The report highlights that transportation costs have skyrocketed in the country, making travel increasingly unaffordable for many citizens.
A recent report by SBM Intelligence, titled "Moving out of Reach," reveals that the devaluation of the naira is the primary driver behind the surge in airfare costs in Nigeria.
The report highlights that transportation costs have skyrocketed in the country, making travel increasingly unaffordable for many citizens.
Interestingly, the report also notes that when converted to naira, the actual cost of flights in dollar terms is cheaper. This discrepancy underscores the significant impact of currency fluctuations on the cost of travel.
According to the report, as of 2017, Nigeria’s exchange rate stood at N395.42, however the exchange rate jumped to N1518 in 2024.
According to the report, air travel costs have decreased in dollar terms, from $82.82 in 2017 to $82.14 in 2024. However, when converted to naira, the average flight price has more than tripled, jumping from N32,750 in 2017 to N124,693 in 2024. This stark contrast highlights the significant impact of naira devaluation on air travel costs in Nigeria.
The report noted that between 2017 and 2024, in naira terms, Nigeria recorded a growth of 280% on airfare rate, jumping from N32,750 to 124,693.
However, in dollar terms, airfare fell from $82.82 to $82.14 between 2017 and 2024.
Speaking on the development, the head of operations at SBM Intelligence, Stanley Ikechukwu, told SaharaReporters that the devaluation of naira among others was responsible for the increase in airfare in naira terms.
“We cannot just look at the recent hike in airfares just in isolation because of the devaluation of the Naira,” he said.
“The airline business is a very expensive venture and any government police wrongly articulated can affect the airline industry and other industries too.
“You will agree with me that before the devaluation of the naira, airline tickets have been on a gradual but steady increase. Before the (Bola) Tinubu administration, ticket prices rose from N25,000 for a one-way trip to Abuja to about N35,000 and have been on such steady rise since then.
“By the time (Muhammadu) Buhari’s administration handed over power, flight tickets were in the range of N70,000 to N80,000 for a one-way trip to Abuja.
“Devaluation of the naira under the Tinubu administration also put a heavy burden on the airline business which also affected flight tickets. Amongst other reasons are increase in fuel prices.”
He continued, “The cost of Jet A1 fuel has risen significantly from N200 to N903 per litre, making it challenging for airlines to operate efficiently. Another big hit is that, the airlines have to tie down operating cost in procuring and storing Jet A1 fuel for a longer period of time.
“It not a situation where you can just stop at any fueling stations and top up the reserve like the road transportation.
“Maintenance cost has its own effect too. Airlines incur substantial expenses for aircraft maintenance, with a single C-check costing between $800,000 and $1 million.”
“There has been a gradual but steady increase in taxes and surcharge by on airline operators. Government taxes and levies account for more than 40% of airline earnings in Nigeria, making them one of the highest in the world,” he said.
“Other factors are demand and supply and how it affects incomes and purchasing power of Nigerians.”
As inflation rises, Nigerians face increasing air travel costs, sparking widespread concern.