Rising Exchange Rates Put Pressure on Domestic Airlines and Aviation Agencies

….Leading to Potential Airfare Increases

Domestic airlines and Aviation agencies are currently under pressure to increase airfares and charges for services due to the increasing foreign exchange rates.

The indication was given during a separate chat with Aviation Correspondents in Lagos.

The aviation industry relies on the dollar for various expenses, from purchase of aircraft to maintenance, repairs, personnel training, landing, surveillance, communication aids, Aviation fuel amongst others making it challenging to operate efficiently with the high exchange rates.

With the current exchange rate which has hit over a thousand naira, domestic operators say, the operating environment is strangulating for business and ensuring safety has become more difficulty.

The spokesman, Airline Operators of Nigeria AON, Dr. Obiora Okonkwo said, operators are subsidizing the current price of airfares coupled with the lack of access to forex which is negatively impacting their business.
“Let the traveling public know please if you see airfare increase understand there might still be hike don’t take it personal. It is just in a way to serve you better, it is better to fly safe, viable, remaining in business than just flying cheap”.

The Regional Director, West and Central Africa, International Air Transport Association, IATA, Mr. Samson Fatokun, emphasized that for operators to ensure safety and profitability, they require access to forex.

“How do you want them to be able to maintain their operations without having access to foreign exchange? Dollar is the currency of civil aviation and our government need to understand that”.

For the aviation agencies, they say, after over 10 years with the current economy situation, their charges are yet to be reviewed.

Managing Director, Nigeria Airspace Management Agency NAMA, Mr. Tayib Odunowo said, the airlines are heavily indebted to them.

According to him, the agency spend huge sums of money on diesel to power the navigational aids, purchase safety critical equipment which are in dollars.

“We are being owed a lot of money, power is killing us, honestly, we are really, really bleeding. NAMA has properties everywhere but government has taken them over, we are losing them, we have over close to 100 properties”.

The Director, Finance, NAMA, Mr. Hamzat Balogun says, the 40% Remittance into the Treasury Single Account of the Federal Government is also hurting not just NAMA but other aviation agencies.

He urged the government to give this a thought for the seek of safety in the industry.

“So, if we are removed from the TSA, which means we can manage our resources the best way possible not only even on TSA but our accounts, we should be given the leeway to open all our accounts anywhere”.

These factors could lead to higher airfares for passengers, especially as the yuletide season approaches as operators and other ancillary service providers would be jostling to balance their books.