Presently, Nigeria aviation sector is at cross road over earnings belonging to foreign airlines that they are unable to repatriate to their various countries.
The trapped funds has been a source of concern to foreign airline operators over some years now that they have been calling on government to release but to no avail.
However, the refusal of the federal government to release the trapped fund reached a head last week when Emirates Airline announced suspension of all its flights in and out of Nigeria.
According to the airline, the inability to repatriate its trapped earnings had led to the suspension of its operation indefinitely starting from September 1st, 2022.
The statement announcing the suspension reads, “Emirates 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 1st September 2022, to limit further losses and 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.”
“Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, we will of course re-evaluate our decision.”
But, while some section of aviation stakeholders cautioned the federal government, saying the consequences of withholding the airlines’ fund is better imagined, other argued that Nigerians should look inward, develop it’s own because no matter what best service foreign airlines give, they are not here for the long run.
They further stated that most foreign airline operators are short term investors who pullout from a nation during economic downturn.
Speaking on the issue, a former secretary-general, Nigerian Union of Air Transport Employee (NUATE), Com. Abioye Olayinka, said aside from other foreign airlines following suit, there would be job loss as Nigerians working with the airlines will lose their jobs.
According to him, the airlines would as well move to neighboring West African countries where Nigerians will be forced to travel to connect their various destinations.
He said, “I am very much aware that the Nigerian government has been unfair to these foreign airlines. They have been acting in an unwholesome manner to foreign airlines by trapping their funds with the CBN. Investors expect that when you work in an environment such as ours, you will be be able to repatraite your funds as you make them, but for reasons best known to the government, monies that foreign airlines and other investors have made in Nigeria are being trapped without any recourse to repatraite their money back to their home. That is not only unacceptable, but fraudulent act on the part of the FG.”
“I recall that some years back, I raised this issue with the federal government through the Minister of Aviation that the Nigerian workers who are members of our union and working with these foreign airlines are liable to lose their jobs. If a company make money in Nigeria, they should be allowed to repatraite their funds home because if they closedown or suspend their operations, the Nigerian workers will suffer the consequences and this will not encourage other foreign investors coming to make investment in Nigeria for fear of their money being trapped.”
He, moreover, called on the federal Ministry of Aviation to liase with the Finance counterpart on how to release the trapped fund in the country’s economic interest.
“It’s going to be a terrible thing and a collosal loss to Nigerian flying public as they would be forced to travel to Dubai and those who want to connect their flights outside Dubai vis a vis Nigerian workers employed by this foreign airlines will all be affected.”
“My appeal to government is to please prevail on minister of finance to do the needful otherwise the consequences of their failure to allow foreign airlines repartrait their funds back home will be calamitous.”
“Very many foreign airlines who are portfolio airlines have nothing to lose by closing shops here and going elsewhere and the next available station for them is Ghana. They will move out of Nigeria and go to Ghana and be doing their business while NIgerian passengers will travel from Lagos or Abuja to Ghana to join Emirate airline and I can tell you that the Ghanian government will not trap their fund and Nigeria government doing so have no reasons doing so.
“It doesn’t make any economic or political sense infact, it’s giving Nigerians a very negative impression in the commity of nation’s, so if Emirate that is about number one among foreign airlines doing business with us suspends its operation here you can be sure that Qatar airways, Turkish, British airways will follow suit and Nigeria will become a pariah nation.”
Also, the Aviation Safety Round Table Initiative (ARTI), has urged CBN to ensure prompt release of the foreign airlines’ trapped fund.
The association in a statement by the association’s secretary general, Olumide Ohunayo, they expressed dismay over the handling of the matter by the federal government, adding that the whole scenario portrays a sector that is in need of urgent intervention.
”ARTI is dismayed by the appalling handling of the accumulated foreign airline funds trapped in our banks, due to the non-allocation of forex to these airlines. In all Bilateral Air Services Agreement (BASA), an Article in the agreement — transfer of earnings, clearly states that ‘each designated airline shall have the right to convert and remit to its country on demand, local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing foreign exchange regulations.’”
”International trade is binded by agreements which are sacrosanct and respected. Nigeria cannot do otherwise if we crave the attention of investors in our industry. It’s important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go the parallel market to source, convert and remit as opined in some quarters, the central bank should do the needful as enshrined in the BASA agreements. These funds should have been remitted at the official rate on date of Sale immediately the Airlines get clearance after paying all the local obligations including taxes.”
Ohunayo noted further that the action of government on the matter has affected the country’s image as a country that is not investment friendly.
”The damage that our action has done to the Nigerian image as an investment friendly nation is far reaching, while the citizenry is faced with high fares, reduced capacity and limited travelling options, which will worsen if we continue on this trajectory. We found ourselves in this unenviable situation because we lack capacity to compete, which would have reduced the remittance volume.
”The unborn Air Nigeria cannot produce this capacity, irrespective of the funds allocated, but by an aggregated process of developing our industry to produce vibrant flag carriers that will be courted for commercial partnerships which is the purveyor for successful international flight operations. We are also of the opinion that to kick start this process, a functional and credible data gathering methodology for the industry is a necessity. We cannot continue to blow hot air without verifiable data,” he said in the statement.
On his part, the chief managing director, Aeroland Travels Limited, Segun Adewale, has appealed to the Central Bank of Nigeria (CBN), the aviation and finance ministers, to release the foreign airlines’ funds.
Adewale stated that the CBN blocked revenue from ticket sales from 2021 to July 2022 from being repatriated to airline operators through the International Air Transport Association (IATA).
“The repatriation of revenues of all tickets sold to travellers by airline operators to their home offices is the responsibility of the CBN, but it has refused to release the equivalent in dollars for service already rendered. We have lost so many airlines, and jobs are being lost in the aviation sector and at airports,” he explained.
Mr Adewale added, “The development is inimical to our economic well-being as a nation; from the spiritual angle of thought, it is wrong to muzzle the ox that treads the corn.”
The airline chief decried that the blocked funds had already reduced air connectivity and restricted flights.
“If foreign airlines suspend flight operations, businesses will be shifted to neighbouring countries like Ghana and the Benin Republic. The issue is so difficult for the operators, who now borrow forex from their home offices to fuel their planes,” Mr Adewale stressed.
(Leadership NG)
