Good News for Nigerians as International Airline Sell ‘Cheap’ Tickets Over New Forex Rate

• International airfares have significantly declined, selling for more affordable costs, thanks to improvements in the forex rate
• This came as the naira gained significantly following efforts by the CBN to improve the currency
• Analysts said that Air Peace's resumption of London flights is also a significant factor in the price decline

Legit.ng journalist Zainab Iwayemi has over three years of experience covering the Economy, Technology, and Capital Market.

Since the naira appreciated, there has been a noticeable decrease in the cost of flight tickets from Nigeria to other nations.

The naira appreciation followed efforts by the CBN to settle debt to airlines involving verified and genuine forward requests.

What expert says

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Analysts believe that the action by the CBN restores some level of confidence in the Nigerian FX system for foreign investors especially in the aviation industry.

Samuel Oyekanmi, a macroeconomic analyst said,

"It also sends a signal of FX liquidity in the economy, hence reducing the pressure on the exchange rate both at the official and parallel FX market."

How this affects market

Legit.ng reported that the pressure on the foreign exchange market has eased as naira on Tuesday as the local currency again witnessed growth against the United States dollar, closing on Tuesday, March 26, 2024.

FMDQ data showed that the naira appreciated 1.78% to close at N1,382.95 to the dollar against the previous close of N1,408.04/dollar on Monday. This represents a 178 basis point increase.

The FX reforms that began last year resulted in a significant devaluation of the naira, sharply increasing the rate at which tickets are sold through the International Air Transport Association (IATA).

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The IATA rate for ticket sales in Nigeria decreased to N1,468/$ as of Tuesday from around N1,800/$ a few months earlier.

BusinessDay reported that the price of tickets dropped rapidly for several destinations due to the decline in the exchange rate.

For example, a one-way ticket on British Airways now costs N1.7 million (Economy) and N6.8 million (Business Class), respectively, for the route from Lagos to London. They were formerly advertised for N3 million class and N11 million.

A one-way ticket on Lufthansa from Lagos to London now costs only N2 million (economy) and N9 million (business) instead of N3 million and N9 million, respectively.

Also, the cost of Economy, Economy Premium, and Business Class on Virgin Atlantic dropped to N1.5 million, N3 million, and N6 million, respectively, from N2 million, N5 million, and N12 million.

The Air Peace factor

According to stakeholders, a considerable part of the price cuts by foreign airlines was caused by Air Peace's reduction in ticket pricing on the London route.

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Nigerians who have since looked for less expensive tickets to London have filled up Air Peace's inaugural trip, scheduled for March 30, 2024.

The airline reduced the cost of travel on the trip by N1.2 million by fixing the price of its Economy Class ticket.

The airline states that a return Economy Class ticket costs N1.2 million, while a return Business Class ticket costs N4 million. Additionally, Nigerian students studying in the UK are eligible for an additional 15% discount.

Airline to begin direct flights to Abuja

The Ugandan government is seeking increased business interactions with Nigeria as it assures Uganda Airlines will add Abuja to its routes.

Legit.ng reported that the Ministry of Foreign Affairs disclosed the development on its official X page.

The ministry revealed that the agreement was reached when Ugandan High Commissioner to Nigeria, Nelson Ocheger, met with Nigerian Minister of Foreign Affairs, Yusuf Maitama Tuggar, to discuss trade and commerce promotions between the two countries.

Source: Legit.ng