Abdullateef Aliyu
There's a mounting pressure on the federal government to make significant releases to clear the foreign airlines' trapped funds amidst their threat to exit Nigeria.
This is despite the release of $61.4m by the Central Bank of
Nigeria (CBN) last week as part of efforts to clear outstanding liabilities and
bolster the foreign exchange market.
While there's no updated data on the foreign airlines' funds
trapped in Nigeria, our correspondent reports that the money was $793m as of
December 2023.
According to data from the International Air Transport
Association (IATA), Nigeria accounted for a substantial part of airlines'
trapped funds globally.
The foreign airlines said the funds keep mounting hence the
$61.4m was too infinitesimal to cover anything.
A foreign airline representative who spoke with our
correspondent in confidence said the trapped funds hinder the operations of
their airlines.
“We all know what the margin is for airlines. If your funds
are trapped to that level, how do you fund your operations? From loans or what?
You can fund from other locations for how long? If every nation holds back
funds, will there be international flights?
Foreign airlines mull cut of Nigerian operations
Amidst the raging controversy over dollar settlement,
airlines are said to be considering the option of reducing or suspending their
operations outright.
It was learnt that despite the substantial resolution of
diplomatic issues with the United Arab Emirates (UAE), the non-payment of
Emirates Airlines’ trapped funds is responsible for the delay in resumption of
flights to Nigeria.
“The airline is yet to see sufficient commitment of the
Nigerian government to clear Emirates trapped funds which is the major reason
for the airline’s suspension of operations in the first place,” the source
said.
It would be recalled that Emirates suspended all flights to
Nigeria on September 1, 2022 and despite two different visits of President Bola
Tinubu to the UAE and follow-up visits by the Minister of Aviation, Festus
Keyamo, the airline is yet to agree on resuming flights to Nigeria.
“Yes, the trapped funds issue seems deadlocked,” said a
source.
Similarly, other airlines are increasingly restless over
their trapped funds, threatening to call it quits in Nigeria as the funds keep
increasing.
"It is not a fair competition. My airline flies to
Nigeria and our revenue is trapped. A Nigerian airline flies to our base
country and they get their monies. Where is the fair competition?,"
another foreign airline representative said.
Aviation analyst, Group Capt. John Ojikutu, said aviation
agencies would lose 80 per cent of their revenues if foreign airlines should
leave in protest.
He said, "80% of our earnings in commercial aviation
will be gone if the foreign airlines carry out their threats to withdraw their
operations in Nigeria.
"Whoever knows Keyamo should tell him now. Whoever
knows Tinubu should tell him now too to tell Keyamo to find out what happened
to the forex earnings ($2.5bn) that the Nigeria Aviation service providers
collected from the foreign airlines annually? This is not a joking matter like
the palliatives and the subsidies."
The General Secretary of the Aviation Roundtable and Safety
Initiative (ART), Mr Olumide Ohunayo, decried a situation where foreign
airlines pay for services in Nigeria in dollars yet they cannot get dollars to
repatriate their funds.
According to him, if the foreign airlines should leave as
being threatened, Nigerian airlines cannot fill the vacuum.
More so he advised that Nigeria should take advantage of the
reciprocity in the Bilateral Air Service Agreement (BASA) to begin to operate
some of those routes operated by foreign airlines.
He said, "The truth is that our airlines cannot fill
the vacuum, that's almost impossible, as much as I would not advocate for us to
increase their frequencies, I think it's time for us to start using those
frequencies that are ours by virtue of the reciprocity in the bilateral service
agreement we have with different counties.