Trapped funds: Travel agencies shutdown operations as airlines shut GDS

Travel agencies have been shutting down operations in Nigeria over the last six months as some airlines, especially European, American, and the Middle East, including Ethiopian Airlines from Africa have shut their Global Distribution Systems (GDS) against the travel agencies due to the challenge of trapped funds.

The shutting down of the GDS automatically stops travel agents who are regarded as travel partners to airlines from booking flights for their clients through the platform.

Airlines like Delta, Air France/KLM, Emirates, British Airways, Virgin Atlantic, Lufthansa, Turkish, and Qatar among others have closed down their GDS against the travel agency because of the unpleasant situation of trapped funds.

The implication of this is that travel agencies will no longer be able to sell air tickets to their willing clients, while passengers are compelled to buy tickets at the black-market rate of N730 to a dollar to purchase air tickets.

The bulk of commissions of travel agencies is earned from foreign airlines. The situation since January has further compounded their challenges as bills continue to rise, yet no resource is earned.

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According to a stakeholder, all efforts by the umbrella body of travel agencies in Nigeria, the National Association of Nigeria Travel Agencies (NANTA) to intervene in the last three months have proved abortive.

He said almost two months after the federal government directed the Central Bank of Nigeria (CBN) to release $265 million, representing 50% of the trapped funds, the situation was yet to abate.

The CEO said air traffic had dropped on international routes in Nigeria, while the airlines have continued to squeeze the travel agencies out of business through their antics.

The helmsman also said most of their clients, especially those who have their children in Europe and America for education purposes, have begun their withdrawal and moved to institutions in West Africa in order to save the cost of airfares.

Besides, a top staff with one of the leading airlines in Africa said the airline was yet to get any amount of money from its trapped funds in Nigeria since January.

According to him, the airline had over $160 million as trapped funds in the country, while efforts by the carrier to recover the sum had failed despite the involvement of the International Air Transport Association (IATA).

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He, however, said unlike some of the foreign airlines that removed the travel agencies from their GDS, the airline refused to do so because of the consequence on the travel agencies and the effect on the traveling public.

“We now pay for fueling and some other charges in naira, but there are some critical ones that have to be paid in dollars and we have a lot of money stuck in Nigeria.

“The money is in the hands of the CBN, we are not earning interest on it, yet we can’t get it. The airlines are losing big time,” he said.

President of NANTA, Mrs. Susan Akporiaye at a news conference in Lagos had said an economy flight ticket of N300,000 now sells for N1.5 million, while another N1 million is charged for change of travel dates.

Akporiaye, while appreciating the response to the release of some funds, urged the government to, as a matter of urgency, open further windows of engagement by calling a meeting with all parties.