Japa syndrome keeps us in business – Travel agencies

The President of the National Association of Nigerian Travel Agents, Susan Akporiaye, speaks with LILIAN UKAGWU on how the surge in migration has impacted the travel agency business and other issues

How has the depreciation of the local currency affected the travel agency business?

It has affected airfares. For example, if we exchanged N100 for $1, $1,000 would be N100,000 and if the exchange rate rose to N400 per $1, automatically the same $1,000 would be N400,000. So, there would a difference of N300,000 which is massive. Then, we are not even exchanging N400 for a dollar. The rate we sell a dollar is between N460 and N465. So, do the math, and that it is for just airfares alone. It affects everything because Nigeria is a consuming country. We bring import most of our things. So, it will definitely affect everything, not just airfares.

There seems to be a surge in migration, with many Nigerians relocating abroad. How has this affected airfare, and travel agencies?

It is true that last year, there was a massive migration of Nigerians to the UK, US, Canada and out of the country generally. It doesn’t affect fares in any way. The only component that usually affects fares is inflation, which is inflation leading to the devaluation of the naira, causing airfares to go up.

 So, migration does not affect airfares in any way. Migration itself is even good for business because if you have a lot of people migrating, which is not a luxury or holiday, they won’t even mind the cost of the ticket because they know it is a migration. Somebody who just wants to go on a holiday and come back and you give him or her the price of N1m plus for a ticket, he or she will say, “No, I’m not going” and cancel the holiday. On the other hand, someone that is migrating won’t really mind because he or she is leaving. There are no plans to come back. They have probably sold a lot of things and traded in a lot of things. So, they don’t mind. Such people can pay N1.5m and go.

 So, that is why I said the migration of many Nigerians was actually what kept us in business in 2022 because they are relocating and have to buy the ticket irrespective of the cost.  So, Nigerians migrating has not really affected the fares instead it gave travel agencies the opportunity to remain in business. This is because the unrepatriated airline funds have led the airlines to make some decisions in terms of the classes of tickets that they sell. That has really brought about very high fares in the system which made a lot of holidaymakers cancel their plans last year. But that migration was the one that kept us in business. So, it was good for us as travel agencies. It was a good one for us.

Inflation has been on the rise in the past one year. Is this affecting NANTA members?

 Inflation affects everybody. Inflation is not particular to any sector, group of people, colour or race. Once there is an acceleration in the inflation rate, it means ordinarily things will go up, prices will go up, and currency will be devalued. So, it is not just about only NANTA members. Inflation affects everybody, the same way it is affecting those in the media, government, medical sector, construction, etc. Inflation has been on the rise in Nigeria in the past year and has affected everybody, as long as you live in Nigeria.

Last year, the association called on foreign airlines operating in Nigeria to unblock cheaper airfares on their Global Distribution System  to reduce the burden of high ticket prices on the travelling public. What is the current situation?

 When we made that call one or two airlines were able to look into the situation and we had a situation where the GDS was opened for us to do business and lower inventories even though not all were opened for a period of time. We had that opportunity but as we speak, it has gone back to the status quo. The majority of them have locked up again and even the ones that did not have also locked up to some certain level.

 So, the situation is actually worst now because the ones that used to sell their inventories including the lowest ones will not sell. Quite a number just closed up totally and are only selling the highest fares in each cabin, which, of course, you know what the price would be. The other ones that were initially selling all their classes have reduced a bit; they have closed up the lower ones. For instance, in the economy cabin, we have 10 classes with 10 different prices. Some airlines stopped selling from prices number one to nine. They were only selling 10 which is the highest. But some airlines were still selling the entire 10. As we speak now, even those ones that were selling the entire 10 fares have now blocked out one to four. So, they are selling from five to 10.

How would you assess fluctuation in ticket prices in Nigeria?

 The ticket prices don’t have anything to do with fluctuation. It is not a fluctuation issue. It is actually the issue of the airlines taking some business decisions that according to them is the best decision they can take at the moment.

Currently, we are having a forex challenge. Why is that so? Because the sale of our crude is the only way we get foreign exchange. So, there is a challenge in terms of foreign exchange in Nigeria we all know these airlines are international airlines and one of the  Bilateral Air Services Agreement is for them to be able to repatriate their funds in foreign currency. Their funds are not supposed to be in naira because they can’t transfer naira and foreign currency is not available as it is scarce. It is not as it used to be. So, the airlines have not been able to remit their sales in their own country and it has been piling up. Almost all of them (foreign airlines) decided to make a business decision by selling only the highest fares. Why are they doing that? To control the volume of sales, to make sure the volume of sales reduces. If the fares are very high, people will not travel as much; the volume of their funds in naira in Nigeria will not be on an exponential increase. It will be increasing at a manageable ratio.  But then again, they don’t want to stop doing business totally as Emirates did, which stopped flying from Nigeria. They still want to be flying; hence they took the decision lets sell only the highest fares. So, it is their own way of mitigating their unrepatriated funds in from too much that it will now put the airline in a crisis situation. That is the reason for the high prices of tickets. It has nothing to do with fluctuation.  As soon as the forex crisis is resolved, you will see that all the airlines will release all their lower inventories and everything return to normal.

There seems to a be rise in the number of agency businesses. How does the association monitor their activities to ensure they do not defraud people?

Well, if there is a rise in agency businesses, we as an association is only responsible for our members. There may be an increase in a lot of people opening travelling agencies, which I seriously doubt because these are not the best times for anybody to open a travel agency. So, I seriously doubt if there is an increase but even if there is, then until they become our members, we cannot say because people have been opening travel agencies but they are not registering with us. As long as they have not registered with us, we cannot monitor them. We can only monitor the activities of our members.

If you start a travelling agency and you come forward so that the association can have your details and information and we do our checks on you too, those are the ones we can monitor their activities. And definitely, we also have activities that we do for members, engaging our members in terms of increasing their level of professionalism.

 It is important that they are professional in everything they do because most of the fraud you are talking about, upon investigation it is found out that it was really not fraud per se but more of the fact that the travel agent was ignorant of what to do and did not know how to handle the situation. These are some of the benefits of being a member of NANTA. We engage our members in training and retraining because in every business there is always crisis situations. So, when you have a crisis, it is not the time for you to stay quiet or become incommunicado and run away. Our members hardly get involved in fraud. Most fraud issues upon investigation we discover it is not our members. We have a regulator. NCAA is our regulator. We first do in-house training and regulation before NCAA does that.

It seems the issue of trapped funds is sending travelling agents out of business as Nigerians have devised other means of travelling through neighbouring countries to get cheaper tickets. How is this affecting NANTA members?

This issue of trapped funds is becoming really bad as we speak.  We had an assurance from airlines that during the low season, it might be better because the low season is when people don’t really travel. So, airlines might be forced to bring out lower inventories, but unfortunately, that is not the case. Quite a number of them are still keeping only the highest fares on the system. So, it is actually getting worst and, of course, it is affecting our members because if people are not buying tickets from our members because it is too high, they would go elsewhere where they can get it at affordable prices. Even though sales are low for us right now, doesn’t mean tomorrow’s sales would be low. There are ups and down in businesses. That is one of the things we engage our members on, for them to recognise that there are circles in everything in life.

 So, when the business is going well that is when to plan for when the business is down because in every business, there is a high time and a low time. In our low time is really bad. But those that are our members understand, especially those that have gone through a lot of our training. We did quite a number of that during the Covid.  We already prepared their minds because after Covid the industry for us had not really recovered. It started recovering in 2021 by 2022, the trapped funds’ issues took us back again to the period of Covid, even though not as bad as that, because during Covid there were no sales at all. Now there is sales just that the sales are just reduced. Sales are not being done through travel agencies in Nigeria.

As you said, a lot of people go to neighbouring countries to buy tickets. But it is still done through us through some other means. So, these is our low moments and like I always say to my members, there are ups and downs in anything.

Remember the trapped funds’ issue happened in 2016/2017 before we were brought to this same situation, where airlines closed up their inventory, and opened only the highest fares. There were a lot of restrictions that they placed on travel agencies in Nigeria. But we came over it. We started late 2015 into 2016/2017, it came to an end and everything went back to normal.  We are back there again and it will pass.

 Are there moves by the association to salvage the situation?

This situation is for the government to salvage. It is not in the hands of anybody. That is why we as an association can’t salvage it. It is an economic and governmental issue. What we can do as an association is to engage the government, airlines and our members. We had an extensive press conference which led to us being invited by the National Assembly. It was after our press conference the government started talking to the airlines. They had like two or three sessions with the airlines on the government’s plans to start paying these funds.

Article first published on the Punch Website

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