There are indications that foreign airlines may be planning to exit Nigeria’s airspace soon at the backdrop of the worsening operating environment.
This is coming amidst several exits of foreign businesses from the country this year, the latest being Procter & Gamble of United States, which announced their decision pull out last week barely months after another multinational corporation, GlaxoSmitKline, took similar step.
The key challenge, according to the airline operators, remains the inability to raise the foreign currency required for their operations as over $792 million of the funds are still trapped in Nigeria, a development that is currently threatening their operations globally.
In Nigeria, foreign airlines collect Naira for their tickets to customers and exchange the same for foreign currencies for their operations.
But they have been lamenting their inability to get the exchange executed through the official foreign exchange market due to the scarcity of foreign exchange resources.
The development has already seen the UAE’s flag carrier, Emirates Airlines which exited the country’s airspace last year still refusing to come back despite intervention from President Bola Tinubu.
President Tinubu had directed the Central Bank of Nigeria, CBN, to create a platform for quarterly reconciliatory meetings with foreign airlines to address the backlog of their fund.
But till date, nothing has come out from it, as there have neither been any meeting or funds released to any of the airlines.
It was also responsible for the move by the airlines to close down their lower fare inventory to travelling agents across Nigeria, denying them access to issuing tickets emanating from other countries into Nigeria in a bid to reduce the backlog.
Aviation World gathered that, travellers from Nigeria pay about N2.5 million for economy tickets to London, Heathrow airport, also, flying with KLM Royal Dutch, over N2.6 million flying with Virgin Atlantic, while with Lufthansa which is among the highest at N2.7 million.( Travellers from Ghana, South Africa, among other countries in the region which have to cover more distance to Heathrow than Nigeria pay about N400,000 to N500,000, for the same grade of tickets.
However, the International Air Transport Association, IATA, Regional Vice President Africa & Middle East, Kamil Al-Awadhi, during a media presentation with African journalists at the IATA Global Media Day in Geneva, called on the Federal Government to take the matter seriously.
He listed Nigeria as the country with the highest amount of airlines’ blocked funds at $792m followed by Egypt, $348 million, Algeria, $199 million, AFI zone, $183 million and Ethiopia, $128 million.
He said: “It is getting to a breaking point for the airlines. They are contemplating stopping operations. Nigeria should look into this to resolve the issue. The airlines don’t have the cash to expand their operations”.
“Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising. The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward.
“I have not been able to engage with Nigeria’s CBN Governor, he said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
“The airlines in Africa are owed $34 million. That $34 million is blocked. Depreciation has set in on the money. They have already lost $10 million because of depreciation. That is not fair for the airlines because they have paid all the dues to the operators of the airports. Every due has been paid for. They carry Nigerian officials on these flights and they can’t get their money.”
On the state of aviation in Nigeria, Al-Awadhi said with 25 percent interest on loans, high airport taxes, and insurance premiums which it said was six times more than anywhere in the world, it would be difficult for Nigerian airlines to make a profit.
“Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines.
“Every airline has its challenges and it depends on where it operates. To answer this question, I will use Nigeria as an example. Nigeria has two most expensive airports; their fuel is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.”
