International airlines are beginning to reduce flight frequencies in and out of Nigeria and reduce capacity as the exchange rate of naira to a dollar continues to increase, thereby creating uncertainties in the economy.
The naira adjusted by 29 percent to N282 against the dollar in the interbank foreign exchange (FX) market as the Central Bank of Nigeria (CBN) intervened to ease demand for the greenback, but the dollar is currently being sold between N370 and N400.
BusinessDay’s checks show that the development has impacted on the purchasing power of buyers as many find it difficult to source for dollar to travel, thereby affecting the frequencies of flight in and out of Nigeria, as airlines no longer have as much passengers to travel as they had before now.
Few months after United Airlines and Iberia Airlines stopped operations into Nigeria, to the dismay of travellers and travel agents, Emirates Airlines closed reservation on one of its two daily Dubai – Lagos services, saying the afternoon flight EK781/782 would no longer be available for reservation.
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 Emirates as some of the cheap rates hitherto displayed on the website have been cancelled.
BusinessDay’s checks also show that British Airways readjusted by flying Boeing B777, Virgin Atlantic moved to Airbus A330, in a bid to readjust the seat capacity.
Kola Olayinka, country manager of British Airways, said foreign airlines operating in Nigeria lost N6.4 billion in the N157.6 billion ($800m) of their revenues trapped with the CBN when the naira was devalued from N197 to N280 by the apex regulator.
Olayinka said the total amount of money trapped in CBN before the devaluation was $800 million and for every $1 million the airlines lost N80 million.
The BA country manager explained that the fares Nigerians pay for international destinations had increased because more naira was exchanged for dollars, but passengers still pay the same fare in dollar denomination.
The economic downturn and scarcity of the dollar are bringing uncertainties in the Nigerian economy, and have affected every business done in Nigeria and in the entire economy, he said.
“Dollar scarcity is bringing about uncertainties to all businesses. $800 million was in our banks that needed to be transferred. We were selling for N197, when it went up to N285. For every $I million, we lost N80 million,” he said.
The devaluation and the trapping of airlines funds eroded their finances and led to their adjustments in order to survive, while some of the airlines were forced out of the Nigerian market, he said.
