Nigeria: Airlines Cite Forex Volatility and Inflation as Causes of Rising Airfares

Local airlines have attributed the surging airfares in Nigeria to the volatility of foreign exchange rates and the country’s soaring inflation.

Osita Okonkwo, Chief Operating Officer of United Nigeria Airlines, explained to Sunday PUNCH that the ongoing economic challenges are severely impacting the aviation sector.

“It is an economic issue. We have a limited supply of naira chasing forex, and the economy is stagnant, not growing as fast as it should,” Okonkwo stated. “Many people are now avoiding air travel, which limits how much we can increase fares to cover costs. If fares were increased to reflect the actual costs, many people would not be able to fly. Operators are trying to find a balance, hoping for an economic turnaround. When we talk about economic issues, we mean inflation, lack of opportunities, lack of growth in the economy, and high-interest rates.”

Okonkwo further noted that while some fares remain below N100,000, which is unsustainable, a few tickets are sold above that price, though the minimum should be around N150,000. “We are trying to balance it,” he added.

John Ojikutu, Chief Executive Officer of Centurion Security Limited, provided additional context to the current challenges, stating, “In the early ’90s, tickets were selling for around $100. Selling tickets for less than $100 today is not feasible. You have to factor your fares against the dollar.”

Ojikutu pointed out that several practices from the past helped mitigate costs. “There were many things we did back then that softened the impact of price increases. For example, Dunlop tyres were manufactured locally, and some were even made for our aircraft. Today, every part of an aircraft is imported.”

The combined effects of forex volatility and inflation are creating significant hurdles for the aviation industry, forcing airlines to continuously adjust and adapt to the economic landscape.