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Operators dread Naira further depreciation, Forex scarcity, carriers on cliffhanger

The Naira floatation policy by the Federal Government has continued to take a toll on airlines as they are reeling under the effects of the policy.

The policy which has led to the devaluation of the Naira technically has put them in a precarious situation and has equally led to high costs to carriers just as the galloping costs have made it very difficult to raise fares.

Some existing Nigerian airlines

Another operator who spoke on condition of anonymity said that the airlines are faced with the option of the devil and the deep blue sea as any effort to further raise fares would force travelers to jettison air travel, stressing that people are battling with hardship and are finding it extremely difficult to live.

He further stated that the situation could see the demise of airlines if Foreign is not only difficult to come by but continues to skyrocket.

Speaking at the 3rd AviaCargo Chinet Conference in 2023, the Chief Operating Officer Ibom Air, Mr. George Uriesi admitted he does not know how other airlines manage the situation but the situation is a cause for concern.

He however stated that the airline, Ibom Air is still committed to starting its West Coast operations commencing with Ghana despite the unpredictable terrain

According to him, insurance, one of the dollar-based payment components of any airline business is a sine qua non, and with the rising cost of the dollar so increases the losses.

He in fact stated that the airline’s losses are those accumulated in dollars due to the rising cost.

He said,” Insurance is a growing problem and because we cannot fly an uninsured aircraft we have no choice but to hang in there and source for the dollars to do the insurance.

” The losses we accumulated were mainly dollar-based components, when you are procuring dollars above the then CBN rate, you apply when it was 400 to a dollar and you get it at 680. The difference is a lot.

” Now, it is being floated and it is running faster. Yesterday we bought a dollar for N915 but on the platform it was put at N890. Today, it is N900 on the platform I’m sure when we are getting it we would procure at 950.

” The new style now is they tell you ‘ give us cash and when we buy dollar we will give you. But it delays, you ask for your cash back and they tell you that you wouldn’t get the dollar.”

” Then when they now have the $400,000 they will now tell you the price they got it for exceeds what was paid and you need to add more. That is where we are now, I don’t know how other airlines are managing.” He said.

On the sidelines of the programme he stated further,” I don’t know, I hope it gets okay even if it stops at N1000, let it stop there then you know what you are dealing with every day. Now you wake up every morning and they have added N50.

” I don’t know but there is a point we get to, we may not be able to do it again but I hope we don’t get there.

On raising fares to reflect current realities he said,” You cannot increase fares ad-infinitum, at some point you get to where’ na only you and your airplane go dey fly‘ so you have to first struggle where you are. We have not raised fares because at this point in time, if you attempt to do it, you’d be flying empty.

On its Ghana operations, Uriesi said,” We are preparing for it but the truth is that right now the terrain is getting difficult every day with the dollar pricing. But yes, we plan to start going to Accra from Lagos from September and the plan is still on, I don’t think anything is going to stop that.

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