Foreign Airlines Laments Over President Buhari’s FOREX Policies

Many have always asked: why is it difficult or almost impossible for economic principles that work in other places to work or be applicable in Nigeria? Once prices of goods or services go up, they never come down. Market forces hardly apply or are not allowed to apply.

President Muhammadu Buhari who came into power in May 2015 has refused to devalue the Naira after a sharp drop in foreign earnings due to the global decline of oil price. This has led to a wide margin between the official exchange rates and the parallel market rates. Photo Credit:

Despite fall in the price of crude oil which consequently led to the fall of the price of aviation fuel in the international market, foreign airlines who have always used the high cost of aviation fuel as excuse to charge high fares, continue to charge Nigerians going to Europe, or any destination, astronomical fares compared to what these same airlines charge travelers in other parts of the world.

What reasons do the foreign airlines have for these arbitrary charges? One of the reasons given by the representatives and spokespersons of these foreign airlines when interviewed by Saturday Vanguard is the current lingering foreign exchange scarcity, which they claimed has made it difficult for them to repatriate their ticket sales proceeds for several months. The airlines claimed that the operating environment in Nigeria is now very harsh and this is making them take some harsh decisions.

It will be recalled that two weeks ago, the National Union of Air Transport Employees ,NUATE, revealed that foreign airlines planned to sack about 2,000 Nigerian workers due to what they claimed was their inability to transfer their earnings to their respective home countries to meet operational costs in accordance with international rules because of new Central Bank of Nigeria , CBN, policy on forex and fund transfer.

In a letter addressed to the Minister of State for Aviation, Senator Hadi Sirika and made available to newsmen, Acting General Secretary of NUATE, Comrade Olayinka Abioye said the plan has destabilized the affected workers, adding that the Federal Government should wade in and prevent the huge job loss.

Murtala Muhammed International Airport (MMIA) is Nigeria's busiest airport. Photo Credit:

Murtala Muhammed International Airport (MMIA) is Nigeria’s busiest airport. Photo Credit:

According to Abioye, “The reason being adduced for this danger is that their earnings in the past year are under lock with the Central Bank of Nigeria, CBN , as they are unable to transfer these earnings to their respective home countries to meet operational costs in accordance with international rules.

“Following concerns raised recently by leaders of these workers and other stakeholders and in appreciation of the good intent of the government’s fiscal policy, we humbly make this clarion call for your (Minister’s) intervention to grant foreign airlines concession to repatriate their proceeds to their home countries,” he said. The foreign airlines said there is now “ Foreign exchange risk” and this is now a major component in determining airfares on Nigerian routes.

Investigation by Saturday Vanguard revealed that the airlines operating on international routes in the country have increased airfares by as much as 100 per cent as a result of this development.

They said government FOREX policies had become harsh and that they found it difficult to transfer their funds to their headquarters. A survey of all the major Nigerian routes flown by the foreign airlines in the country showed that the cost of return tickets had been increased by between 80 per cent and 120 per cent of the previous fares, depending on the carrier, time of booking and the passengers volume.

Subject to last minute changes Airfares on the Lagos-London and Abuja-London routes now cost an average of N380,000 for the economy class seat, as against the average of N200,000 a year ago on the British Airways and Virgin Atlantic Airways. This represents an increase of 111 per cent. Also, on Air France, an economic ticket on the Lagos/Abuja-London routes now goes for about N360,000, while Lufthansa German Airlines charges N380,000. These represent an increase of 80 per cent and 90 per cent, respectively, when compared with an average fare of N200,000 on the routes a year ago.

A Business Class ticket now goes for as high as N3m as against the N1.5m a year ago on the Lagos-London route. On the Lagos-Atlanta and Lagos-Houston routes, Delta Airlines and United Airlines, which used to fly Economy Class passengers for between N270,000 and N330,000 some 12 months ago, now charge an average fare of N600,000, depending on the time of booking.

South Africa Airways which used to fly the Lagos-Johannesburg routes for between N100,000 and N120,000 for the economy class, now flies the route for between N180,000 and N220,000, depending on the time of booking and the season. The Lagos-Paris route, which used to go for N180,000 on the average, now goes for around N400,000. This represents an increase of 120 per cent.

Most of the representatives and spokespersons of these foreign airlines refused to have their names in print as they claimed that airfares and operational polices are determined at their various headquarters abroad and they have to seek clearance from their head offices to make statements on policy matters.

Nigerian carriers like Arik Air and Medview Air who ply international routes have also been accused of increasing airfare. But Arik Air Communication Manager, Mr Adebanji Ola said “Allegations making the rounds that Arik Air has increased fares on the London Heathrow, New York JFK and Johannesburg routes are untrue.

“We wish to make it clear that we have not increased fares on any of our routes (international, regional or domestic) in the recent past. Also, we charge our fares in Naira at the Central Bank of Nigeria (CBN) official rate. “

Source: Lawani Mikairu for Vanguard Newspapers

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