Travelling by air from Nigeria to other parts of the world has become significantly more expensive in recent weeks as the International Air Transport Association (IATA) has approved an exchange rate of N634/dollar for flight tickets sold in Nigeria.
This represents a 37.5% increase over the official exchange rate set by the Central Bank of Nigeria (CBN), which is pegged at N461.06/dollar.
This latest increase in the IATA exchange rate has led to a corresponding rise in airfares on the Nigerian route, which is set to worsen the financial burden on travellers ahead of the peak summer travel season.
It has also compounded the existing problem of foreign airlines being unable to repatriate their ticket sale proceeds out of Nigeria, due to a shortage of dollars from the CBN.
To mitigate the impact of blocked funds, international airlines in Nigeria have reportedly closed their low-price ticket inventory, further pushing up airfares.
A few months ago, foreign airlines sold tickets at N444/dollar in line with the CBN official exchange rate. However, in recent weeks, the IATA has reviewed the exchange rate for ticket sale in Nigeria to N462/dollar, N551/dollar, N582/dollar, N610/dollar and currently N634/dollar, even though the CBN official exchange rate has remained around N461/dollar.
While IATA officials justified the exchange rate increases, saying they were in line with the spot rates the CBN has been selling foreign exchange to foreign airlines in Nigeria for the repatriation of their ticket sale proceeds, travellers are likely to feel the pinch of the rising airfares.
Despite the significant increases in the IATA exchange rate, the amount of trapped funds in Nigeria has yet to reduce, according to the report.
As the summer travel season approaches, it remains to be seen how the situation will evolve and whether alternative solutions will emerge to address the challenges facing the aviation industry in Nigeria.
