Dollar-priced tickets fail to release airlines’ trapped funds

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Despite many attempts to ensure that ticket purchases are received in dollars, airlines’ stuck funds in Nigeria have increased.

Despite efforts to limit the amount of money stuck in Nigeria, airline stranded cash increased sharply from $744 million in March to $802 million in April.

In addition to these efforts, the National Association of Nigeria Travel Agencies (NANTA) recently revealed that airlines’ stored funds were being paid out gradually.

According to stakeholders in the travel and aviation industries, the stranded cash have continued to climb as airlines tripled costs for passengers paying in naira.

A return ticket from Nigeria to London, for example, has climbed in the last year from N350,000 to between N1.5 million and N1.8 million (for travelers paying in naira).

While these tariffs have deterred travellers, forcing many to utilize their dollar cards, those who do not have this option must pay astronomical naira rates to travel agencies.

“A Lagos-London return ticket that cost N350,000 is now being sold for N1.8 million. If you issue one economy class ticket, it should have been just N350,000 that is trapped, but now one economy ticket means N1.8 million is trapped.

“This means it will triple the effects of trapped funds because these are selling higher and because we are selling higher, the trapped funds are increasing but if we are selling N350,000, it should not have increased,” Susan Akporiaye, president of the National Association of Nigeria Travel Agencies (NANTA) told BusinessDay

High fares, according to Akporiaye, are the reason the trapped funds will continue to rise.

She stated that the trapped funds have increased from $700 million to over $800 million in such a short period of time because, for example, a business class in the United States that was sold for N2.5 million is now worth about N6 million.

She claims that the government is not to blame for the growth in trapped monies, but rather the airlines, because payments of trapped funds are paid in little amounts.

According to the NANTA, airline steps to reduce naira ticket sales have resulted in airlines recouping more over half of their ticket sales in foreign currencies, reducing the amount of money stuck in Nigeria.

Airlines have prohibited travel agencies in Nigeria from providing tickets from other countries into Nigeria since last year in an effort to decrease the amount of money that would be stuck in Nigeria.

As a result of the locked monies, Nigerian travelers have been forced to purchase tickets from agents in Ghana and other African countries rather than through Nigerian travel agents.

Airlines have also prohibited cheap ticket inventories, leaving high inventories to be sold only in naira, while low ticket inventories on most airlines’ websites can only be purchased using dollar cards. This is to warn of the consequences of their locked funds in Nigeria.

Delta Airlines, the lone US carrier that flies into Nigeria from its headquarters in Atlanta, Georgia, has been selling airline tickets in dollars to passengers. The development was confirmed by Jimmy Echelgruen, the airline’s sales director for Africa, the Middle East, and India.

Bankole Bernard, chairman of the International Air Transport Association’s Airlines and Passengers’ Joint Committee, stated that despite the issues confronting Nigeria’s travel sector, international airlines operating in Nigeria earned more than $1.1 billion in ticket sales in 2022.

Bernard, who revealed this in a phone interview with BusinessDay, stated that international airlines are making good money from Nigeria, despite the stuck finance issues.

He said: “The airlines have sold more. In the whole of Africa, Nigeria sales are still the highest. We have done over $1.1billion in 2022. We are doing much better than our contemporaries.

“We are a good market and a market that any airline would want to come into. Nobody will talk about the good side of this market. Nigerians are still travelling. The only thing is that travel agents are losing business to outside the country. Most of us are buying tickets from other travel agencies from around the world.”

Travel experts say the ticket sales in 2023 will still increase because airlines have continued to make sales despite high fares.

 

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