June 21, 2023 – Strong indications have emerged suggesting that international airfares, particularly on Nigerian routes, may experience a significant surge once again. This development follows the International Air Transport Association (IATA) setting the exchange rate at $1 to N770 on Wednesday.
The inability of international airlines to repatriate their ticket sales for over a year has already contributed to the exorbitant airfares on Nigerian routes.
On average, economy tickets for a six-hour flight skyrocketed from approximately N400,000 in 2021 to about N1.2 million in 2022 and 2023.
Similarly, business class tickets have increased to a range between N4 million and N6 million during the same period, depending on the airline and booking time.
With the new exchange rate benchmark, a N1.2 million economy ticket may rise to N2 million and beyond. As for business class, fares could reach N7 million or more.
In 2021, airlines accessed a dollar at the official rate of N444. However, it surged to over N577 to a dollar in 2022.
Under the new regime and the harmonization of exchange rates by the new administration, the black market sold a dollar at N702 on Tuesday.
A reliable source from one of the foreign airlines operating in Nigeria revealed that the new rate of N770 to a dollar would take effect today.
The source disclosed that IATA had already informed its member airlines about the new benchmark, stating, “Please be informed that the IATA Rate of Exchange (IRoE) will increase from tomorrow (today).”
IATA represents approximately 300 airlines in 120 countries, with about 25 member airlines operating direct commercial and cargo flights to Nigeria.
During its 79th Annual General Meeting (AGM) held in Istanbul, Turkey, earlier this month, the organization raised concerns about its member airlines’ blocked funds in Nigeria, which had surged to $818.2 million by the end of April, up from $744 million in March.
According to a statement by Willie Walsh, IATA’s Director-General, Nigeria has the highest amount of trapped funds in the world, with the total global figure reaching $2.27 billion as of April 2023.