Foreign airlines operating in Nigeria have initiated the unblocking of their low-priced fares on Nigerian routes following the Central Bank of Nigeria’s completion of the payment of approximately $7 billion in backlog, which includes over $700 million in unremitted ticket revenue.
The CBN recently announced the clearance of $7 billion legacy debt, encompassing FX forward contracts and other foreign exchange-denominated debts. However, about $2.4 billion of this debt was declared invalid due to issues like improper documentation.
The International Air Transport Association (IATA), representing foreign airlines, is yet to confirm the clearance of the entire $700 million. Still, investigations indicate that these airlines have started unblocking their low-priced tickets.
The decision to block low-priced tickets was made over 24 months ago by foreign carriers after ticket revenue amounting to hundreds of millions of dollars got stuck in Nigeria. This resulted in significantly higher fares on Nigerian routes, worsened by the naira’s sharp depreciation against the US dollar.
The CBN’s gradual clearance of the debt, accelerated by the new administration, led to major parts of the debt being cleared late last year and this year. Subsequently, following the CBN’s announcement of the $7 billion clearance, most airlines have released their low-priced fares.
Susan Akporiaye, Chairman of the National Association of Nigerian Travel Agents (NANTA), confirmed the airlines’ action, noting that most foreign carriers had already opened their low fares before the CBN’s announcement.
However, challenges like unverified transactions caused delays, with one unnamed foreign airline yet to open up its low-priced tickets fully. Akporiaye clarified that airlines have been cooperative, and any outstanding payments are with commercial banks, not the government.
While commercial banks are still reconciling with foreign airlines for the final payments, airfares on Nigerian routes have dropped. Akporiaye cautioned that despite the opening of low inventories, airfares may not significantly reduce due to exchange rate fluctuations.
Comparing air ticket prices on March 4 and March 30, 2024, a notable price drop was observed, indicating a 41.19% decrease in round-trip economy class tickets from Lagos to London. Similarly, fares for flights from Lagos to New York also saw a decline during the same period..
