rate could mar the summer travel plans of many Nigerians.
The President of the National Association of Travel Agents of Nigeria, Susan Akporiaye expressed disappointment lamenting that passengers would suffer the most from the increment.
“Fares will definitely increase and passengers have to pay more. As a result, Passengers won’t travel as much as they should and this will affect travel agents”, she said.
The Chief Executive Officer, Corporate Travels, Mr. Akande Diran said: “Around mid-June, ticket prices always go up. We call it peak period. This is so because many people often go on vacation during this period. Apart from this, the rising exchange rate will lead to higher ticket prices”.
The development came amid difficulty in repatriating millions of dollars of ticket sale proceeds by foreign airlines in Nigeria.
However, experts believe the latest move by the CBN will ease the process.
Regional Vice President, Africa and Middle East, IATA, Kamil Alawadhi, at the IATA Annual General Meeting held in Istanbul two weeks ago said that the trapped funds had risen to $812m as of April 2023.