Foreign airlines set to restore fare categories

The withdrawal of categories of fares was what triggered what people referred to as increase in airfares, international airlines operating to Nigeria have said.

The carriers’ top officials, who spoke to woleshadare.net but craved anonymity, however, stated that the fluctuating naira exchange rate against the dollars made them to restrict fares to just one category, just as they refuted insinuations that the firms increased airfares.

They noted that only a clear policy on foreign exchange would help to solve the problem. They lauded the Central Bank of Nigeria (CBN)’s flexible exchange rate policy that was handed down by the apex bank last Tuesday.

A flexible exchange-rate system is a monetary system that allows the exchange rate to be determined by the forces of supply and demand.

They stated that devaluation of the nation’s currency, the naira, would have been the solution to the problems airlines operating to Nigeria are currently facing, adding that it would lead to reduction of what many considered to be astronomical rise in air fares.

The situation, they reiterated, would lead to restoration of categories or segments of fares foreign carriers withdrew as a result on uncertainty in foreign exchange policy of the Nigerian government. They insisted that “devaluation of naira against the United States dollars will bring down and stabilise air fare prices. Investors are holding on to their funds.

Once it is done, the country would witness injection of funds into the economy. We did not increase air fares. What we did was to withdraw some segments of fares and restrict to only one fare category. “For instance, we had over 10 categories of fares.

But when we started having issues pertaining to exchange rate and delay in repatriating our funds, we now removed all other segments. This is what many airlines did. But they will be restored once the situation normalises,” the sources added.

Foreign airlines had, since the beginning of the year, deployed smaller airplanes on the country’s route due to low capacity occasioned by shrinking seat capacity triggered by the tough economic reality.

For instance, British Airways, which has operated the B747 to Nigeria for over three decades, has since last February, operated the smaller B777. Some others, such as Air France, KLM and others have followed suit.

The uncertainty in the foreign exchange policy of government coupled with the inability of the foreign airlines to repatriate their $575 million trapped in the country forced operators to cancel over 10 categories of air fares.

Airlines have, for months, struggled to repatriate revenue from ticket sales due to delays in both Nigeria and the South American nation’s 12-yearold exchange controls, with trapped cash peaking at around $4.1 billion over the summer.

As a result of the problem, international airlines in Nigeria resorted to selling their tickets in dollars because of their inability to access their monies trapped in the CBN. International airlines normally sell their tickets in naira and then approach the CBN for the dollar equivalent to take back to their respective countries.

However, the banking watchdog has, in recent times, been reluctant to give the airlines the dollar equivalent of their naira ticket sales at the official rate, as it seeks to conserve its fast dwindling external reserves for only what it considers essential imports or payments by Nigerians.

The carriers were said to offer one single category of fares, which did not give passengers the option of cheap fares. The airline chiefs said foreign airlines never increased fares, explaining that what happened was the taken off of categories of fares, adding that what was published in the media was erroneous.

Before now, these airlines made fares flexible with intending passengers choosing different categories of fares that suit them. For instance, two people travelling on the same economy class could have different fares, depending on the condition attached to the ticket. The difference could be as high as 40 per cent, depending on the time of booking and duration of stay.