…Foreign airlines contribute 80% of our earnings — Expert
…FAAN, NAMA, others accuse Minister of ‘desperate plot’ to cripple Lagos Airport
By Seun Ibiyemi
As foreign airlines trapped fund increases and failure of the Federal government to resolve payment of $800m, Nigeria may lose over 80 per cent of its earnings in commercial aviation to neighboring countries.
To recover from shortage of dollar in the country, the federal government through the Central Bank of Nigeria placed restriction on an estimated $450 million in revenues belonging to foreign airlines which rose to $800m according to data from IATA.
Findings by Nigerian NewsDirect show that the situation could hamper air connectivity, economic growth, and the development of the country’s aviation sector.
In December, 2022, Foreign Airlines’ fund trapped in Africa stood at $1.1 billion with Nigeria having half of the share of the blocked funds at $550million and increased to $743, 721,097 from $662m in January 2023.
In 2023, the International Air Transport Association revealed that the total amount of foreign airlines’ trapped funds in Nigeria has risen to $802m and warned the Nigerian government that the situation could hamper air connectivity, economic growth, and the development of the country’s aviation sector.
According to report, the total amount of blocked funds in Africa is $1.6bn, out of which Nigeria has $802m.
Recall that the Director-General, IATA, Willie Walsh while launching “Focus Africa,” a new initiative aimed at strengthening aviation’s contribution to Africa’s economic and social development said that “Airlines may be forced to reduce their service in the countries blocking funds; this is a very important issue to airlines and IATA. It is capable of affecting the growth of African aviation,”.
He listed blocked funds as a big issue that could affect the Single African Air Transport Market project and hamper the growth potential of Africa’s aviation sector.
“Blocked funds is one of the biggest issues that will affect aviation. There has been a 10 per cent increase in blocked funds recently. The total amount of blocked funds is huge. This is one of the things we need to address to move forward.”
IATA Area Manager, West and Central Africa, Dr Samson Fatokun said increasing backlog of international airlines blocked funds in Nigeria had sent a message against Foreign Direct Investment (FDI) in Nigeria.
According to him, potential investors are reading from the plight of airlines that they may not be able to repatriate their funds from Nigeria, at a time when Nigeria is expecting more investments.
“ Foreign airlines fly into Nigeria within the legal framework of the Bilateral Air Service Agreement (BASA), signed between their countries and the Federal Republic of Nigeria.
“It is agreed in those BASAs that Nigeria will facilitate the repatriation of the funds of the other party’s airline. Nigeria flouts this contractual obligation by not facilitating enough the repatriation of airlines’ funds,” he said.
He said some airlines had decided to reduce number of their frequencies or seats made available for sale in the Nigerian market to mitigate increasing backlog of their funds in Nigeria and its impact on their cash flow.
He stated that this reduced person and cargo access to Nigeria, and e-commerce that relied on aviation for speedy delivery would be impacted in the country.
“ Moreover, going by the law of demand and supply, the reduction of airline inventories in the Nigerian market will lead to ticket fare increase which would further burden average Nigerians and take air travel away from the reach of many Nigerians,” he said.
FAAN, NAMA, others accuse Minister of ‘desperate plot’ to cripple Lagos Airport
Aviation workers have accused the Minister of Aviation, Hadi Sirika, of plotting to cripple the Murtala International Airport, Lagos as the hub of the aviation sector in the Nigeria.
The allegation which has become part of the reason for a nationwide strike was fueled by the recent decision by Sirika to demolish the offices of the Federal Airports Authority of Nigeria (FAAN) and Nigerian Airspace Management Agency (NAMA) in Lagos.
Barely a year after, Sirika was renominated as the aviation minister in 2019, he gave a 45-day ultimatum to relocate the corporate headquarters of the agencies under the ministry from Lagos to Abuja.
He gave the directive in a letter dated 4th May 2020, which was circulated online at the time.
The Aviation unions comprising the National Union of Air Transport Employees, Air Transport Services Senior Staff Association of Nigeria; the National Association of Aircraft Pilots and Engineers and the Association of Nigerian Aviation Professionals had protested the planned demolition.
But the matter took a different dimension when the Minister ordered the demolition of the agencies building at the Murtala Muhammed Airport for the planned aerotropolis project.
The unions have also argued that the aviation master plan only covers the Nnamdi Azikiwe Airport, Abuja.
The demolition moves and non-implementation of the conditions of service signed with the staff of the aviation agencies led to the two-day warning strike which began on Monday April 17, and will run till Tuesday April 18, 2023.
A top member of one of the aviation unions who spoke to journalists on condition of anonymity accused the Minister of deliberate attempt to whittle down the capacity and influence of Lagos in the aviation industry.
He said, “Almost all airlines in Nigeria have their facilities and headquarters in Lagos. Therefore, carrying out oversight on them is better with the aviation parastatals HQs located in Lagos
“We became worried why he decided to make this move even when it costs parastatals such as NCAA much more to carry out safety oversight on the airlines. The movement of HQs to Abuja was followed by massive relocation of most of the staff from Lagos to Abuja. The staff in Lagos were not sufficient to continue performing these safety oversights.
“NCAA would send Inspectors from Abuja, spend money on their tickets and duty tour allowances just to bring them to Lagos to perform inspections. This was not ok. The ease of doing business became worse. Yet, the Minister was never moved to reconsider his earlier order.
“The Unions told him clearly that in the master plan of Lagos airport, there was never plan to build an aerotropolis. Therefore, we became worried about what his real motive really is considering that the major problems the airlines wanted from the government was to build an MRO (Maintenance Repair and Overhaul).
“Since airlines spend millions of dollars yearly to send their airplanes outside the country for maintenance, if the government would actually build an MRO here in Nigeria, it would drastically reduce the expenses these airlines make on aircraft maintenance, and that would enable them to easily reduce cost of flight ticket.”
He further alleged that the Minister is trying to demolish the offices to make it difficult for the next administration to reverse the order.
He said, “Knowing that he (Sirika) has little or no time left in office, and knowing that the next coming government may revert his earlier decision and bring back the aviation parastatals HQs back to Lagos, he decided to demolish the buildings so that the aviation agencies would have no place to return to if the earlier order was reversed.
“This is the only plausible reason for his being so bent on demolishing the buildings. He wants the aviation agencies to remain under the control of the North, and have the HQs located in the northern region.”
Sirika, had at the National Aviation Stakeholders Forum held in Abuja, said that the Lagos office of FAAN and the Nigerian NAMA would be demolished to pave way for the take-off of the aerotropolis project as one of the items on the aviation sector roadmap.
He said, “FAAN/NAMA in Lagos will be demolished and a proper aerotropolis setup with cinema, shopping malls, etc. It sounds ambitious but it will happen before we leave. It involves the development of Nigeria’s major commercial airports and surrounding communities into efficient, profitable and self-sustaining commercial hubs through increased private sector participation and Foreign Direct Investment (FDI) will create jobs and grow the local industry.
“The project will be structured as a Public Private Partnership (PPP) arrangement where the private partner will be required to design, develop, finance and maintain the Aerotropolis during the agreed period. The Aerotropolis will contain the full complement of commercial facilities that support airlines and aviation linked businesses. Other components of the project include the development of hospitality and tourism oriented real estate assets; and ancillary support infrastructure.
“It is in the procurement phase. From there, the selection of the preferred partner and we commence negotiation. We will demolish necessary structures to have it. It’ll be one of our major projects before we leave. Same with the national carrier.”
Speaking with Nigerian NewsDirect over a telephone chat, the Chief Executive Officer, Centurion Security Limited, Capt John Ojikutu (retd) said that “shutting down movement in the airport, is like shutting the road for their earnings of their agencies, if you are working with an agency and you close the shop that brings in money, is your salary you are shutting.
“Unfortunately, it affects the foreign airlines and they are killing our earnings, foreign airlines contributes minimum 80 per cent of our earnings in commercial aviation.
“The number of passengers they bring are being charged $100 from each foreign passenger, while our local passengers are paying just N2,000,
“We are collecting minimum of 2,000-3,000 dollars for landing and parking, so if they are going on strike, like I stated earlier, they should go on strike to the offices that employed them and not to the common areas, they can protest at FAAN, NAMA headquarters, not at the airport, the airport is a common land for everybody. It does not belong to anyone of these people, especially the foreign airlines.
“If your airlines do not pay your service provider, how do they pay or get their earnings, the only way that can be done is to go to the offices of their employers as to disturb, and disrupt them and allow other people to operate on their daily activities.”