Weak Regulations Aid Repatriation of $2.2bn by Foreign Airlines 


By Chinedu Eze

Weak regulations, which do not compel foreign airlines to partner local airlines, have encouraged the international airlines operating in Nigeria to repatriate $2.2 billion from January 2017 to June 2018 without investing part of these proceeds in the country, THISDAY has learnt.

According to statistics by the International Air Transport Association (IATA), international airlines sold tickets worth $1.4 billion to Nigerian travellers in 2017and in the first six months of 2018, the foreign carriers sold tickets worth $800 million.

The President of the National Association of Nigeria Travel Agencies (NANTA), Bankole Bernard, who also confirmed the figures, stated that it is expected that more tickets would be sold in the last quarter of 2018 during the peak Yuletide season.

THISDAY gathered from aviation stakeholders that with their skeletal workforce in Nigeria and operations confined on rented offices, foreign airlines repatriate almost all their earnings out of Nigeria.

These airlines, it was gathered, dominate the international travel market with over 90 per cent market share because domestic carriers that could compete with them are not encouraged by the federal government through strong regulations.

Industry stakeholders who spoke to THISDAY, suggested that government review bilateral agreements and make it a policy that foreign airlines must code-share with domestic carriers or introduce Fly Nigeria Act which would make it compulsory for anyone travelling on government expenses to patronise Nigerian airlines or their partners.

Former Director of Engineering, Medview Airline, Mr. Lookman Animaseun, told THISDAY that the major reason why Nigeria is being literally ripped off by foreign airlines is because there is lack of policy that protects Nigerian airlines.

He explained that such policy is not in place because the federal government regards issuance of Bilateral Air Service Agreement (BASA) and designation of foreign airlines as a business venture and ignored the protection of local airlines and creation of jobs.

“If there is a policy that compels foreign airlines to partner with local airlines, those international carriers will not have any other choice than to do so. If that is done, there will be no multiple designations of foreign carriers because the local airlines will bring passengers for them to Abuja and Lagos. This will benefit the local carriers and Nigeria,” he said.

The Minister of State, Aviation, Senator Hadi Sirika, had confirmed last week that Nigeria has BASA with 83 countries and many airlines from some of these countries which operate into Nigeria.

He added that apart from West Coast destinations, Nigerian carriers do not operate long haul flights to these countries.

Investigation revealed that the inability of Nigerian airlines to reciprocate these flights has cost the country over $3 billion in capital flight annually.

It was gathered that the aviation industry also spends about $1 billion on aircraft purchase, leases, manpower training, aircraft spares importation, insurance and on aviation fuel.

Renowned economist and the Chief Executive Officer of Financial Derivatives Limited, Bismarck Rewane, told THISDAY that the country may not be able to curtail the repatriation of funds in the aviation sector because Nigeria has open sky agreement with the United States and had also signed BASA with many countries of the world, which the country must comply with.

He said because Nigeria does not have the resources, it imports aircraft spares, lease airplanes, purchase some of them, also import aviation fuel, and also takes its technical crew, from cockpit to cabin overseas for simulator training.

These he noted, must be done for Nigerians to travel by air overseas and locally.

“There is every justification for these because we don’t have the resources to carry out these activities locally. 

Right now airlines do what they want according to regulation so you cannot force them to code-share with local airlines because that was not contained in the bilateral service agreement Nigeria signed with them. The alternative we have is to travel by road, which is very difficult to do because of the state of the roads,” Rewane said.

A member of Aviation Round Table and Executive Director, Zenith Travels, Olu Ohunayo, told THISDAY that effective way to cut back those funds repatriated outside the country is to introduce Fly Nigeria Act which would force foreign airlines to partner local ones as the act makes it compulsory that anyone travelling on government expense must travel with local airlines.

He explained that with the act, Nigerian airlines and their foreign carrier counterparts can sell tickets to Nigerian travellers on behalf of domestic airlines and the two operators would benefit. This he noted would cut back the volume of funds repatriated from Nigeria.

Chief Executive Officer of Aglow Limited, Tayo Ojuri attributed the ability of foreign airlines to take away all their earnings from Nigeria as a function of existing bilateral agreements, which afforded foreign airlines the opportunity to transfer funds accrued from ticket sales and other ancillary services, less operational charges to their home countries.

“It is pertinent to note these funds have increased significantly over time due to the absence of a national/flag carrier and the increased frequency by foreign airlines to different locations within Nigeria. Since the foreign airlines do not have any significant operational or mechanical cost in Nigeria, except fuel purchase and staff salaries, it behoves on them to repatriate the funds to their home country to cover their major operational liabilities such as insurance, navigational charges, aircraft maintenance to mention a few,” Ojuri said.