The Federal Government is taking steps to lower airfares for both domestic and international travel while enhancing aviation security, Minister of Aviation and Aerospace Development Festus Keyamo has said.
Speaking at a ministerial press briefing on Thursday, March 13, in Abuja, Keyamo identified key factors driving high ticket prices, including limited access to affordable aircraft leasing, high airport taxes, and the backlog of foreign airlines’ trapped funds.
He explained that Nigerian airlines struggle to lease aircraft at competitive rates, often resorting to expensive leasing or outright purchases, which pushes ticket prices up.
“We have domestic tickets and we have international tickets. I talked about domestic tickets and the fact that we don’t have access to lease aircraft at a very cheap cost. We will only go for the very expensive option of leasing aircraft or buying aircraft. We are addressing that. We will see the results very soon with the Cape Town Convention and the Dublin Conference we are going to. The deals are coming in, so we will see the results then,” he said.
Keyamo also highlighted improvements in aviation security, noting that Abuja and Lagos international airports recently underwent recertification, closing over 130 security gaps.
“We are happy to report that Abuja and Lagos International Airport also achieved a recertification and in recertifying it, they closed more than 130 gaps at Abuja and Lagos airport. And so there’s a lot of improvement in terms of safety and security in those airports,” he stated.
He added that these upgrades were crucial in maintaining safety standards at Nigeria’s major international airports, including Kano.
Foreign Airlines Trapped Funds
Addressing the long-standing issue of foreign airlines’ trapped funds, Keyamo explained that airlines had struggled to repatriate ticket sales earnings due to foreign exchange shortages at the Central Bank of Nigeria (CBN).
“There was a time when we came to office, there were airlines that had a three-year backlog of funds trapped in Nigeria. We had the Naira in CBN and that’s the sales of tickets. When their agents sell tickets to you in Naira, those nairas are evacuated and dropped in the CBN. CBN will now get the dollar equivalent and repatriate.
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“That is how it is done so that the tickets will be sold in Naira. All of these tickets were sold in Naira for three years plus, four years, but the CBN had no liquidity. They had no liquidity, no dollar equivalent to send to these foreign airlines, so the funds were trapped. It’s not that they were owing, the Naira was there, but they were trapped. No dollar,” Keyamo explained.
He credited the government’s policy shifts, such as subsidy removal and the naira’s floating exchange rate, for increasing forex liquidity, which enabled the clearance of $893 million in trapped funds.
“Because of the deft policies of this government on the removal of subsidy and floating of the Naira, liquidity began to rise.
“That’s why I said earlier when I was thanking the President for the unusual attention he is paying to aviation, one of the first things the President did when liquidity began to rise in the CBN, the first thing was clearing the backlog of the trapped funds for aviation. $893bn was cleared of trapped funds,” he stated.
High Cost of Tickets
He also revealed that foreign airlines had been overcharging Nigerian passengers due to uncertainties about when they would be able to repatriate their earnings.
“We called international airlines; what they used to do, they said, if you want to buy international tickets, you will see business class, Z, Z grade, J, different grades, but it’s all the same. One can be N2m cheaper than the other. Those ones, they opened it for countries they knew that once they sold the ticket, they could get their money immediately. But they now opened only the high fare for Nigerian passengers, since the last 3-4 years,” he revealed.
According to him, airlines factored in potential naira depreciation, inflating ticket prices significantly.
“They said because they were taking into account inflationary rates of the money that will be trapped, they don’t know where they will get the money back, so they were building on top of it, inflationary rates, that by the time they want to get the money back, the Naira may have collapsed.
“So instead of selling a ticket for N2m or N3m, they will sell it for 7m. Whereas Ghana will sell it for that price. Ghana is cheaper than Nigeria. This was an issue of policy,” he said.
To reverse this, the government is negotiating with international airlines to ensure ticket prices reflect the clearance of trapped funds.
“President Bola Ahmed Tinubu, being very smart on this, he cleared that first. And so we called them and said, look, it was recently we called them, you have been enjoying this high price because Nigerians were paying.
“So by the time we cleared this thing, they were still enjoying the high fares. We said, no, you cannot continue to enjoy it. We have cleared the backlog, so you cannot continue to open up the high tickets only to Nigerian passengers,” Keyamo stated.
High Airport Taxation
The Nigerian Civil Aviation Authority (NCAA) is spearheading discussions with airlines to ensure pricing adjustments while also tackling other cost-related issues, including high taxation.
“So that discussion is going on now. NCAA is championing that, and I think they held a parliament with them recently on that, with one or two other factors in terms of high taxation. Our airport, they say, is the highest in Africa, their taxes,” he said.
He acknowledged that high government-imposed taxes contribute to expensive airfares but noted that addressing this would require collaboration with the Ministry of Finance.
“Nigerian Airspace Management Authority and Federal Airport Authority of Nigeria, are looking at them to see what we can do about it. Because it’s not my call. We have to talk to the Minister of Finance to do that. So don’t look at the Aviation Minister alone. I’m not in charge of revenue. I have no right to say I will reduce revenue. The money is not my money,” he added.
He emphasised that airlines factor these high costs into their pricing, ultimately passing the burden onto passengers.
“The taxes imposed in our airports and navigation routes, they say, is one of the highest in Africa. And the airlines come here, they bill that too because they have to pay. And that trickles down to the passengers. So we will tackle that,” he said.