Opinion

(Opinion) 4 Airlines That Have Suspended Nigerian Operations Over Trapped Forex Concerns

Published

2 years ago

Sep 4, 2022.

Four Airlines that have suspended operations in Nigeria over trapped Forex concerns.

The Federal Government’s inability to allow foreign airlines operating in the country’s airspace to repatriate their trapped funds has unsettled the nation’s aviation industry forcing some airlines to suspend their operations in Nigeria.

This is as the international carriers operating in Nigeria have repeatedly complained to the Federal Ministry of Aviation, Ministry of Finance and even the Central Bank of Nigeria about their inability to repatriate funds to their home countries and had gotten no helpful attention from any of them thus, keeping them more stranded and desperate.

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Earlier in April, APG Interline E-Ticketing (IET) in a travel advisory issued to its trade partners said (its) members would commence the sale of tickets in Nigeria in dollars. APG IET is an interline platform allowing travel agents to issue a large number of airline tickets.

APG IET members that use Nigerian routes are Middle East Airlines, Turkish Airlines, South Africa Airways, Egypt Air, Asky Airlines, Kenya Airways, Royal Air Maroc and Rwandair.

This means all these airlines have since April 2022 been either selling their air tickets to Nigerian travellers in US dollars or charging deliberately prohibitively hiked airfares in Naira.

APG IET had said “dear travel partners, warm greetings from APG. This is to bring to your notice that with effect from April 19, 2022, GP would only accept issuing of tickets in US dollars and not Naira. This is mainly due to repatriation issues and the Forex situation in the country.

“This would most likely be a temporary measure till the Forex situation improves. Our sincere apologies for any inconvenience this may cause you and your business. Thank you for understanding.”

It would be recalled that in June, the International Air Transport Association, AITA, the Switzerland-based global body representing international airlines, said Nigeria was withholding $450 million in revenue that international carriers operating in the country had earned.

Towards July ends, the funds of over 20 foreign airlines had risen to over $600 million, and stakeholders maintained that if the development was left unchecked, the fund could hit $1 billion before the end of 2022.

Due to this, IATA had warned Nigeria that more carriers might suspend flights to Nigeria if the government failed to address the repatriation of the $464m trapped funds.

The development has further complicated the already multifaceted hardship and poor standard of living caused by a combination of sharp Naira depreciation and a surge in prices of goods and services.

This crisis has put a torrent of pressure on stakeholders, and also hindered Nigerian travel agents from issuing tickets, as many Nigerians seeking to travel abroad are now faced with high fares, reduced capacity and limited travelling options, and left passengers no other option than travelling through neighbouring countries.

Nigeria faces the danger of ‘disconnection’ from the rest of the world, a challenge which also carries with it huge job losses by Nigerians; loss of revenue by Nigeria as well as poor image implications for the country, globally.

More to this, it will cause a decline in the country’s competitiveness in the global aviation sector, diminish investors’ confidence in the country and give a perception to foreign investors that Nigeria is a high-risky place to do business.

The federal government had restricted access to foreign currency for imports and for investors seeking to repatriate their profits due to a shortage of dollars.

Nigeria gets about 90% of its foreign exchange from oil but is struggling to produce due to pipeline theft and years of under-investment.

Between August 2020 to July 2022, the oﬃcial exchange rate of dollars to Naira has moved from ₦381 to ₦415/$, representing only a nine per cent increase.

However, the parallel market moved further from ₦470 to ₦710 within the same period representing a 51 per cent increase and a record 71 per cent arbitrage with the oﬃcial exchange rate creating a huge incentive for round-tripping, price gouging, sharp market practices, and inﬂation.

In a bid to halt International Airlines from mulling out of the country, the Central Bank of Nigeria (CBN) on Friday, August 26, 2022, released the sum of $265 million to airlines operating in the country, to settle outstanding ticket sales.

A breakdown of the figure indicates that the sum of $230 million was released as special FX intervention while another sum of $35 million was released through Retail SMIS Secondary Market Intervention Sales) auction.

IATA, while welcoming the move, said it would encourage foreign carriers to continue servicing the country.

Despite CBN intervention, there are fears that other foreign airlines whose funds are trapped in the Nigerian economy may follow soon.

Below are some of the airlines that have suspended their operations in Nigeria due to trapped funds.

Emirates Airlines

Following complaints of trapped funds, the United Arab Emirates, UAE, flag carrier, Emirates airlines, on Thursday, 18 August noted that it would suspend flights from Nigeria effective September 1, citing its inability to repatriate the over $85 million trapped in Nigeria.

The statement reads in part, that Emirates Airlines “has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and we have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution.

“Regrettably, there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective September 1, 2022, to limit further losses and the 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.”

However, on Wednesday, 31 August 2022, the Dubai-based carrier said it would resume four-weekly flights to Nigeria starting from Thursday 11, September 2022.

According to a notice sent to travel agents in Nigeria, the Dubai-based carrier said it would resume four-weekly flights to Nigeria.

The notice, obtained from one of the travel agents, name withheld, read in part, “Operations to Nigeria will be reinstated with 4-weekly Lagos (LOS) flights EFF.11Sep22.

“EK783/784 DXB-LOS-DXB on days 1,3,5,7 will operate as per the schedule below:

“EK783 11SEP22-30SEP22 1_3_5_7 DXB DEP 1020 LOS ARR 1500 77WR

“EK784 11SEP22-30SEP22 1_3_5_7 LOS DEP 1815 DXB ARR 0500+1 77WR
“Dates/times local.
“NOTE: Lagos flights beyond 30SEP22 will be advised in due course.”

Delta Airlines

The United States’ longest serving operator in Nigeria, Delta Airlines, on Tuesday, 30 August announced that it will from October 4, 2022, suspend flight operations between JFK airport, New York and Lagos.

The airline disclosed this via a statement, stating that the route suspension was to fit into “the current demand environment.”

The statement reads, “Delta is suspending its nonstop service between New York-JFK and Lagos to fit the current demand environment.

“The airline continues to operate service between Lagos and Atlanta and offers onward connections to New York and other cities across the United States.

“Customers impacted by our suspended New York-JFK to Lagos service will be re-accommodated on Delta-operated flights or services operated by our joint venture partners. Delta remains committed to the Nigeria market.”

British Airways

British Airways on Friday, 23 August, stopped travel agents in Nigeria from selling their tickets.

The BA in a notice to travel agents in Nigeria said the ticket distribution firms would no longer be able to make new bookings or service existing bookings made in Nigeria.

The UK airline did not specify the reason for the decision, nor did it state how long the suspension of ticket sales by Nigerian travel agents would last.

BA, however, said it was committed to the Nigerian market and would not stop flights to the country.

The notice to the travel agents, read in part, “We’ve had to make some temporary changes to the way we sell our inventory in Nigeria. As a result, trade partners are currently unable to make new or service any bookings made in Nigeria at this time.

“Existing bookings may still be serviced on both a voluntary or involuntary basis through our Global Engagement Centres and lines. Once a ticket has been revalidated or reissued, British Airways will take ownership of the booking. We remain fully committed to serving the Nigerian market and apologise for this temporary adjustment in operations.”

As a result, Nigerian passengers seeking to fly the UK carrier may have to go to the airline’s website to book flights and possibly pay with local or foreign debit cards.

British Airways had given the federal government an ultimatum within when to pay its trapped funds or watch it pull out from Nigeria in December.

Turkish Airlines

The airlines have said they would no longer issue tickets to passengers in Naira.

In a message on August 19, it said Nigerian passengers can only pay for tickets in US dollars.

Turkish Air said, “Dear Business Partner, kindly be informed that as of today:

“Only candy fare classes will be available on GDSS for sale in Nigeria. Unused tickets will be upgraded to Y or C class for voluntary reissue cases, fares and tax differences shall be collected for inbound or outbound travel.

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(Opinion) 4 Airlines That Have Suspended Nigerian Operations Over Trapped Forex Concerns

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