Foreign Airlines Panic over looming Devaluation of Naira – Thisday

Muhammed International Airport in Lagos. AFP PHOTO / PIUS UTOMI EKPEI (Photo credit should read PIUS UTOMI EKPEI/AFP/Getty Images)

By Chinedu Eze

If the Central Bank of Nigeria (CBN) devalues the Naira as pressure mounts on the federal government to do so, foreign airlines may lose about 45 per cent of their over N119. 4 billion ($600 million) trapped in CBN.

THISDAY gathered that the airlines would lose substantial value of their earning, a development, which could trigger another wave of outrageous fares in their bid to recover the lost funds.

Currently, there are not many Nigerian airlines to effectively compete with the foreign carriers on international routes. Sources said, with the new development, the already exorbitant may double.

Industry analyst and CEO of Aglow Limited, Tayo Ojuri said the huge revenues would lose value and would affect the disposition of the airlines about doing business in Nigeria, adding that some of the airlines would be extremely reluctant to do business in the country, while others, especially those that had operated long in Nigeria would wait out the “bad time”.

“Some of the airlines will still continue to do business in Nigeria because we have huge population and we are a big market. Airline like Turkish cannot be discouraged because it is already building a hub in Nigeria. From three times weekly flight, it is now operating five times weekly and has requested for daily flight. Also old operators like BA will not go; they will wait out the time and in due time the situation will be better, but ticket fares will double and will become like gold. Imagine a Lagos to London flight for two adults and two infants in late August going from $7000 in Lufthansa? That is the present fare; imagine what will happen if the airlines lose the value of their money,” Ojuri said.

Senior official of a major mega carrier told THISDAY that devaluation may reduce the value of the airlines money domiciled with CBN by 45 per cent.

“But we will live beyond this challenging time. God is with Nigeria and we will live beyond this time. We are not in the position to tell government what to do. If you look at the government there are lot of experts in their own fields. So whatever happens we will be planning on new Nigeria; what will happen after this period is over. We want to be the company that will be standing after this challenging time.

“We stand with our customers. We know what they are going through at this time. In any case, government is yet to announce devaluation. CBN said it has not devalued the Naira so we should not put words in their mouths. We are just hanging out there waiting for what government will tell us. Everybody is worried; it is not only aviation; all other sectors are worried,” the official said.

An industry consultant also told THISDAY that the airlines would lose money because the devalued Naira would be to the value of what they have.

“The airlines have always known Nigeria will devalue so to cushion that loss they decided to charge full fare, which is more than double of what they have. What they have now is more than $600 million by now. So they have done away with low classes of fares and are using full fare for business and economy tickets,” the consultant said