Connect with us

Business

Dollar Scarcity: Airlines Raise Fares by 100%

Published

on

Airlines in Nigeria

The lingering foreign exchange scarcity, which has made it difficult for foreign airlines to repatriate their ticket sales proceeds for several months, has forced the carriers to increase their fares by about 100 per cent, OLAWUNMI OJO writes

Foreign exchange risk is now a major component of airfares on Nigerian routes, the country managers of top foreign airlines have revealed.

Investigation by our correspondent revealed that the airlines operating on international routes in the country had increased airfares by as much as 100 per cent as a result of the development, Punch reported.

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 season.

The survey cuts across Nigeria-North America routes, Nigeria-South Africa route, and Nigeria-Europe routes. Airfares on the Lagos-London, Abuja-London, Lagos-New York, Lagos-Atlanta, Lagos-Houston, and Lagos-Johannesburg routes were examined.

Findings also showed that local airlines operating international flights, especially Arik Air and MedView Airlines, had increased their airfares.

For instance, 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.

Similarly, 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 render the same service at an average fare of N600,000, depending on the time of booking. This represents an increase of about 100 per cent.

South Africa Airways and Arik Air, which used to fly the Lagos-Johannesburg routes for between N100,000 and N120,000 for the economy class, now fly 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.

Operators link the increment in fares to the scarcity of foreign exchange to attend to the operational needs of the carriers and the erosion in the value of the ticket sales proceeds, which are now stuck in banks due to lack of forex to repatriate the funds.

Late last year, the new administration of President Muhammadu Buhari had unveiled a fiscal policy, through the Central Bank of Nigeria, restricting access to foreign exchange and funds transfer out of the country.

While this has had advantages for some sectors of the economy, foreign airline operators have complained of their inability to repatriate revenue to their operational bases as a result of the new policy.

An official of one the airlines told our correspondent that the carrier had close to N90bn as accumulated earnings in banks, which it had been unable to repatriate.

He said that the airline industry relied heavily on cash to meet its commitments, adding that it was sad that the government was not seeing things this way.

With huge airline revenue in the vaults of the banks, some of the operators nursed fears of being exposed to risks should the pressure on the naira lead to the devaluation of the currency, which could erode the value of the funds by about 35 per cent to 45 per cent.

Following the difficulty in repatriating earnings from Nigeria, some of the airlines initially began restricting cheap fares on the Nigerian routes in the last quarter of last year, leading to an indirect hike in fares.

At the time, the effect was felt more on second tier routes from Lagos-London-Atlanta, Lagos-London-New York, Lagos-London-Miami, Lagos-London-São Paulo, Lagos-London-Houston; or Lagos-Frankfurt-New York, Lagos-Frankfurt-Chicago, Lagos-Frankfurt-Los Angeles, and Lagos-Frankfurt-Shanghai.

Citing Nigeria’s slowing economy amid forex scarcity, some international airlines are now contemplating reducing flights to the country or operating smaller capacity aircraft as a short-term measure.

However, following complaints by the airlines, representatives of the International Air Transport Association are said to have pleaded with the CBN Governor, Godwin Emiefele, to intervene in the matter and make dollars available to them.

But the move has yet to yield any positive results.

The foreign airlines also reportedly met with the Minister of Transportation, Chibuike Amaechi, and urged him to look into their case.

A spokesperson for one of the airlines noted that the difficulty in repatriating revenues was affecting aircraft leases and fuelling, stating that the earnings were partly being used for fuel and renewing aircraft leases.

While the situation persists, the effect on air travellers and other businesses that depend so much on air travel has been immense.

A manager with a transport and logistic firm, Mr. Emmanuel Iruobe , said the company had incurred more costs than were provided for in the execution of most contracts this year.

Iruobe urged the government to look into the situation with a view to resolving it in the interest of Nigerians.

On their part, stakeholders in the travel industry under the aegis of the National Association of Nigeria Travel Agencies have faulted the astronomical cost of air tickets by the airlines, especially the foreign carriers.

Describing the situation where taxes that go to the airlines are higher than base fares as unacceptable, the group has petitioned the Federal Government, through the Ministry of Aviation, to caution the foreign airlines over the alleged sharp practices.

The Publicity Secretary, NANTA, Mrs. Ngozi Ngoka, opined that the cumulative effect of taxes and surcharges by airlines also generated a final price to the passenger that could be as much as double the advertised airfare for a short-haul flight.

Another stakeholder, who is the Chief Executive Officer, Gadshire Travels, Mr. Gbenga Adebayo, berated the airlines, describing the excuse of forex scarcity and multiple taxes given to increase fares as untenable.

According to him, the arbitrary increment and gap between what is charged in Nigeria and other African countries on the same routes are due to the failure of regulatory authorities to perform their duties.

CEO/Founder Investors King Ltd, a foreign exchange research analyst, contributing author on New York-based Talk Markets and Investing.com, with over a decade experience in the global financial markets.

Continue Reading
Comments

Company News

Ford Motor’s India Head Anurag Mehrotra Quits After Ford Stop Manufacturing Cars in India

Published

on

ford - Investors King

Ford Motor’s India head Anurag Mehrotra has quit the company to pursue other career opportunities, days after the United States’automaker said it would stop making cars in the Asian nation, taking a hit of $2 billion.

Mehrotra, according to his LinkedIn profile, has spent over a decade with Ford in India across multiple roles, including marketing, sales and most recently as president and managing director.

September 30 will be Mehrotra’s last day, a source with knowledge of the information told Reuters.

Mehrotra did not immediately respond to a request for comment.

Ford India said in its statement it has put its director of manufacturing, Balasundaram Radhakrishnan, in charge of overseeing its restructuring in the country.

Ford’s decision to stop making cars in India ends its more than two-decade long presence in a market it no longer sees as profitable. The move will affect around 4,000 employees, the company has said.

Ford is the fifth major automaker to cease vehicle manufacturing in India since 2017, following exits by General Motors and Harley Davidson from a market that is dominated by Asian rivals.

Despite being in India since the mid-1990s, Ford has less than two per cent share of the passenger vehicle market and was using about 20 per cent of its total production capacity of 440,000 cars a year across two plants.

Ford said earlier this month it plans to wind down production at its western India plant by the end of this year and at its southern India plant by the second quarter of next year.

Theannouncement has upset hundreds of its factory workers, some of whom protested the decision this week.

Continue Reading

Appointments

Veritas Kapital Assurance Appoints Mrs. Oyindamola Unuigbe as an Executive Director

Published

on

Veritas Kapital Assurance - Investors King

Veritas Kapital Assurance Plc, one of Nigeria’s leading insurance firms, on Monday announced the appointment of  Mrs. Oyindamola Unuigbe as an Executive Director of the Company.

The appointment of Mrs. Oyindamola Unuigbe as Executive Director, Operations is subject to the final approval from the National Insurance Commision (NAICOM), the company disclosed in a statement signed by Saratu Umar Garba, Company Secretary and Legal Adviser.

Oyindamola Profile

Oyindamola brings to bear over two decades of hands-on expertise in the insurance and financial services sectors. She combines experience in entrepreneurship, underwriting; reinsurance; portfolio management; product and business development; enterprise risk management and sales and marketing; acquired across leading international and local organizations.

Preceding her appointment as Executive Director at Veritas Kapital Assurance Plc, Oyindamola served as Head, Business Development, South wherein she was responsible for overseeing business procurement and total service delivery activities of branches in the Southern region of Nigeria.

Her over 27-year career includes working as an Accounts Manager with Brokerlink Inc.; one of Canada’s largest brokerage firms; Primerica Life Insurance Company, Alberta Canada; where she developed key competencies in the areas of processes and procedures that conform to the international practice of General and Life Insurance,
Standards and Regulatory Compliance requirements.

She started her career at the Lagos office of SCIB insurance brokers and subsequently worked at Citi Trust insurance brokers and the Nigeria Reinsurance Corporation where she served as a senior manager.

Oyindamola holds a Bachelor’s degree from the University of Ife, Nigeria. She is an Associate of both the Chartered Insurance Institute of London (ACII) and Nigeria (ACIIN) and is a recipient of various prestigious international certifications encompassing general insurance, life insurance and professional risk management.

Continue Reading

SMEs

Fidelity Bank To Develop SMEs Capacity in Non-oil Exports Sector

Published

on

Fidelity Bank SMEs Capacity-Investors King

In furtherance of its resolve to help Nigerian businesses build sustainable export capabilities, leading Nigerian lender, Fidelity Bank Plc, is set to host the 11th and 12th editions of its highly acclaimed Export Management Programme (EMP).

Launched in 2016, the EMP is targeted at preparing participants for real-time experiences in the international non-oil export markets and the broader export market at large. The session typically covers a wide range of topics including Export documentation, Selection and Implementation of Supply Chain Management for Exports, Application of Export Development Business Processes amongst others.

Speaking on the programme, the Managing Director, Fidelity Bank Plc, Mrs. Nneka Onyeali-Ikpe noted that, “As a leading supporter of small businesses, we introduced the EMP five years ago to bridge the knowledge gap in the export business locally and to help participants to compete effectively in the global export market. Given the success, we have recorded in the course of the programme and following the yearnings of potential participants, we decided to host an edition of the training in Kano for those who are unable to attend the session in Lagos.”

While EMP 11 is scheduled to hold at the Lagos Business School (LBS), Lekki, Lagos between 4 and 8 October 2021; EMP 12 would hold at a soon-to-be-announced venue in Kano State from 11 to 15 October 2021. The sessions would be facilitated by leading faculty from LBS, Nigerian Export Promotion Council (NEPC) staff as well as experts in financial management and exports.

Fidelity Bank has over the years demonstrated its resolve to grow the non-oil export side of the economy through strategic initiatives and partnerships. For instance, the bank provided over N32.7 billion in credits to businesses operating in strategic sectors including rice, dairy, poultry, oil palm and cocoa in 2019. The bank has also successfully leveraged strategic partnerships with the Central Bank of Nigeria (CBN) and Development Finance Institutions (DFIs) under various industry targeted intervention funding programmes to enhance access to credit for eligible players in the agribusiness and non-oil exports space with the aim of addressing food security gaps and enhancing foreign exchange earnings.

“The benefits of supporting the non-oil sector of the economy cannot be overemphasized given the immense benefits that it provides to the economy and the nation in terms of providing much needed foreign exchange investments, increasing our Gross Domestic Product (GDP) and employment generation. This informs our decision to host the EMP regularly and we enjoin interested entrepreneurs to take advantage of this initiative to take their business to the next level,” Onyeali-Ikpe explained.

To register for the event, kindly visit www.fidelitybank.ng

About Fidelity Bank Plc

Fidelity Bank is a full-fledged commercial bank operating in Nigeria, with about 6million customers who are serviced across its 250 business offices and various other digital banking channels. The bank has in recent times won accolades as the Best SME Friendly Bank, Best in Mobile Banking and the Most Improved Corporate/Investment Bank among several industry awards and recognitions. The bank was also ranked the 4th Best Bank in the Retail Banking Segment in the 2017 Banking Industry Satisfaction Survey conducted by KPMG.

Focused on select niche corporate banking sectors as well as Micro Small and Medium Enterprises (MSMEs), Fidelity Bank is rapidly implementing a digital-based retail banking strategy which has resulted in an exponential growth in savings deposits over the last 3 years and a corresponding surge in customer enrollment on the bank’s flagship mobile/internet banking products.

Continue Reading




Advertisement
Advertisement
Advertisement

Trending