International

Dollar Shortage: Foreign Airlines Stop Ticket Sale to Nigeria-bound Travelers

Published

3 years ago

Dec 1, 2021.

Dollar shortage: Foreign airlines stop ticket sale to Nigeria-bound travelers

EKO HOT BLOG reports that as the Nigerian economy continues to suffer from dollar shortage, international airlines flying into the country have prohibited local travel agents and enterprises from selling tickets to intending incoming Nigeria customers.

The airlines also prohibited Nigerian travel agencies from selling tickets to intending customers whose trip itineraries did not begin or conclude in Nigeria.

This is known in air travel parlance as SOTO ticket, meaning Sold Out, Ticketed Out.

The move is presently hurting many Nigerian students overseas who are attempting to get tickets to return home for the Yuletide through Nigerian travel brokers.

The majority of them are now obliged to contemplate purchasing their tickets from travel services headquartered in other countries.

The latest action by foreign carriers followed their failure to repatriate ticket sales earnings totaling billions of naira in the previous year.

The International Air Transport Association (the worldwide trade association for international airlines) reported in October that foreign carriers operating in Nigeria had been unable to repatriate around $207 million in ticket sales earnings to their different head offices overseas.

The Central Bank of Nigeria is rationing the sale of dollar to international airlines and other sectors of the economy as the country battles to meet dollar demands.

However, economic and financial experts have queried the rationale for the CBN’s rationing of the greenback when the nation’s external reserves are still above $40bn.

Local travel agencies told the Punch that most of the foreign airlines stopped sale of SOTO tickets due to the exchange rate problems in Nigeria, which they said had made it difficult for them to repatriate their revenues.

“Most airlines don’t want to sell SOTO tickets again because of the exchange rate problem in Nigeria, which is affecting them; they couldn’t move their revenue out of Nigeria,” an official of Peacock Travels and Tours, a major local travel agency, said on condition of anonymity because she was not authorised to speak on the matter.

The official of another agency said aside from the difficulty in repatriating revenue, SOTO tickets might not pay the foreign carriers because of the international exchange rate among countries.

According to a report by the Punch, British Airways stopped local travel firms from selling tickets to inbound Nigeria passengers about two weeks ago. BA also barred the local firms from selling SOTO tickets.

It was further learnt that other carriers including Lufthansa, Air France and KLM had joined in barring local travel agencies from selling SOTO tickets.

According to foreign airlines and travel agencies, more international carriers take similar decision in coming days or weeks.

A British Airway official confirmed the development anonymously and explained that the decision was taken because IATA had told foreign airlines that SOTO tickets were putting more pressure on the Nigerian economy due to the increase in foreign carriers’ demand for dollars from the CBN.

“IATA confirmed to us that we (foreign airlines) are putting pressure on the Nigerian economy when we sell in naira tickets that are meant to be sold in dollars. An example is a London-New York-London ticket. That itinerary has nothing to do with Nigeria. But most passengers, especially Nigerians, prefer to buy those tickets from Nigerian travel agencies because it is cheaper. A lot of passengers who don’t even have business in Nigeria prefer to buy their tickets in naira because it pays them. So we had to take this decision to avoid putting more pressure on the naira,” a BA official said on condition of anonymity because there was no official approval to speak on the matter yet.

As of press time, spokespersons for Lufthansa and Air France-KLM could not be reached.

Susan Akporiaye, President of the National Association of Nigeria Travel Agents, the umbrella group for Nigerian travel agencies/companies, was unable to communicate with our correspondent since she was in route at the time of publication.

The media aide promised to get back to newsmen.

Last month, the naira plummeted against the US dollar on the IATA market because to a continuing cash crisis in Nigeria.

As a result, airfares on Nigerian routes priced in naira have risen significantly.

The development came amid struggles by foreign airlines to access forex from the CBN to repatriate ticket sale proceeds running to over $208m.

Investigations by the Punch revealed that the naira had fallen against the dollar last month on the IATA ticket pricing template from 415/dollar to 444/dollar, forcing travel companies to sell tickets at higher prices.

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