• Why air fares may hit the roof very soon
• Air revenue falls to abysmal low as business and leisure travelers desert the country
The centre cannot hold and unspeakable catastrophe is let loose in the business world. As you read, the gale of depression and anarchy have overrun the cutthroat world of Nigeria’s aviation sector. Bankruptcy floods the once boisterous sector like blood-dimmed tide drowning the prospects of profit and future progress. The declining value of the Naira and inability of foreign airlines to recover their investments and make profit have forced United Airlines, a Chicago, United States-based carrier, among others, to withdraw services to Nigeria.
United Airlines, is pulling out of Nigeria over difficulty in recovering monies made from tickets sales, due to Nigeria’s foreign exchange policy. The company has decided to stop flying to Nigeria thus ending its run as the only route to Africa.
According to the company’s spokesperson, Jonathan Guerin, “Repatriation has been a significant issue, as has been the downturn in the energy sector. The daily route from Houston to Lagos had underachieved for years but was kept alive because of its importance to Texas-based customers.”
The company’s last flight will be June 30, after which Delta Air Lines Inc. will be the only major US carrier flying to Africa. Passengers can still fly to Nigeria on United’s trans-Atlantic business partner, Deutsche Lufthansa AG, through a connection in Frankfurt.
Findings revealed that the Nigerian government owed airlines about $575 million in air fares as at March 31, according to the International Air Transport Association (IATA). From all indications, the airlines would lose substantial value of this money with the devaluing of the Naira by the federal government which has become imminent.
It is projected that if government devalues its currency, foreign airlines may lose about 45 per cent of their revenues with the CBN. This, pundits aver, is one of the reasons why some of the airlines are pulling out of the country. At the backdrop of this ugly reality, there are fears that affected airlines may begin to charge outrageous air fares in the short-run, in bid to recoup what they have lost.
As United Airlines revealed its plan to stop flights to and from Nigeria, Air France, Qatar and Etihad have also issued a two-month revenue warning on tickets sold in Naira which they must be allowed to repatriate or they would pull their flights from the country.
In April Spanish national airline, Iberia announced it would pull out of Nigeria and wound down its operations by May 12. The airline explained that it pulled out of Nigeria following protracted passenger drought since late last year.
This no doubt is the worst of times for business entrepreneurs in the country’s aviation sector.
The departing carriers claimed they are quitting their services to the country due to the country’s depressive economy and their inability to sustain a vibrant business. According to them, the cash crunch bedeviling the economy has depleted the finances of a greater percentage of their clients. People have cut short their trips to and fro the country for tourism, business or leisure.
This has no doubt incited harsh criticisms of President Muhammadu Buhari’s economic policies. Pundits lament that the depressive economy wasn’t part of the positive change that he promised. So far, they consider his economic policies the worst the country has endured till date. President Buhari surely needs to put on his thinking cap because business is grim and Nigerians are not smiling.
