Expert explains why new exchange rate may not affect travellers

Thursday, June 22, 2023

Murtala Muhammed International Airport (MMIA)

A travel expert with LoizTours and Travel Limited, Alimi Oluwaseyi, has explained that the new exchange rate might not affect travellers that employ the services of travel agencies for their international travel processes.

Speaking with Peoples Gazette on Wednesday, Mr Oluwaseyi said such travellers, before the new exchange rate, were already being billed the equivalent of the new exchange rate as they usually paid for their tickets with the black market rate.

“Well, for us, the new exchange rate will not exactly change anything because we bill our customers with the black market rate, which is also around the current exchange rate at the official market. So nothing has really changed,” he said.

He, however, said that international travellers who will be affected by the new exchange rates buy their flight tickets directly from the airlines.

There are strong signs that foreign airfares, particularly on Nigerian lines, may increase once more now that the International Air Transport Association (IATA) has pegged $1 at N770 on Wednesday, according to Nairametrics.

With the new standard, a N1.2 million economy ticket may increase to N2 million and beyond, while N7 million or more may be charged for business class tickets.

Before now, the hike in the price of aviation fuel and the inability of multinational airlines to repatriate funds from Nigeria had caused the price of airfare to shoot up on different occasions in 2021 and 2022.

In the wake of the recently introduced unified exchange rate, there are speculations that the naira equivalent of airfare will shoot up significantly.

President Bola Tinubu had last week introduced a unified exchange rate that saw the official rate of the naira shoot up to N700 to a dollar from the N460 it initially exchanged at the I&E window.

The move was in line with Mr Tinubu’s commitments upon being sworn in as the 16th President of Nigeria. During his inauguration, Mr Tinubu promised a single foreign exchange rate regime.

The change allows banks to freely influence and determine the naira to dollar value.

However, since the government of Mr Tinubu took action, the naira has weakened further against the dollar at the official market, reaching a high of N770 to a dollar on Wednesday.

Travel experts have consistently predicted a significant increase in the cost of tickets for overseas flights because they are paid for in U.S. dollars, echoing the most recent reality of the nation’s new exchange rate system.

In a statement released in May, the International Air Transport Association (IATA) clarified that airline tickets departing from Nigeria for international destinations are priced in U.S. dollars before being converted to the local currency.

According to the organisation, conversions are made using the official exchange rate offered by the nation’s financial system, which was approximately N460 to a dollar before the unification of the currency rate. 

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