Chinedu Eze
Despite claims in some quarters that foreign airlines may soon shutdown operation in Nigeria as a result of ‘trapped funds,’ it has emerged that that many of the airlines have since repatriated their funds from Nigeria.
The International Air Transport Association (IATA), had recently said Nigerian government could hamper air connectivity over the non-repatriation of funds by foreign airlines, which would affect the nation’s economic growth and overall development.
However, it was learnt that many of the airlines have since collected their funds.
THISDAY investigation also revealed that many of the airlines have circumvented the process that stipulated they sell their tickets in Naira and opened their foreign currency window for Nigerian travellers to buy tickets.
Besides, the airlines are making a kill with Nigerian passengers, selling tickets at price, which is twice the cost of tickets in Ghana for the same destinations.
According to industry experts. Nigerians pay the highest fares for international travel in the African continent.
The Group Managing Director and CEO, Finchglow Holdings Limited and President, Association of African Aviation Training Organisation of Nigeria (AATON), Bankole Bernard, told THISDAY that foreign airlines cannot stop operating to Nigeria because they are making unprecedented profits from the Nigerian route more than they have ever made in the past.
“In all ramifications foreign airlines are making so much money from Nigeria now. Their flights are full and they are selling tickets from outside Nigeria. They have upped the exchange rate to N521 per dollar. No foreign airline will leave Nigeria,” he said.
Bernard explained that why Emirates is still not coming to Nigeria was because besides the fact that the airline’s revenue is still trapped in Nigeria, there is diplomatic row between the United Arab Emirates (UAE) and Nigeria, which has not really been fully resolved.
He disclosed that in spite of that Nigerians are still getting UAE visa and hosting events in Dubai noting that UAE was hamstrung in a way because the authorities did not want to give visa to certain categories of Nigerians but the rich who would come and spend money in the country, “and it is difficult for them to delineate that in their visa conditions.”
“UAE had diplomatic row with Nigeria, which has not really been settled. But they are still giving Nigerians visa. A lot of Nigerians are still making their way to UAE. The other day a Chairman of a major bank in Nigeria organised a meeting in Dubai. Many of the airlines are getting their money from the so-called trapped fund.
Some airlines bided at higher rate and were paid. So, the trapped fund has drastically reduced. In Ghana you pay $3000 for a destination but in Nigeria you pay $6000 for the same destination. Why we are not complaining is because business is governed by demand and supply. More Nigerians travel than Ghanaians so tickets are in higher demand in Nigeria,” Bernard who was former President of the National Association of Nigeria Travel Agencies (NANTA), said.
Industry expert and the General Secretary, Aviation Round Table (ART), Group Captain John Ojikutu (rtd), suggested that foreign airlines should be allowed to pay for their services in local currency to aviation agencies, handling companies and fuel marketers.
“They should be allowed by responsible authorities to pay service fees in naira to the services providers and not again in dollars. However, in this situation, the dollar rate will never go down. What really is the reason why the services providers are not made to account for the dollars they earn from the foreign airlines? About $2 billion annually from FAAN (Federal Airports Authority of Nigeria) (PSC (passenger service charge) $100/pax, landing /parking), NCAA (Nigeria Civil Aviation Authority) ($20/passenger security fees), NAMA (Nigeria Airspace Management Agency) $500/flight(enroute charges)), fuel marketers earn over one billion dollars at $1 a litre and the ground handling service providers, etc. Total of these is more than $3 billion annually; yet they still want shares of the CBN earned forex from other commercial sources,” Ojikutu said.
However, the Head of Business Development, Zenith Travels and the spokesman of Aviation Round Table (ART), Olu Ohunayo, said foreign airlines operating into Nigeria have access to three rates now, which include the parallel market, the CBN and the IEA window. He said they get these new rates in conjunction with the CBN.
“So, I think that once they have left the official rate, there is the possibility it will be moving closer to the parallel market rate, though not recognized in international business but that is what I am looking at now. And if it keeps moving, then they probably may not have any reason to have issues with remittance. Now they are probably collecting their money in the dollar equivalent. But in the rate before the official rate, you cannot use naira to deal with some transactions because that rate is far lower than the parallel market. So you need to get that official rate from CBN for you to make use of the funds. For now, if they are moving towards the parallel rate now, they can now transact using their country and other businesses to get their naira out,” he said.
Ohunayo also stated that foreign airlines are not leaving except those that have issues like Emirates, which cannot pay for its service in Nigeria with naira and became stuck with bringing forex from their own country, which the government might not approve.
“It is such airlines that will be the one that will pull out. But for those who have their services operating in Nigeria, and who have their payment in naira, and also with the movement of the IEA rate now towards the parallel market rate, I doubt if anyone of them will leave.
“Again, there is a government coming in and they would probably want to wait and watch the government. I know they will all give the government a minimum of about six months to see what line they want to toe. So you can be sure that between now and the end of the year, we probably will not have any airline withdrawing anymore,” he further said.
On the high fares Nigerians pay for their flights, Ohunayo said that the fares should not be described as outrageous because the fares are not outrageous.
“It is one of the fares on their portal and that is what they have released. For fares to sell, there must be demand, and the only way you can lower the pressure on demand is to increase supply. So if the supply is not coming from international airlines then we should add supply from the domestic airlines. That is the way to beat it. But I encourage other African airlines to operate some of those flights out of Lagos and Abuja,” he added.
