Foreign airlines operating in Nigeria have started to release their low-priced fares on Nigerian routes following the completion of payments by the Central Bank of Nigeria (CBN) of a backlog of approximately $7 billion, which includes over $700 million in unremitted ticket revenue.
About two weeks ago, the CBN announced the conclusion of the payment of the $7 billion legacy debt, which comprised various foreign exchange-denominated debts, including FX forward contracts. However, the CBN invalidated about $2.4 billion of the debt due to issues such as improper documentation.
While the International Air Transport Association (IATA), the trade body representing foreign airlines, is yet to verify the clearance of the entire $700 million backlog, indications show that foreign carriers have commenced unblocking their low-priced tickets.
For over 24 months, foreign carriers had blocked their low-priced tickets on Nigerian routes due to hundreds of millions of dollars in trapped ticket revenue in Nigeria. This situation led to a surge in fares on Nigerian routes, exacerbated by the sharp depreciation of the naira against the United States dollar.
The CBN initiated the gradual clearance of the debt, with significant progress made between late last year and the present. Consequently, following the CBN’s announcement of the debt clearance, most airlines have released their low-priced fares.
Susan Akporiaye, Chairman of the National Association of Nigerian Travel Agents (NANTA), confirmed that the airlines had already opened up their inventories before the final backlog of forex was cleared. She noted that virtually all foreign carriers had reduced inventories about two weeks before the apex bank’s announcement.
However, one foreign airline is yet to comply, citing management issues. Akporiaye emphasized that the airlines’ cooperation was affected by challenges such as unverified transactions.
The CBN’s announcement of the clearance of the $7 billion debt has prompted commercial banks to reconcile with foreign airlines for the final payment. While the reconciliation process is ongoing, there has been a notable drop in airfares on Nigerian routes despite the release of low inventories by foreign carriers.
Travel agents have confirmed the release of cheaper fares but noted that the rates remain relatively high due to taxes and other charges. They expressed optimism that fares would gradually reduce as airlines comply with the directive to release low inventory tickets.
The Federal Government had earlier warned foreign airlines of sanctions for non-compliance with the directive to release low inventory tickets. Airlines pledged to enhance transparency and accessibility of low-priced tickets, with the government closely monitoring compliance.
Overall, the release of low-priced fares by foreign airlines signifies progress in addressing aviation industry challenges, with ongoing efforts to improve transparency and affordability for Nigerian travellers.
