Foreign airlines operating in Nigeria have initiated the release of their discounted fares on Nigerian routes following the Central Bank of Nigeria’s settlement of a backlog totaling approximately $7 billion, which includes over $700 million in unremitting ticket revenue.
Approximately two weeks ago, the CBN announced the clearance of the $7 billion legacy debt, encompassing FX forward contracts among other foreign exchange-denominated debts. However, the CBN invalidated about $2.4 billion of this debt, citing reasons such as improper documentation and other infractions.
Although the International Air Transport Association (IATA) is yet to confirm the clearance of the entire $700 million, indications reveal that foreign carriers have started unblocking their low-priced tickets.
Over two years ago, foreign carriers had blocked their low-priced tickets on Nigerian routes due to ticket revenue, amounting to hundreds of millions of dollars, being trapped in Nigeria. This led to a surge in fares on Nigerian routes, exacerbated by the depreciation of the naira against the US dollar.
The gradual clearance of the debt by the CBN, expedited by the new administration, has led to the clearance of significant portions of the debt between late last year and the present year.
Following the CBN’s announcement of the clearance of the $7 billion debt, most airlines have reportedly released their low-priced fares. However, one foreign airline is yet to comply, citing management reasons.
Challenges such as unverified transactions have caused delays, with commercial banks still reconciling with foreign airlines to clear the final payments.
Although the release of low inventories by foreign carriers has led to a drop in airfares on Nigerian routes, the actual impact on consumers remains uncertain, as taxes attached to the fares often inflate the final cost.
Travel agents have noted that while airlines are releasing cheaper fares, the rates are still relatively high, and discrepancies exist between fares from Nigeria compared to neighboring countries.
The Federal Government has issued warnings to foreign airlines regarding the release of low inventory tickets, threatening sanctions for non-compliance. Airlines have pledged to enhance transparency, but discrepancies have led to instructions for all airlines to comply, with sanctions looming for those failing to do so.
