… Airlines tickets for first class travelers hit $7000
… Only government officials can afford new price — Ojikutu
… Businesses may soon shift to Ghana, Benin Republic if needful is not done — Adewale
By Uthman Salami and Seun Ibiyemi
Stakeholders in the Aviation industry have warned that more foreign Airlines may soon join Emirates Airlines to suspend operations in Nigeria over $600 million unrepatriated revenue.
The $600 million unrepatriated revenue is accruing from sales of flight tickets in local currencies, which the affected companies have found difficult to repatriate even after spirited efforts made to make the Central Bank to place the foreign airlines on the cash-call priority list.
This is on the heels of the escalated price of flight tickets, which the industry has witnessed in recent times.
The first class price ticket has now hit $7000, the rate the industry experts have said could only be afforded by government sponsored travelers.
Though the stuck revenue is neither peculiar to only Nigeria nor the first time such issue would crop up in the country, this is coming at a time when Nigeria is witnessing its toughest time.
Some African countries who are currently clad with similar issues include Zimbabwe – $100 million; Algeria – $96 million; Eritrea – $79 million and Ethiopia, $75 million.
Recall that the aviation sector in the country was plagued with a similar issue in 2016 when foreign airlines were unable to pull out funds from the official window, hence trapped funds rose to $600 million, causing many foreign airlines to avoid Nigeria’s route.
In an already crisis-ridden aviation sector that is battling with skyrocketed prices of Aviation fuel, stakeholders have warned that urgent steps need be taken to avoid a repeat of the spree of foreign airlines that exited the country in 2016.
Citing the inability to repatriate its earnings in foreign exchange from Nigeria, the Emirates Airlines announced the suspension of its flight operations to Nigeria, starting September 1, 2022.
The company had asked Hadi Sirika, minister of aviation, to support the repatriation of its revenue, amounting to $85 million.
The Airlines disclosed that the decision would minimize “further losses and reduce the impact on its operational costs that continue to accumulate in the Nigerian market.
“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 remain keen to serve Nigeria, and our operations provide much-needed connectivity for Nigerian travelers, providing access to trade and tourism opportunities to Dubai, and to our broader network of over 130 destinations.”
Speaking with Nigerian NewsDirect yesterday, an aviation expert, John Ojikutu queried why it was difficult for the Central Bank to support the foreign Airlines in repatriating the stuck fund.
“I don’t know why the Central Bank of Nigeria (CBN) cannot give them their money. These service providers pay in dollars. They do not pay in naira. So where’s the dollars they paid these people?
“That’s where we should start from. Where are the dollars they paid for passengers service charge? Where are the dollars they paid for landing and parking? Where are the dollars they paid for handling to NAHCO and SAHCO. Ask them if these foreign airlines pay them in naira. The answer is no because they pay in dollars.
Speaking further, he urged the affected foreign Airlines to track the stuck funds to their respective banks, noting that “their money cannot be trapped in the CBN, their money will definitely be trapped with their banks.
“That is where they should start from. By the time they are choosing these banks, the banks must be ready to repatriate their money for them. That is the way I see some of these arguments.
“I remember in 1989/90 and then 2007, all the money that these people were making in dollars, they should open a domiciliary account for it in the CBN. Can all these agencies and the private companies account for the dollars they collected on commercial aviation in this country? Can they?
“The same thing with NIMASA, NPA. They all collect money; these are the money that they should keep from the dollars coming from NNPC.
“These are the money they should keep in domiciliary accounts because a lot of them still have to go out the way they came in. The foreign airlines, the foreign ships, when they come in, they pay in dollars, so where’s the dollars?
“We should be hearing from their banks, not even the central bank except their banks are the ones shouting that they took the money to the central bank and the money is trapped there.
“The money cannot be trapped in CBN if CBN has not given them money. If the CBN cannot exchange their money for them, it returns the money to them. So, their money cannot be trapped there. If their money is trapped there, we’ll have to call the CBN to account for it.
“If they say their money is trapped, do they deal directly with the central bank? Their money should be trapped with their banks.
“They should hold their banks responsible if they cannot get their naira back. It is a very serious offense as far as I am concerned.
He explained that “the first class ticket has now hit $7000, wondering who could pay such a huge amount?
He added that “It is difficult. The only people that can pay for it are government agencies and companies. If those at the national assembly want to travel out, are they taking the N4 million from their pockets?
“It’s the government that will pay for it. If the Chief Executive or Directors of private companies, including banks are going to travel out, are they taking the money from their pockets?
“These are the only people that can travel except if you buy a ticket from abroad, except someone who pays for your ticket from abroad, but then, I don’t know if what they are charging here is the same as what they are charging there.
“But I’m sure with the way things are going, if you are coming from Nigeria, you will pay that $7000 because of their money that is trapped in CBN.
“For me, it is a laughing matter. For us, there is no way we should get ourselves to this level. I have been watching this trend since 2007 when Obasanjo told them to take their dollars in a domiciliary account at the CBN.
“It makes sense to me, so that if there is a shortage of dollars, when you deposit the dollars there, they pay you in naira. If you put your dollar there at the time it was N180, will they not give them the same even now that dollar to naira had risen? We were not looking at it as a problem that was coming.
“Let’s talk about domestic airlines here. Right from the time Obasanjo came in, in 2000, we were importing fuel. I was at the airport from 1990 to 1993.
“Tickets to Abuja were selling between N3000 and N4000. Dollar was exchanging at N40. And we were refining fuel here. All the fuel refineries were working.
“Suddenly, all the refineries collapsed when Obasanjo came. Can you now tell me that you’ll be selling tickets at N3000 to N4000 when you are importing fuel when the dollar has gotten to about N80 to N100? From that moment, the dollar kept increasing. From N80 to N120 to N180 to N200 to N360.
“There was a time it went to N500 and then it went down again to N360. From that moment, it started climbing to N400, N500 and N600. And the airlines are not looking at it.
“The only thing they depended on was government intervention. And the government was giving them intervention. When I say government, there are people in government giving them intervention.
“Let me give you one scenario, which I knew because I was a member of a committee. In 2007, when government felt we should help the agencies, FAAN, NAMA and co,”
… Businesses may soon shift to Ghana, Benin Republic if needful is not done — Adewale
businesses will be shifted to neighbouring countries like Ghana and Benin Republic
Chief Executive Officer of an aviation company, Mr Segun Adewale, urged the Federal Government to expeditiously repatriate the 600 million dollars ticket revenue belonging to foreign airlines operating in the country.
Adewale, also former Vice-Chairman, National Association of Nigerian Travel Agencies (NANTA) made the charge in a statement he issued on Saturday in Ikeja.
Adewale stated that revenue from ticket sales which accumulated from 2021 till July 2022 was blocked by the CBN from being repatriated to airline operators through the International Air Transport Association (IATA).
“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,’’ Adewale stated.
The airline chief 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.
Adewale appealed to the Ministers of Aviation, Finance and the CBN to do the needful and ensure release of FOREX.
Meanwhile, the International Air Transport Association (IATA), the top global trade association of airlines, has criticized Nigeria’s failure to allow international airlines repatriate their profits, warning it may cause the country more damage.
The group said the amount airlines have been unable to repatriate from the country rose to $464 million (N199.2 billion) in July.
In a statement on its official Twitter handle on Friday, IATA said it was “disappointed” that the Nigerian government did not heed its warnings to allow timely repatriation of the funds.
“The IATA is disappointed that the amount of airline money blocked from repatriation by the #The Nigerian government grew to $464 million in July. #blocked funds,” it said.
“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.”
The reaction came a day after Emirates announced it will suspend all flights to Nigeria from September 1 due to its failure to repatriate money from the country.
Three weeks ago, the airline had in a letter to Nigeria’s Minister of Aviation, Hadi Sirika, said it would reduce the number of flights to Nigeria from August 15 due to its failure to repatriate $85 million.
The airline said the figure has been rising by more than $10 million every month, while operational costs of 11 weekly flights to Lagos and five to Abuja continued to accumulate.
The IATA said airlines cannot be expected to fly if they cannot realize revenue from ticket sales and warned that loss of connectivity harms the economy, investor confidence, jobs and people’s lives.
“The Government of Nigeria needs to prioritize the release of funds before more damage is done, IATA added.