Just a week after the naira was “floated” by the CBN, and commercial banks were instructed to trade foreign money at market rates, the price of an air ticket has soared.
According to research by The PUNCH, airfares on Nigerian flights to a variety of locations in Europe, North America, the Middle East, and other foreign cities have surged as the exchange rate for ticket prices has reached N702/$.
The CBN last week released new forex guidelines aimed at unifying the country’s exchange rate as part of its efforts to stop different exchange rates that have caused some investors to leave Nigeria.
The CBN recommended collapsing all FX windows into the Investors and Exporters Window, among other things.
The naira traded at 664.04/dollar at the I&E window around 24 hours following the verdict. Two days later, on Thursday at the close of business, the local currency was valued at 702.19 per dollar.
Following the event, The Punch’s findings on Monday indicated that the International Air Transport Association’s accepted exchange rate for ticket prices in Nigeria increased to N702/dollar.
The exchange rate that international airlines used to determine ticket prices increased steadily in recent months, rising from roughly N445 to N660 about two weeks ago.
The CBN’s most recent action, though, forced IATA to use the exchange rate displayed on the I&E Window.
IATA used to adopt NAFEX rates issued on the FMDQ Exchange prior to the most recent development.
The change occurred a week after the start of the summer travel season, when costs for tickets increased by 25%.
The cost of tickets has increased dramatically, according to travel agents, who also expressed concern that the increase in the exchange rate might thwart many Nigerians’ summer travel plans.
When responding to the present event, Susan Akporiaye, President of the National Association of Travel Agents of Nigeria, expressed dismay and bemoaned the fact that passengers would suffer the most from the increase.
“Fares will undoubtedly rise, and passengers will be required to pay more. Passengers won’t travel as frequently as they should as a result, which will have an impact on travel agencies, she said.
In response, Mr. Akande Diran, the Chief Executive Officer of Corporate Travels, added, “Ticket costs always increase around the middle of June. It is known as the “peak period. This is true because a lot of people take vacations around this time. In addition, rising currency rates will increase the cost of tickets.
The development happened when foreign airlines in Nigeria were having trouble returning millions of dollars in ticket sales proceeds.
However, experts think the CBN’s most recent action will streamline the procedure.
The trapped cash has increased to $812 million as of April 2023, according to Kamil Alawadhi, regional vice president for Africa and the Middle East at IATA. He addressed the IATA Annual General Meeting two weeks ago in Istanbul.