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HomeBusinessForeign Airlines resume low-priced fares in Nigeria amidst CBN forex backlogs clearance

Foreign Airlines resume low-priced fares in Nigeria amidst CBN forex backlogs clearance

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As the Central Bank of Nigeria (CBN) concludes the payment of its $7 billion backlog, including over $700 million in unremitted ticket revenue, foreign airlines operating in Nigeria have begun to unblock their low-priced fares on Nigerian routes.

The CBN recently announced the completion of its debt payment, which encompassed legacy debts such as FX forward contracts and other foreign exchange-denominated debts. However, approximately $2.4 billion of the total debt was deemed invalid due to documentation discrepancies and other infractions.

While the International Air Transport Association (IATA) is yet to verify the clearance of the entire $700 million owed to foreign carriers, preliminary findings indicate that airlines have initiated the unblocking of low-priced tickets.

This move comes after over two years of airlines blocking their low-priced fares on Nigerian routes, resulting in a surge in ticket fares due to trapped revenue.

The prolonged blockade of low-priced tickets exacerbated fare increases on Nigerian routes, exacerbated by the sharp depreciation of the naira against the United States dollar. Economy fares on popular routes such as Lagos-London skyrocketed, reaching over N3 million.

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Efforts by the CBN to gradually clear the debt gained momentum under the new administration of the Apex Bank, leading to substantial progress in debt clearance since late last year. Following the CBN’s announcement of the clearance of $7 billion, most airlines have released their low-priced fares.

Chairman of the National Association of Nigerian Travel Agents (NANTA), Susan Akporiaye confirmed the opening of low fares by most foreign carriers. However, she noted that some airlines had already reduced inventories before the final debt clearance in March, indicating cooperation despite challenges such as unverified transactions.

Commercial banks are currently reconciling with foreign airlines to finalize the remaining payments following the CBN’s announcement. Although some airlines have complied with opening low inventories, discrepancies remain, prompting the issuance of sanctions threats by the Federal Government for non-compliance.

Despite the reopening of low inventories, airfares on Nigerian routes have recorded a drop. However, concerns persist regarding the actual impact of low inventory fares on consumers, as taxes attached to fares often inflate the final cost for travelers.

Travel agents have noted a gradual decrease in fares but highlight the need for further adjustments to align with international standards.

The government’s warning to foreign airlines underscores its commitment to enhancing transparency and affordability in the aviation sector, signaling a positive step towards addressing industry challenges.

(Edited by Oludare Mayowa; omayowa@globalfinancialdigest.com; Newsroom: +234 8033 964 138)

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