The federal government included aviation among the sectors prioritised for foreign exchange concessions in October 2016, a belated intervention aimed at easing the dollar shortages that had squeezed airlines throughout the year. The move followed months of lobbying from carriers who argued that without preferential access to scarce foreign currency, they could not sustainably price international tickets or meet dollar-denominated obligations such as aircraft leases and insurance.
By the time the concession arrived, however, much of the damage to consumers had already been done. Airfares had risen by between 50 and 100 percent on some foreign routes over the course of 2016, as airlines passed the cost of Nigeria's currency devaluation and continuing forex scarcity on to passengers. Domestic operators were not spared either, with the new exchange rate regime introduced earlier in the year further straining an industry already grappling with fuel scarcity.
Too Little, Too Late for Some
Industry figures argued that the October priority listing, while welcome, arrived only after several international carriers had already scaled back or withdrawn services from Nigeria entirely over the course of the year, citing both thin load factors and the difficulty of repatriating ticket revenue. For airlines still serving the market, the concession offered a measure of relief but did not fully reverse the cost increases that had already been built into fares.
A Sector Still Under Pressure
Aviation analysts noted that the priority listing reflected a broader recognition within government that air connectivity, both domestic and international, carried economic significance beyond the airlines themselves, touching trade, tourism and business travel. Even so, the sector closed out 2016 having absorbed a combination of fuel scarcity, currency devaluation and falling international capacity that left it, by most measures, in a considerably weaker position than it had started the year.