Yuletide: Passengers, Stakeholders In A Fix Over Skyrocketing Int’l Airfares - DAILY TRUST
NOVEMBER 19, 2022
Ahead of the Christmas and New Year festivities, hard times await travellers over the skyrocketing airfares and the depleting flight...
FILE PHOTO: Nigerians at airport
Ahead of the Christmas and New Year festivities, hard times await travellers over the skyrocketing airfares and the depleting flight options, Daily Trust reports.
Experts have predicted tougher times on not only the international front but the domestic routes as the holiday season inches closer following the protracted crisis in the aviation sector, which has contributed to skyrocketing airfares.
Despite recent efforts by the Central Bank of Nigeria (CBN) to pay part of the trapped funds of foreign airlines, findings by our correspondent revealed that the funds belonging to the airlines are still on the high side, and this is partly responsible for the high cost of flight tickets.
Our checks revealed that the airlines’ trapped fund is now estimated to amount to $800million, putting pressure on many airlines.
Emirates Airlines recently suspended flights to Nigeria indefinitely, citing the difficulty in repatriating funds from ticket sales.
In a statement, the airline noted that it was earlier encouraged by the CBN’s response and assurance that the issue would be swiftly resolved with the subsequent clearance of the remaining funds.
It stated, “However, Emirates is yet to receive an allocation of our blocked funds to be repatriated. Without the timely repatriation of the funds and a mechanism in place to ensure that future repatriation of Emirates’ funds do not accumulate in any way, the backlog will continue to grow and we simply cannot meet our operational costs nor maintain the commercial viability of our operations in Nigeria.
“We have officially communicated our position and attended multiple hearings with the Nigerian government. And we have made our proposed approach clear to alleviate this untenable situation, including a plan for the progressive release of our funds.
“This included the repatriation and receipt of at least 80 per cent of our remaining blocked funds by the end of October 2022, in addition to providing a guaranteed mechanism to avoid future repatriation accumulation challenges and delays.
“Under these extraordinary circumstances, Emirates had no option but to suspend flights to and from Nigeria from October 29, 2022, to mitigate against further losses moving forward.”
Our correspondent reliably gathered that Emirates got 50 per cent of the first tranche of the blocked funds, which is about $45million, many of the airlines did not get up to that. In addition, Emirates was said to be worried about the continued accumulation of the funds, hence the decision to suspend flights.
Dubai visa ban
While the Emirates blamed the suspension of flights on the trapped funds, the visa ban on Nigerians by the United Arab Emirates (UAE) authorities also resulted in ban as the load factor on the Dubai route has been shrinking. Nigeria’s airline, Air Peace, also said it would stop flights by next week, November 22, over the same visa ban as there are few or no passengers to carry since the UAE is not issuing visas to Nigerians.
Passengers explore alternatives amidst high fares
With Dubai, one of the most lucrative routes and most frequently visited countries by Nigerians out of the calculation, many passengers are now exploring alternatives amidst high fares.
London, for instance, has always been a regular destination for Nigerians for holidays, business, medical tourism, and education, among others. But many stakeholders, including travel agents and passengers who spoke with our correspondent, said the airfares were not friendly.
A check by our correspondent also revealed that many airlines have not released lower inventories on their websites as fares are still extremely high.
For instance, British Airways’ fare for a one-way Lagos-London flight has not changed from $2,698 to $2,777 for an economy ticket which was the price months ago.
With the price advertised in dollars on its website, it implies a passenger would pay N2.1m at the parallel market rate of N790 to a dollar as of Friday for a one-way flight to London.
A frequent traveller who spoke with our correspondent said, “The airfare is still crazy now, and I can tell you that except it becomes extremely necessary, I don’t think it makes any economic sense to spend millions of naira to travel for holidays.”
“We have to wait till when there is an inflow in forex, which lies majorly with the sale of our crude oil. When you are dealing with the foreign currency you cannot say this is when it is going to stop, except the government would go and borrow in dollars, and specifically for the airlines. That is the only way this thing can go back to normal.”
She said the cheapest fares were still not available on most of the airlines. She disclosed that only British Airways had tried to be flexible, but it is still not like before.
“The cheapest ones are still not back, but there are more options and cheaper ones now on the BA, but some others have not shifted grounds at all.
“Turkish Airlines, Lufthansa, Air France are still selling their highest fares. Of course, Emirates, as usual, has left. People are not even asking for Emirates now because of the uncertainty. You will go and ask for Emirates and they will stop it and everybody will be back to square one, looking for refunds and trying to buy another ticket. They have stopped again,” she added.
She said many people were not travelling out for the yuletide except those coming to Nigeria, who would have to book in the currency of the originating countries.
For Emirates, she advised many travellers to explore African countries or other Arab countries with little or no visa restrictions.
She said, “Normally, for the yuletide period, people really don’t travel out. It is more of Nigerians coming home. The only one that makes Nigerians travel is the UAE, Dubai because Nigerians prefer to do Christmas in Dubai and come back, but Dubai has said we should not come. So everybody will spend Christmas in their village.
“Their leaving or staying doesn’t make any difference because the destinations they go to, other airlines also go to those destinations. It is not an issue of Emirates not going to Dubai, it is an issue of the UAE not allowing Nigerians to come in. Without the visa, you can’t go and you cannot even use any other airline. If you notice, Air Peace has stopped because there is nobody to carry again.
“The only people that can go to the UAE now are those that do not require visa; they have their residence permits and most airlines would start shutting down their Dubai route.”
More airlines may stop flights over trapped funds – AFARN
He urged the government to sit with the airlines and devise a systematic method of defraying the trapped funds.
“The government should sit down with foreign airlines and look at ways to make sure that this problem is addressed. They should come up with a systematic way to make sure that they get their trapped funds. If it is monthly, quarterly, they should design a way out because it grows every day,” he added.
An aviation analyst and Director of Research and Strategy, Zenith Travels, Mr Olumide Ohunayo, said while there was some level of stability on the domestic market, international fares remained high owing to forex crisis.
He said the solution did not lie only on settling the funds belonging to foreign airlines, local carriers must also strive to increase capacity in order to be able to partake in the international market, adding, “Our airlines need to come out of their shelf. We need to stop fighting each other and cooperate to strengthen our flag carriers to participate in the international front.
“On the domestic front, there is relief for passengers because we have increased capacity, ValueJet came on board, Dana has returned. Again, the dollar is going down again. So, there is a bit of stability, aviation fuel has also gone down in price. So there is a bit of stability on the domestic route.
“But on the international front, we still lack capacity and our inability to commit ourselves to fund remittance is affecting airlines. Emirates has pulled out and the ones available are yet to release lower fares. That means the yuletide period would be a tight one for our passengers. Fares would be high and we are sure that most passengers now would have to start buying tickets outside Nigeria as naira tickets are not available and the ones available are also very high.
“The solution is not just remitting this fund, it is also increasing capacity, and the way to increase capacity is for Nigerian airlines to participate.”