As international airlines are increasingly withdrawing from Nigeria, travel agencies in the country are feeling the pinch.
In the past few months, US-based United Airlines and Spanish Iberia both pulled out of Nigeria. Iberia cited ‘very difficult operating circumstances and dwindling passenger numbers’ as the main reason for its exit, whereas United cited reduced revenue as a result of the deteriorating value of the Naira and tight currently controls as the main reasons to stop flying to Nigeria.
In a bid to manage foreign exchange outflows, the government decided to limit money transfers out of Nigeria. According to the International Air Transport Association (IATA), international airlines are owed about $575 million by the Central Bank of Nigeria.
A new ‘flexible’ foreign exchange policy introduced by the Central Bank of Nigeria (CBN), which effectively removed controls on the Naira, has put even further pressure on air travel in and from the country.
For long, the naira was pegged at $1 to N197. Airline fares are quoted in US dollars and Nigerians pay the equivalent in naira at the previous exchange rate of N197. After the introduction of the flexible forex policy the payment is now calculated at an exchange rate of N318.
“We have seen airfares increase by 175%,” Ngozi Ngoka, CEO Zigona Travel told Inside Travel. She explains this increase in airfares has led to a tremendous decrease in air travel both internationally and locally.
Says Ngoka: “Organisations have already started taking measures to cut down their travel budget- measures such economy cabin only policy for all cadre of staff as well as reduction in number of foreign training seminars, etc. Most companies are looking for solutions with the country. This is also true for government parastatals.”
All is not lost however, according to Ngoka, who says that travel agencies just need to become more creative in order to survive. She says: “For example, we have to source for products locally and explore road and rail travel options within the continent. We are going through very difficult times. The more creative and adaptable we are, the better our chances of survival.”