The International Air Transport Association (IATA) has made a public announcement clarifying they are not in charge of the currency rate used for international airline tickets in Nigeria.
This follows reports that claimed IATA was responsible for the current increase in currency rates.
At its twice-weekly retail foreign exchange auctions, IATA merely applies the spot rate at which the Central Bank of Nigeria sells USD to banks on the open market.
The exchange rate is not constant, therefore if the CBN increases the price at which USD is sold, the exchange rate used to calculate airfares would do likewise, and vice versa.
The IATA, responded to these claims, “The exchange rate applied to international flight tickets sold in Nigeria are not decided by IATA, and it is erroneous to identify them as the “IATA exchange rate.”
IATA claims that airline tickets for international flights departing from Nigeria are priced in US dollars before being converted to the local currency, the naira, for sale on the Nigerian market. The official currency exchange rate issued by the nation’s financial system is used in the conversion procedure.
IATA simply applies the spot rate at which the Central Bank of Nigeria(CBN) sells the United State Dollar(USD) through banks to the market at its fortnightly retail foreign exchange auctions.
The rate is not static, meaning that if the rate at which the CBN sells USD goes up, the exchange rate applied to airfares will follow suit and vice versa.
The New Telegraph a few days ago reported that the exchange rates for international air tickets in Nigeria recently rose by 37.5 percent above the official rate of N461.1/dollar to N634.0/ dollar. This increase has led to international airlines operating in Nigeria significantly increasing their airfares.
The statement reads, “The exchange rate applied to international flight tickets sold in Nigeria are not determined by IATA and it is incorrect to describe them as the “IATA exchange rate”.
“Air fares for international flights from Nigeria are denominated in US Dollars and converted into Naira, the local currency, for sale in the Nigerian market.
“These conversions use the official prevailing exchange rate provided by the country’s financial system.
“IATA simply applies the spot rate at which the Central Bank of Nigeria sells USD through banks to the market, at its fortnightly retail foreign exchange auctions.
“The rate is not static, i.e. if the rate at which the CBN sells USD goes up, the exchange rate applied to airfares will follow and vice versa.”