Nigerians planning vacations this summer will be faced with high airfares, as the prices of flight tickets have surged, compared to the pre-lockdown period in 2020.
In a survey of some Nigerians, our analyst discovered that aside from the cost of conducting COVID-19 tests, both home and abroad, the cost of flight tickets to Accra, Ghana, has increased from an average of N110,400 in February 2020 (round flight) to N231,000 as at Sunday, August 1, 2021.
The hike is not limited to Accra-bound flights, as Nigerians planning to spend their vacations in the United Kingdom (UK), Kenya, Rwanda and South Africa, among others, need to increase their budget (on the cost of flight tickets) depending on the airline they fly, and their destination.
For a Lagos to Manchester flight, for example, ticket cost has increased from about N522,000 to N838,760 within the same period under review.
The cost of flights from Lagos to Rwanda, Kenya and South Africa (Durban) have also increased from N129,100, N164.540 and N650,400 to N215,050, N254,263, N751,400 respectively.
What experts say about the hike
Some experts attribute the development to the recent ban on forex sales to Bureau de Change operators by the CBN, scarcity of dollars, and increasing cost of fuel/maintenance.
An economist, Olugbenga Ajayi, explained that though the recent CBN forex ban is not the only factor responsible for the hike, the immediate impact of the ban will be negative for air passengers especially this summer vacation season.
He said, “The problem is that dollar itself will now be relatively scarce in that market because CBN intervention will not be coming in and you know when the dollar is scarce the price will go up, eventually there will be a seizure.
“The scarcity will cause pressure at the parallel market because the demand will be very high. If not properly implemented, there will be a major increase in inflation rate because the cost of goods and services will move up, because a lot of them are dollar-based. Nigerians, especially travellers and importers, should brace up for harder times in the medium term.”
A source in National Association of National Travel Agencies (NANTA), who pleaded anonimity, told Nairametrics that prior to the ban, passengers and travel agencies had been experiencing difficulties in buying dollars.
She said, “NANTA applied for Forex from one of the Tier 1 banks early 2021 but up till this moment, the association has not been able to secure Forex to pay its annual dues to IATA.
“The association requested $60,000 but the bank was only able to provide $4,000 and that cannot pay for the association’s annual dues to IATA.”
Ayo Kolapo, an aviation expert, attributed the hike to the rising fuel prices. According to him, the Energy Information Administration showed mid-June per-gallon prices for kerosene-type jet fuel to be more than four times higher than the low point during the pandemic in late April 2020.
He said, “Fuel and labour are airlines’ biggest expenses, and when they go up, higher fares often follow. Like all crises, Covid-19 had compelled airlines to reduce capacity in 2020 by cutting the number of available seats as well as reducing their labour forces. Those decisions are likely to translate into higher ticket prices, at least until the industry catches up with demand.”
The bad news for the vacation travelers is good news for the airlines and their investors.