..wants government to encourage/designate indigenous carriers on foreign routes as flag carriers
The fluctuating exchange rate in Nigeria has led to high airfares on the International routes from the country as foreign airlines go by the floating rate it picks on the Investors and Exports, I&E, Window of the Central Bank of Nigeria CBN.
As the rate continues to go back and forth, this is having effects on the volume of travel from Nigeria to the US and Europe as passengers are not finding it easy sourcing millions to purchase an economy class tickets depending on the airline.
In this interview, Dr. Gabriel Olowo, President, Aviation Safety Roundtable Iniative ART speaks on the immediate action to be taken by the Central Bank of Nigeria CBN to address this problem, the alternatives to reducing foreign airlines trapped funds in Nigeria and others.
Ticket fares in Nigeria and the exchange rate floating by the I&E window of CBN.
Well, I would imagine that, if the sales that are made out of Nigeria point of sale now goes with the floating exchange rate then the whole remittance of airlines would be seamless that is the guarantee that the CBN must give the airlines. Because if they sell at the floating rate today and yet they don’t get these remittances by the time the rates fluctuate to a higher level the same problem would remain, therefore CBN must guarantee that, as we are selling at those rates we would within a fortnight at worse remit the funds. The backlog of $800m of sales still there that they sold at the old rate.
Now at President Tinubu dispensation that IATA rate is going with the CBN floating rate I&E window, assurance must be given still by CBN that, the remittance will go as at when due and not allowed to pile up as before.
How does this affect tariffs?
Tariffs essentially have not changed, the dollar value of tariff remains the same, it is equivalent form of payment that is changing which is in our case Nigeria, our currency for payment is naira, it is our exchange rate that is changing, tariff has not effectively changed.Globally, passengers have the option, is either you opt to pay a dollar equivalent of your tariff in any form of currency. If you want to use your credit card for payment that would mean dollar for dollar but if you must pay in naira, you just have to pay by the current floating rate of exchange that the airline picks on the I&E window of CBN and until CBN finds a lasting solution to naira fluctuation that would just have to continue.
I remember sometime in the country of Brazil the exchange rate was changing per hour, it was fluctuating per hour, so if you buy a ticket at 9am you might not get the same rate at noon because the exchange rate fluctuates and the airline picks the exchange rate as it is and that guarantees the airlines home remittance.
Nigeria has to get to a solid conclusion on how to fix our exchange rate. What we have been doing in the past is forcing it and forcing it has not helped. I think the era of reality is here, all our economists must come together, the theorists, the professors, the CBN, the IMF people find a lasting solution to the monetary policy of government on how to stabilize the naira, the naira is the issue, tariff is not the issue, airlines are not the issue.
Are there Alternatives?
Deliberate and sincere efforts must be made to reduce foreign airlines sales into Nigeria and substitute with our own.One song writer said, “We must buy our own”.
And where is our own? They will not give you London, who are they resolving it for? The private airline so called National Carrier that’s not been born? And even if it is born, how much of the volume can it reduce with three initial aircraft for a national carrier and if it is born, can it reciprocate fully?. We need at two to three strong carriers, Air Peace has proved its point that they can do it, why don’t you give it to him? Why don’t you let him start?.
I heard the same language many, many years back that you cannot do it, the guy has demonstrated that he can do it. How do we reduce remittances when we deprive our own from destinations to low hanging fruits destinations? That is an immediate alternative.
Two, three other airlines in the market can come together and fly a flag called Nigeria First. It could be a combination of Aero, Arik, Ibom air and they are flying as Nigeria First, this flight will operate as one, we see that outside this boundaries.When you have Iberian air operated by, United Air operated by and when these airlines come together, they will just do that and fly the flag, let us fly our own, that is an alternative.
Foreign airlines are doing $800m, we can slash that by half, we can do $400m and the pressure on our naira will go down. We must do our own our leaders have not been sincere.
