The International Air Transport Association (IATA), recently opened a can of worms in Nigeria’s aviation sector when it alleged that Nigeria is withholding $450 million in revenue of international carriers operating in the country.
This is in excess of the $85 million allegedly been trapped from the revenue of Emirates Airlines.
IATA said $1 billion of revenue belonging to foreign airlines is being withheld across Africa, although Nigeria is the only country where the value of blocked funds has risen.
IATA said, “The $450 million, the largest amount withheld by any African nation, in May was 12.5 per cent higher than the previous month.
“Algeria, Ethiopia and Zimbabwe, who combined are withholding $271 million from foreign airlines, in May marginally paid down what they owed. Eritrea was unchanged at $75 million.”
IATA vice president for Africa and the Middle East, Kamal Al Awadhi, described talks with Nigerian officials to release the funds as a “hectic ride.”
Al Awadhi, who spoke in Doha on the eve of IATA’s annual meeting of airline chiefs sai, “We keep chipping away and hoping that it clicks that this is going to damage the country down the road.”
IATA has so far had held two rounds of talks with Nigerian officials, including from the Central Bank, who Al Awadhi said were “not responsive” to releasing cash.
Another round of talks between IATA and Nigerian officials is expected to start soon, the airline lobby group said, without specifying when.
“Hopefully, we can get some sort of solution where it starts going down (but) it won’t, I doubt, (it will) be paid in a single shot,” Al Awadhi said.
He said Nigerian officials had blamed the foreign currency shortage for not repatriating the airline revenue.
Nigeria, which is Africa’s largest economy has restricted access to foreign currency for imports and for investors seeking to repatriate their profits as the nation tackles a severe dollar shortage.
Nigeria Working To Resolve The Issue – Minister
Meanwhile, the minister for Information and Culture, Lai Mohammed said that the federal government is working hard to resolve the issues.
The minister said, “On the trapped funds, I can tell you that the relevant authorities are working hard on that issue.”
Stakeholders Want Issues Sorted Out Fast
Chief executive officer of an aviation company, Segun Adewale, has urged the federal government to expeditiously repatriate the about $450 million ticket revenue belonging to foreign airlines operating in the country.
Adewale, also former vice-chairman, National Association of Nigerian Travel Agencies (NANTA) gave the charge in a statement he issued.
Adewale appealed to the ministers of aviation, finance and the CBN to do the needful and ensure release of forex.
Adewale stated that revenue from ticket sales which accumulated since 2021 till July 2022 was blocked by the CBN from being repatriated to airline operators through the International Air Transport Association.
He said, “The repatriation of revenues of all tickets sold to travelers by airline operators to their home offices is the responsibility of the CBN, but it has refused to release the equivalent in dollars for service already rendered.
“We have lost so many airlines and jobs are being lost in the aviation sector and at airports generally.
“The development is inimical to our economic wellbeing as a nation; from the spiritual angle of thought, it is wrong to muzzle the ox that treads the corn.”
He also decried that the blocked funds had already led to reduction of air connectivity and restriction of flights.
He stated that it was disheartening that the same forex being denied the airlines was being released to import non-essential products such as champagne and toothpicks.
“If foreign airlines suspend flight operations, businesses will be shifted to neighbouring countries like Ghana and Benin Republic.
“The issue is so difficult for the operators, who now borrow forex from their home offices to fuel their airplanes.
“With the increase in dollar rate leading to rise in flight ticket prices, especially en-route America and Dubai, which is now over a million naira, the environment is getting hostile for businesses to thrive,’’ he stated.
One of the airlines, Emirates Airlines had announced the suspension of its flight operations in Nigeria from Sept. 1, over its inability to repatriate its funds from the country.
NUATE Seeks Crude Swap To Defray Backlog
The National Union of Air Transport Employees, NUATE, has called on the federal government to utilise crude trapped funds.
The union stated that the development which has turned the nation’s image negatively globally if not addressed now poses a major threat to the employment and livelihood of thousands of workers.
NUATE made this call in a letter signed by its general secretary, Ocheme Aba, titled: ‘Foreign Airlines’ Trapped Dollars: A Looming Catastrophy – Call For Extraordinary Action’ and addressed to the minister of aviation, Hadi Sirika.
Part of the letter reads, “The ugly situation of hundreds of millions of dollars earned by foreign airlines operating into Nigeria, but which they have been unable to repatriate due to Nigeria’s foreign exchange challenges has already been blown out by local and foreign media, bringing colossal collateral damage to Nigeria’s image.
“And we find it ineluctable to weigh into the matter, being the trade union to which all workers in the foreign airlines belong. As such our stake in this imbroglio is, without question, much higher than most other stakeholders.
“We feel obliged to mention the threat to the employment and livelihood of thousands of workers of these foreign airlines should there result in further significant reductions, or outright shutdown, of operations of these airlines. We must also mention the concomitant losses (not excluding jobs) that would accrue to several service providers who are dependent on, almost entirely, on foreign airlines – ground handling, inflight catering, logistics, aviation security, etc. This, unfortunately, is already visible from the reductions in operations that have come into effect in the past weeks resulting from the impasse.
“It is important to state that we are very mindful of current difficulties being experienced by the state with regard to the acute shortage of foreign exchange earnings. We also recognise that there are no straight fixes available. But, in view of the apparent calamity that will surely befall the nation if the situation is not ameliorated quickly enough, we urge you to prevail on the federal government to take extraordinary measures to resolve the quagmire. Such a measure could include the use of a crude oil swap to defray the backlog in the first instance.
“Please, do not be covered by the enormity of this, and other, problems presently mitigating the sector’s projected growth. We offer our hand of support, whatever that counts, at this very trying time. We equally make ourselves available for any stakeholders meeting convened to address the matter.
“While awaiting urgently needed results, you may count on our highest regards as always.”