International travel tickets set to rise as travel agencies devalue exchange rate.

International travel tickets in Nigeria are on track to rise following a directive to travel agencies to adjust exchange rates from N420.86 to N460, effectively an 8.5% devaluation. Nigeria’s official exchange rate at the Investors and Exporters window is currently N410.11/$1.

The travel agencies were advised that exchange rates will be “going from N420.86 to N460 per dollar on GDS” from, Tuesday, July 13th 2021. They were also advised to “issue all pending tickets” using the new rates.

The GDS is an acronym for Global Distribution System and is the platform used by the travel industry for issuing tickets. Booking platforms such as Amadeus, Sabre, Galileo, etc, all running on GDS already have their exchange rate adjusted to N460/$1.

the adjustment in the exchange rate is a reflection of the market value of the naira in the exchange rate market.

Unlike other industries, the travel industry has a history of relying on the official exchange rate (not IFEX) as a basis for issuing tickets after converting from dollars to naira.

International airlines who are the original issuers of the tickets repatriate their funds by converting their naira proceeds into dollars based on the exchange rate.

They also hedge against current risks by purchasing hedging instruments sold by the central bank.

This adjustment reflects the market dynamics of Nigeria’s exchange rate quagmire, as the supply of dollars continues to struggle to meet demand.

The latest move by the airlines to adjust the official exchange rate for selling tickets could be a precursor to a wider adjustment at the I&E window which is what the central bank currently cites as Nigeria’s exchange rate.

Nigerians looking to travel internationally but yet to purchase tickets will pay higher due to the adjustment.

About admin

Check Also

Omokri; Is an insult to attribute Lagosians’ effort to southeast traders during Obedient’ Lagos rally.(Video/photos)

Rhodes-Vivour, Lagos guber candidate, Charly boy and other notable Lagosians, who led the rally crowd …

Leave a Reply

Your email address will not be published.