According to the report, the exchange rate adjustment is due to the depreciation of the Naira which was selling at ₦803.90/$1 on the Investors' & Exporters' FX Window. This is occasioned by the FX scarcity in Nigeria.
“The exchange rate applied to international flight tickets sold in Nigeria is not determined by IATA and it is incorrect to describe them as the IATA exchange rate. Airfares for international flights from Nigeria are denominated in US Dollars and converted into Naira, the local currency, for sale in the Nigerian market,” IATA said in a statement a few months ago.
According to the association: “These conversions use the official prevailing exchange rate provided by the country's financial system. IATA simply applies the spot rate at which the Central Bank of Nigeria sells USD through banks to the market, at its fortnightly retail foreign exchange auctions. The rate is not static, i.e. if the rate at which the CBN sells USD goes up, the exchange rate applied to airfares will follow and vice versa.”
Nigeria still tops the list of countries withholding aviation funds, globally. As of March, the West African country was holding $743 million in revenue earned by international carriers operating in the country.
Last year, Emirates suspended flights to Nigeria after failing to repatriate ticket sales. In August 2022, the Central Bank of Nigeria (CBN) released $265 million out of the total trapped funds. The UAE-based airline said only 50% of its fund has been released.
“Airlines can't be expected to fly if they can't realize revenue from ticket sales,” IATA tweeted last year. “Loss of connectivity harms the economy, hurts investor confidence, and impacts jobs and people’s lives. The Government of Nigeria needs to prioritise releasing funds before more damage is done.”
Last week, Pan-African fintech Flutterwave announced that it has joined the IATA payment orchestration platform. With this integration, a statement shared with Bendada.com says airlines across the world will be able to process payment from customers through cards, bank transfer, mobile money, alternative payment methods and other payment modes available on Flutterwave.
Global airlines looking to collect local currencies will also find this integration useful, as it makes payments seamless for their millions of customers in Africa and other markets where Flutterwave operates.
“According to the International Air Transport Association (IATA), Africa is set to become one of the fastest growing aviation regions in the next 20 years with an annual expansion of nearly 5%,” Olugbenga “GB” Agboola, Flutterwave CEO & Founder, said in the statement.“How can we further accelerate this growth? One way is to ensure airlines can easily set up operations across the continent and seamlessly receive payments from their customers.”