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ECONOMIC CRUNCH: MANY Nigerians Shun Summer Holiday
- Travel Agencies Close Shops
- We’ve Cancelled New York Trip –Family
The economic situation in the country has undoubtedly taken a toll on summer travel following the raise in air tickets. While some have postponed their trips, others have outright cancelled theirs until when the situation improves.
A frequent traveller, Adeyinka Johnson, blamed himself for making his booking rather too late, saying he left it too late. He stated that he had always taken his family of four on summer holiday every year for the past five years.
Johnson disclosed that he would have got relatively lower fares if he had bought tickets for his family before the flexible foreign exchange policy of the Central Bank of Nigeria. His words: “I am finding it extremely difficult to take my family to London for our summer holiday.
This has become a ritual of some sort for us. I will still see what I can do because the family looks forward to this every year.” Johnson, who is a medical doctor, noted that the twin factor of devaluation of naira coupled with summer compounded the problem for travellers but noted that air fares would drop immediately after summer, stressing that the cost would not be as high as it is now, considering that summer is peak period for air travel.
Another traveller, Chigozie Okereke, who spoke to Saturday Telegraph said he had already cancelled his trip to New York due to high cost of air ticket.
He said it was time to start exploring other exotic destinations in Africa, adding that he has told his wife and two children that their vacation would be in the Gambia.
He stated that the beauty of it is for people to begin to prioritise in the face of dwindling revenue and to be creative at the same time. It was not a tale of cutting down on the number of trips, there are people who said that the hike in air ticket has made them to forgo the idea of of a summer holiday.
Jide Omotunde said he had to cancel his trip to Dubai until situation improves, hinting that he had gone to the airport to buy a return ticket to Dubai only to be told that the fare had gone up by over 50 per cent.
“If I pay N450, 000 to travel, how much do I need to pay for a hotel accommodation, and other things I need to buy. I will run out of money. I planned to travel with my wife, but we decided that it was not worth the waste of resources just for two weeks holiday.
Thank God my wife understands the situation.” He however promised to still visit Dubai with his family when summer is over, saying air fare would have dropped by then.
For Isibor Okunbor, his experience was more pathetic considering that he had made a reservation with his travel agent at a cost of N288, 500 only to cancel the booking but realised that the same ticket had gone up to N498, 600 ticket to Manchester.
He regretted that he would have paid for the same tickets. He disclosed that he has cancelled the trip and would no longer be embarking on the course.
Omotunde said there are many people that cancelled their trips because of the astronomical increase in the price of air tickets.
He said a family of four that is very close to him decided that they had to put off their travel plans because of the situation, stressing that the huge amount that would go into ‘enjoyment trip’ is channeled into a more viable venture.
Two factors such as depreciation of local currency against the United States dollars and the rush for summer holiday when there is a huge demand for air travel have pushed air fares up by between 70 per cent and 100 per cent.
A dollar now exchanges for N284. 25 For long, the naira has been pegged at $ 1 to N197. Recently, the Nigerian economy had been hit by unprecedented financial instability. First was the falling oil price which resulted in reduced government income.
The airline fares are quoted in US dollars and Nigerians pay the equivalent naira at the previous exchange rate of N197. After the devaluation, the payment is now calculated at an exchange rate of N284.25. That is an enormous 45 per cent increase and the consequence is a huge reduction in travellers as most people cannot afford the fare.
The most visible strategy, and the one most Nigerians and the international community had proposed to ensure a relief in this economic hardship, is to devalue the naira. After about one week notification, the Central bank of Nigeria (CBN) eventually approved a method of currency system known as floating currency.
The naira-dollar has now been floated, and the trading rate is currently determined by demand and supply. In simple terms, the new exchange rate is now $1 to N255 interbank rates and the official rate, which is based on demand-supply, is currently set at N284.25/285.
The aftermath has been very tough for people with ambitions to travel for either business or pleasure. Many areas of travel have been affected starting from the most obvious which is the astronomical increase in flight ticket.
The situation has also led to a declined air traffic following the withdrawal of airlines and the cut down of capacity on the lucrative Nigerian routes by foreign airlines.
The implication of this situation is a reduction in the revenue expected to go to agencies like the Federal Airports Authority of Nigeria (FAAN), the Nigerian Civil Aviation Authority (NCAA) and the Nigerian Airspace Management Agency (NAMA) and by extension other agencies.
Aside that, it is predicted that the development could have adverse effect on the contribution of aviation to the nation’s Gross Domestic Product (GDP), which before now was put at four per cent but which could reduce to just two per cent.
National President of National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard, recently noted the high fares by both foreign and local carriers.This, according to him, has affected air travel and has had adverse effects on revenue that should accrue to government.
Bernard disclosed that the exit of Iberia and United has created a vacuum which he regretted that Nigerian carriers like Arik and Medview are not capitalising on by also raising their fares astronomically. He noted that the policy of the government on exchange is really hurting and has forced a lot of travel agencies to close shop.
While Spanish carrier, Iberia and American airline, United, have both departed Nigeria as a result of poor patronage and other reasons, British Airways has reduced capacity on the Nigerian route. It has deployed a relatively smaller airplane-B777 while taking off its super jumbo B747-400 it operated to Lagos for more than three decades. The B747 is a 400 capacity aircraft while the B777 has capacity for 250 passengers depending on the configuration.
On July 1, Emirates, the United Arab Emirate (UAE) flagship carrier reduced its frequencies to Lagos from two daily flights to one. The foreign carriers cited reasons of dwindling passengers, difficulty in repatriation of their trapped funds in Nigeria, among others as reasons for their decisions.
To the dismay of travellers and travel agents, the mega carrier, Emirates, closed reservation on one of its two daily Dubai – Lagos services, saying the afternoon flight EK781/782 would no longer be available for reservation.
Also, reservation and ticketing officials at the airline’s office located inside the international wing of Murtala Mohammed International Airport (MMIA) confirmed the development to one of our correspondents.
A check on the airline’s booking page showed that only one daily flight is now available from Lagos to Dubai. To worsen the matter, passengers have to now pay more booking for Dubai flights on Emirate as some of the cheap rates hitherto displayed on the website have been cancelled.
A senior official at the airline’s office at the airport confirmed to woleshadare.net that the decision had been communicated to them that beginning from July 1, the flight would be reduced to one per day. The official who asked not to be named because “I was not authorised to comment on the issue” simply said: “It is due to the nation’s economy. In fact, you can’t even get cheap flights again; you need a minimum of N400,000 to purchase Emirates ticket.”
However, the NANTA president, has said in order for the carriers to maximise profit, the few that offered to give travel agents commission have withdrawn them.
He cited the case of Etihad, which wrote to them that they are now coming up with zero commission, to recoup what they might have lost to foreign exchange crisis.
According to Bernard, the zero commission policy was adopted as a result of the high cost of doing business and change in operational environment.
As a result, airlines have commenced full ticket sales on their websites, forcing many travel agencies to repackage the ticketing business.”
The managing director of Soltan Tours, Mrs. Victoria Soluade, points to the volatile nature and high rate of exchange for naira to USD.
She also mentioned inconsistent CBN policies regarding bank operations as it concerns foreign exchange in Nigeria, which, according to her, has adversely affected sales of outbound summer holiday packages. “Total cost has tripled in naira terms when compared to a year ago.
Sales are also down by about 50 per cent when compared to same season in the previous year. Interestingly, we do have quite a number of new clients and prospects, mainly in the cruise segment,” Soluade told Saturday Telegraph. Yet, ticket sales have suffered from the same issues being faced by holiday packages.
Tour operators and travel agents continue to find creative ways to keep people travelling and remain in business as they cannot afford to lose their means of livelihood.
However, a number of airlines have either ceased or given notice that they will cease flying into Nigeria soon.
This is due mainly to their inability to repatriate their trapped funds as well as declining load factor, as a result of the financial crisis. This action by the airlines has forced their staff back into unemployment with its attendant social issues.
Many airlines now quote and sell in USD. A few continue to sell in naira though, with most having to withdraw discounted fares from the market and sell only full, published fares. Mrs. Chinyere Umeasiegbu, MD, Global Links & Services Ltd – Travel, Tours, Cruises & Pilgrimages also admitted that there is a significant drop in ticket and package sales as a result of the exchange rate.
“As a Christian company we are taking it one day at a time and God has been helping us. What we are doing is trying alternative local inward; Nigerian regional and African destinations,” she said.
For the MD/CEO of Divine Tours Brokers, Ibadan, Olumuyiwa Salamig, “the experience in selling summer packages has not been encouraging. We all know what the economy is like now.
It is less compared to last year sales.” Also, Mrs Sally Ukpo of SUFFY Travels, said she has not experienced much change in sales this summer as she usually do not sell a lot of seasonal tickets.
“We rely on our packages which are not necessarily restricted to the seasons. I can, however, tell you that enquiries and sales have dropped drastically as a result of the state of the economy as well as the volatility of the exchange rates.”
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