Nigeria to lose revenue over foreign airlines’ trapped funds

Nigeria is set to lose revenue accruing from foreign airlines operating in Nigeria as most of the airlines have decided to cut down on operations in the country following the refusal of the Nigerian government to allow them repatriate their trapped funds.

Recall that in July, Vice-President for Africa and the Middle East, International Air Transport Association (IATA), Kamil Al Awadhi at the 78th annual general meeting and world air transport summit in Qatar disclosed that foreign airlines are unable to repatriate about $450 million in earnings.

Al Awadhi said as of April, a total of $1.6 billion in funds were blocked by 20 countries worldwide — with 67 percent of it tied up in 12 African nations.

“Nigeria alone is holding back $450 million. It is the most amount blocked by any single African country, and the amount is rising every week,” Al Awadhi had complained.

According to him, cash flow is key for airlines’ business sustainability — when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve.

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Recently, Emirates Airlines, the flag carrier of the United Arab Emirates (UAE), said it would reduce flight operations to Nigeria over the inability to repatriate about $85 million in revenue.

“We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” the airline said in a recent statement.

It was learnt that the federal government’s refusal to allow access to the sum is leading to increasing restrictions imposed by airlines on tickets out of Nigeria.

According to a source, some airlines have “dramatically restricted which classes can be sold to enable them to collect more naira per seat to offset their currency exchange woes.”

Confirming the development, Susan Akporiaye, president of the National Association of Nigeria Travel Agencies (NANTA), said the restrictions, mainly on the type of tickets sold, affect travel agencies.

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“We can longer sell tickets where the point of origin is not Nigeria — UK or USA to Nigeria return — for example,” she said.

According to her, airlines have stopped selling the lower inventories because they make losses from them if they have to go to the parallel market to get dollars to fund operations.

“The higher inventory is what would make them able to break even and still have a little spread to be able to pay their staff,” Akporiaye said.

But the country itself is not shielded from the boomeranging effect of declining the repatriation of funds. With travel agencies buying tickets from other markets for their clients, Nigeria is, therefore, losing revenue from ticket sales.