International airfares on Nigerian routes have risen by more than 20 percent after overseas airlines increased the alternate fee for ticket sales from N462 to N551 per dollar, according to recent findings. Travelers are paying higher prices because carriers have blocked their inventory of cheaper tickets to cushion the impact of the growing amount of trapped funds.
The latest hike in the naira‑dollar alternate fee, announced by the International Air Transport Association (IATA)—the Switzerland‑based trade body for airlines—is expected to worsen the situation for Nigerian passengers, who are already facing elevated fares. Multiple tour operators confirmed on Friday that global distribution system companies had notified them of the increase. They said the change is linked to the difficulties overseas carriers encounter when repatriating ticket‑sale proceeds from Nigeria.
Tour agents report that the higher alternate fee has triggered a more than 20 percent surge in international airfares. “Virgin Atlantic’s promotion, which was about N800,000, is now costing around N11 million because of the increased alternate rate,” said the chief government officer of a tour agency, who requested anonymity. As of January this year, overseas airlines operating in Nigeria had approximately $743 million in trapped funds, the highest amount globally, according to IATA.
Stakeholders and tour firms have urged the federal government to direct the Central Bank of Nigeria (CBN) to expedite the release of these trapped funds. Former president of the National Association of Nigerian Travel Agents, Mr. Bankole Bernard, confirmed the new IATA fee and emphasized that the government must honor the Bilateral Air Services Agreement (BASA) with foreign countries, especially regarding fund repatriation. “The fee we are using to issue tickets is N551 per dollar—not the official rate—but it is moving closer to the black‑market rate. If the official rate had been applied, the trapped‑funds problem would not exist,” he explained. “The funds became trapped because the government was not ready to provide airlines with the official rate. If the fee had been communicated clearly, airlines could have sold tickets at the official rate, avoiding this situation and the hardship faced by travelers.”
Bismarck Rewane, Managing Director of Financial Derivatives Company Limited, argued that overseas airlines should not be blamed for the fee increase. “In dollar terms, airfares have not risen; the impact is only on those purchasing tickets in naira. Airlines cannot repatriate their funds, which are denominated in dollars, and they lose dollars as a result,” he said.
IATA disclosed that, as of January 2023, trapped airline funds in Nigeria totaled $743,721,097—a rise from $662 million in January 2022 and $549 million in December 2022. In a letter to Aviation Minister Hadi Sirika, signed by IATA’s West and Central Africa Area Manager Dr. Samson Fatokun, IATA urged the minister to address the blocked funds. The letter noted that Nigeria has been the country with the highest amount of airline‑blocked funds worldwide for over a year and warned that the growing backlog could negatively affect foreign direct investment, especially as the government seeks concessions for major airports. Fatokun also highlighted that the continued delay in allowing airlines to repatriate funds violates BASA.
Minister Sirika later promised that the federal government would confirm that the backlogged unremitted funds had been paid, though he gave no specific timeline. The CBN released half of the trapped funds a few months ago, but the bank has not shown further progress as the amount of trapped funds continues to rise daily.
Mr. Kingsley Nwokoma, President of the Association of Foreign Airlines and Representatives, noted that IATA periodically reviews alternate premiums and that the current increase may be a routine adjustment. He added that overseas carriers find it increasingly frustrating to repatriate their funds, making operations in Nigeria very challenging.
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