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Business News of Saturday, 20 August 2022


IATA slams Nigeria over $464m foreign carriers’ funds

File photo to illustrate the story File photo to illustrate the story

Global airlines regulator – International Air Transport Association (IATA), has berated the Nigerian government for holding over $464 million belonging to foreign carriers.

The global body said the unfair practice by the Federal Government has prompted Emirates Airlines to stop flying into Nigeria effective September 1, 2022.

In a statement signed by IATA’s Regional Vice President for Africa and Middle East, Kamil Alawadhiit said: “IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. This is airline money and its repatriation is protected by international agreements in which Nigeria participates. IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market. Airlines cannot be expected to fly if they cannot realise the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, impacts jobs and peoples livelihoods. It’s time for the Government of Nigeria to prioritise the release of airline funds before more damage is done.”

The Middle East carrier had said it will suspend all flights from Nigeria effective September 1, 2022.

The carrier cited ongoing difficulties in repatriating trapped funds by the Central Bank of Nigeria (CBN).

In a statement the carrier said: “Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and we have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.

“Regrettably there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective 1 September 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market.

“We sincerely regret the inconvenience caused to our customers, however the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible.

“Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria we will of course re-evaluate our decision. We remain keen to serve Nigeria, and our operations provide much needed connectivity for Nigerian travellers, providing access to trade and tourism opportunities to Dubai, and to our broader network of over 130 destinations.”

Industry stakeholders have excoriated Emirates Airlines over the decision saying it is a subtle pressure on the Federal Government to release dollars that are obviously unavailable.

Industry observers said the reason why the CBN has been unable to pay the blocked fund was because the government does not have money; that blocked fund has been a challenge in Nigeria since 2015. They also observed that while the airline singled out Nigeria, there are other countries that have been unable to allow airlines to have this fund, adding that there is a global economic meltdown, which is exacerbated by the Russia-Ukraine war.

“Please do not succumb to the blackmail of Emirates and their sponsors from within. The country cannot and will not manufacture dollars for them to repatriate their so called over $80 million in Nigeria. When they were competing devilishly to outdo an indigenous, the only airline doing direct flight to Dubai, didn’t they know of the dollar situation here before embarking on having multiple frequencies into Nigeria. They do two flights out of Lagos daily and one out of Abuja daily, bringing the total to three daily flights into Nigeria and 21 flights every week,” said one of the stakeholders, who also remarked that at the time the airline increased its frequency, there was no passenger traffic to justify it.

“Once they heard a Nigerian airline was about to start flying to Dubai, they applied to increase the Lagos frequency to three flights daily, just to stifle the airline out and dominate the route. They didn’t need all these flights but they increased frequency to stifle competition. Nigerians are even angry at the figures they are publishing; they feel having been ripped off by Emirates,” a stakeholder said on condition of anonymity.

An operator who expressed fear about the impact of what he referred to as subtle blackmail of the government also said: “The pressure is on and sooner rather than later the government will succumb and release millions in forex that is supposedly scarce to foreign operators that create and sustain jobs in their respective countries. $600m! Why not? Who does not want to travel abroad? This is a huge subsidy to them in addition to the obscene fares they charge Nigerians which obviously have discounted the Naira at 800/$! Check it out.

“Yet domestic operators cannot get forex to buy spares and pay for their leases or buy aircraft. Yes, how much do we really need? Nothing compared to the direct subsidies given to foreign airlines. Government should support Nigerian aviation investors, who create and sustain millions of jobs here. Airline Operators of Nigeria (AON) should also mount pressure to ensure that these monies are not paid to foreign airlines, while order priorities suffer.”

Some of the stakeholders said what the government should do is to approve that airlines should sell their tickets in foreign currency.

“It’s time for a step back and reassessment. How come the airlines can’t repatriate their sales? Is it that they desire Dangote dollars as opposed to market dollars? This begs the statement of the CBN. We are not the source of delays in repatriation. Everyone on international flights carry dollars, Euros, Yuan, Rand, Dirham. So, why aren’t the airlines converting their naira sales to transfer? Waiting for the banks? Daily the banks are trading market dollars. Here is a case of, how are domestic airlines getting the forex. This is now a case of don’t cry for me Argentina.

“The real story therefore affects all sectors of the economy. Foreign airlines are asking for special treatment. We can’t therefore be blamed if domestic airlines are better at the price mechanics that make them more successful on the routes suspended by foreign carriers. For me I’m going to stop saying funds are trapped, they aren’t. Air Peace should step into the gap voluntarily exited by Emirates, our media must also counter the foreign narrative that funds are trapped,” he said.