$600m Foreign Airlines’ Funds Trapped In Nigeria

Foreign airlines operating into Nigeria are unable to repatriate about $600 million ticket sales held in local currency following shortage of foreign exchange in the country.
This was partly because Nigeria had been hit by recent falls in oil prices which reduced foreign exchange inflows.
Some of the carriers majorly affected by the crisis are British Airways, Etihad, Emirates, Lufthansa, Air France/KLM, South African Airways, Delta Airlines, Virgin Atlantic, Kenya Airways, RwandAir and Ethiopian Airlines.
The Federal Government had released about $350 million of the total $700 million blocked funds to affected carriers in June 2016, but since the initial release it has been facing challenge releasing another batch of funds to the airlines.
Ethiopian Airlines Laments Blocked Fund
Ethiopian Airlines said at least $220 million of its ticket sales are trapped in Nigeria, Egypt and some other African countries.
On Tuesday, its Chief Executive, Tewolde Gebremariam, lamented the firm’s inability to repatriate the trapped funds, saying, “This also means cash held in the local currencies was losing value. This is a huge challenge for us.”
Repatriation issues arose in the last quarter of 2015 when demand for foreign currency in the country outpaced supply and the nation’s banks couldn’t service currency repatriations.
Since June last year when the CBN released 50 percent of the trapped funds to affected carriers the airlines have been unable to repatriate their ticket sales.
The fund has grown to about $600 million in the past six months.
Samson Fatokun, Regional Manager, South West Africa, International Air Transport Association (IATA), had told journalists in Abuja that foreign airlines have been unable to repatriate the funds earned from the ticket sales in the country since October, saying that this has led to a huge crisis in the airline sub-sector.
Besides, Fatokun explained that IATA and foreign airlines were engaging the Federal Government to ensure the release of the funds.
Nigeria With Highest Blocked Fund In Africa
Fatokun further informed that the $577 million trapped in Nigeria was the highest on the continent, but emphasised that Venezuela had the highest number of blocked funds in the world at $3.5 billion.
“The funds we are talking about do not belong to foreign airlines alone as it equally affects Nigerian carriers. As at today, Nigerian carriers are not able to assess dollars for procurement of spare parts and maintenance of their aircraft abroad, among others.
“However, Nigeria remains the highest in the continent with blocked funds. But, the government has assured us that the controversy surrounding the funds would be resolved very soon and we are believing them for that.”
BA Shuns Kaduna Airport As Alternative To Abuja Airport
Meanwhile, the plan by the Federal Government to divert Abuja bound flights to Kaduna airport due to the rehabilitation of the Nnamdi Azikiwe International Airport (NAIA), Abuja, may not be a success as most of the foreign carriers are shunning the alternate airport.
The latest among the carriers to shun Kaduna airport is British Airways, which cited safety and security of its passengers for the action.
An e-mail sent to our correspondent on Tuesday by the Regional Commercial Manager, West Africa, British Airways, Kola Olayinka, said that the airline considered several factors before deciding not to fly to Kaduna Airport.
“I can confirm that BA will not be operating to Kaduna during the planned closure of the Abuja airport.
“Many factors were considered before this decision was reached, major ones are concern about the safety and security of our passengers as well as difficulties around some key operational issues.
“We are currently evaluating all options for our customers planning to travel at that time and we will be reaching out directly to them for information about their trip.”
It would be recalled that Independent had on Monday reported exclusively about the plan of the foreign carriers to shun Kaduna airport.
Earlier, Lufthansa Airways through its media consultant in Nigeria, Hakeem Jimo, told our correspondent that the carrier would not operate to Kaduna as directed by the government.
Rather, he explained that the airline would continue to operate to Port Harcourt and Lagos, stressing that it would only return to Abuja airport once it is re-opened for flight operations.
He explained that the airline has already stopped the sales of Abuja airport tickets for passengers intending to travel to the Federal Capital Territory (FCT) from March 8, 2017.
Also, South African Airways had already written a letter to the Minister of State for Aviation, Hadi Sirika, informing him that it would suspend flight operations to Abuja on March 6, two days before the closure of the airport.