Devalued Naira Disrupts Summer Travel Plans
The Central Bank of Nigeria’s recent decision to devalue the naira has had a significant impact on airfares, jeopardizing the summer holiday arrangements of numerous travelers. With unprecedented increases in airfare costs, this year’s summer travel season has become less predictable and more financially burdensome for those planning their annual vacations.
President Tinubu’s Pledge of Exchange Rate Unification
During his election campaign, President Bola Tinubu promised to unify the various exchange rates in Nigeria to discourage arbitrage and encourage capital inflow. Keeping true to his promise, the Central Bank of Nigeria initiated the floating of the naira on June 14, resulting in its depreciation from 471.67/$ to 763.17/$ as of Wednesday. However, this depreciation has compounded the challenges faced by airlines, including forex and aviation fuel scarcity, ultimately forcing them to raise airfares.
Trapped Funds Worsen Air Travel Affordability
International airlines operating in Nigeria have faced the challenge of trapped funds, which has led to increased flight ticket prices compared to neighboring countries. According to the International Air Transport Association (IATA), the trapped funds have reached $812 million as of April 2023. The unavailability of these funds has further escalated airfares, leaving both domestic and international travelers struggling to afford their trips.