The Nigerian travel sector is experiencing a major shake-up, with local agencies gradually being edged out of the market.

Foreign travel companies now dominate the space, benefiting from global operating licenses, significantly lower airfare rates, and other structural advantages that give them a strong competitive edge.

As a result, indigenous travel firms are struggling to stay afloat, reportedly losing as much as 40% of their market share—a troubling indication that they are being systematically pushed out of the industry.

"Cross-border trading" has been identified as the leading factor behind the decline in market share.

This damaging practice has given foreign travel agencies an unfair advantage in the Nigerian market, enabling them to sell airline tickets at much lower prices than local agencies.

Experts have raised serious concerns about the growing impact of this trend, which has already forced many Nigerian travel agencies to shut down, sparking fears about the long-term sustainability of the country's travel sector.

According to reports, the problem is rooted in foreign agencies' use of global operating licenses, allowing them to offer flight tickets originating from Nigeria at prices that local agencies simply cannot match.

The roots of the problem, according to analysts, can be traced back to the tenure of former President Muhammadu Buhari. His administration withheld funds intended for international airlines from ticket sales in Nigeria. 

In response to being unable to repatriate these funds, international airlines imposed severe restrictions on ticket sales in the country, including blocking lower-priced inventories to limit their financial losses.

Due to the lack of access to lower-priced tickets, Nigerian travel agencies have seen flight costs from the country skyrocket. This has created a window for foreign agencies, who, with support from international airlines, can offer cheaper fares for flights originating from Nigeria.

To prevent funds from being trapped, airlines have provided these foreign agencies with better pricing, which has put Nigerian agencies at a distinct disadvantage. 

As a result, many local agencies have struggled to survive, causing some smaller businesses to shut down.

Unable to afford discounted tickets because of airline restrictions, Nigerian travel professionals had no choice but to depend on foreign agencies to issue tickets for their clients.

This shift has led to a surge in business for international agencies, prompting many to open offices in Nigeria to take advantage of the situation. 

Meanwhile, Nigerian agencies have been left without access to lower inventory options, allowing foreign travel companies with global licenses to flood the Nigerian market.

Investigation shows that international agencies, including some owned by Nigerians, have a significant edge over local competitors due to their global operating licenses. These agencies, operating in multiple markets, can compare airfares across regions and provide Nigerian customers with the most affordable options.

For example, a Lagos-to-London ticket, typically priced at N1.1 million, could be sold by an international agency with a Ghanaian ID for N900,000—accessed through their Ghanaian system—while Nigerian agencies with only a Nigerian ID cannot access the same fare. This advantage allows foreign agencies to promote unbeatable deals that local agencies cannot match.

“For instance, a Lagos-London-Lagos ticket of the same class and airline with a Nigerian-based ID is N1.8 million, but when you use a UK-based ID for the same airline, date, and class of ticket for the same Lagos-London-Lagos route, a passenger will pay N1.2 million despite the fact that the flight originates from Nigeria.”

Although Nigerian travel agencies have resumed normal operations following the Federal Government's clearance of trapped funds, cross-border trading continues. 

International agencies, now well-established in the Nigerian market, still use their global networks to find the lowest fares, taking advantage of their foreign IDs to sell tickets to Nigerian customers. 

This is why these foreign agencies are able to advertise cheaper fares on their websites, while local Nigerian agencies, limited to their Nigerian IDs, can only access fares meant for the Nigerian market.

Nigerian travel consultants face a significant challenge due to the fragmented nature of their operations, especially when compared to international agencies that often function as consolidated companies.

 These foreign agencies typically pool resources to purchase airline seats in bulk at discounted rates, which allows them to offer tickets at lower prices.

An insider in the industry explains how this works: “In January, for example, five international agencies might join forces to buy 500 economy class seats ahead of the busy summer travel period in July/August. Each agency would secure 100 seats. 

They would negotiate with airlines to pay N1 million per seat, despite the listed price on the airline’s website being N1.2 million. By purchasing in bulk, the agencies collectively pay a total of N100 million for the 100 seats. 

These seats, which are then blocked—typically 60 from Lagos and 40 from Abuja—are removed from the airline’s website after the purchase, as they were bought in advance through consolidation.”

The National Association of Nigerian Travel Agents (NANTA) is calling on the government to step in and address the issue of cross-border ticket trading, which is putting local travel agencies at a disadvantage.

According to NANTA’s president, Yinka Folami, foreign agencies have been exploiting SOTO (Sold Outside, Ticketed Outside) tickets—intended for occasional use—to offer lower fares than Nigerian agencies, particularly following the trapped funds crisis in Nigeria. 

This unethical practice has resulted in a 40% market share loss for local agencies. NANTA has discussed the issue with the Ministry of Aviation and is hopeful that Minister Festus Keyamo will take swift action to ensure fair regulations and prevent further exploitation of the Nigerian market.