Foreign Airlines Get Round $600m Blocked Funds Crisis

The inability of some of the foreign airlines to repatriate their ticket sales out of Nigeria in almost 12 months has led to payment of the country’s service providers in naira, rather than in dollars.

Private and public organi­sations like the Nigerian Civil Aviation Authority (NCAA), Nigerian Airspace Manage­ment Agency (NAMA), Federal Airports Authority of Nigeria (FAAN), ground handling companies, catering compa­nies and major aviation fuel marketers are now being paid in naira, investigation by Daily Independent reveals.

Also, players in the Nigerian aviation industry have rebuked Emirates Airlines over its deci­sion to suspend its operations into Nigeria, effective Septem­ber 1, 2022, saying that it is a subtle pressure on the govern­ment to release dollars that are obviously unavailable.

The stakeholders, however, said that the continuous with­holding of airlines’ funds by the Nigerian government has further painted the image of the country in a gloomy picture in the comity of nations.

For instance, the NCAA col­lects 5 percent levies on Tick­et Sales Charge/Cargo Sales Charge (TSC/CSC) from air­lines, which are remitted into the account of the regulatory agency by the airlines.

The 5 percent TSC/CSC is shared among five out of the six government agencies, but NCAA gets about 34 percent of the total sum.

For FAAN, the agency charges foreign airlines on landing and parking, and Pas­senger Sales Charge (PSC), which are always done in dol­lars.

Also, NAMA collects en-route, over-flight and Termi­nal Navigation Charges from airlines.

A source close to one of the foreign airlines confided in Dai­ly Independent that some of the airlines have been paying the organisations in naira, but at the official exchange rate of N444 per dollar, instead of the black market rate of about N700 to a dollar.

Though, it was learnt that some of the organisations re­jected this, but the airlines in­sisted on naira payment.

The source said: “We are having challenges with it, but we don’t intend to sus­pend our operations. We try to find another way around it. Yes, we have not been able to move the funds, but we try to put it to use in the account so that it is not just sitting down. We commit our funds in Nige­ria to long term investment in the banks.

“So, we now divert funds from other areas and from it, we pay our service providers in Nigeria. We used to pay the service providers in dollars in the past, but the trapped funds have made us revert to naira. Some of them don’t want it in naira, but we insist that, that is the only thing we can make the payment. We however pay at the exchange rate of N444 to a dollar. Their billings still come in the United States dollars, but we pay based on the exchange rate we are pegged in the mar­ket at N444.”

Besides, some industry stakeholders have criticised Emirates Airlines over its de­cision to suspend its operations to Nigeria from September 1, 2022.

One of the stakeholders who preferred to remain anon­ymous, observed that while the airline singled out Nigeria, there are other countries that have been unable to allow car­riers to have this fund, adding that there is global economic meltdown, which is exacerbat­ed by the Russia-Ukraine war.

“Please do not succumb to the blackmail of Emirates and their sponsors from with­in. The country cannot and will not manufacture dollars for them to repatriate their so called over $80 million in Nige­ria. When they were competing devilishly to outdo an indige­nous, the only airline doing direct flight to Dubai, didn’t they know of the dollar situa­tion here before embarking on having multiple frequencies into Nigeria.

“They do two flights out of Lagos daily and one out of Abuja daily, bringing the total to three daily flights into Nige­ria and 21 flights every week,” said one of the stakeholders, who also remarked that at the time the airline increased its frequency, there was no passen­ger traffic to justify it,” he said.

Some of the stakeholders canvassed that what the gov­ernment should do is to ap­prove that airlines sell their tickets in foreign currency.

Commenting on the issue, Mr. Chris Aligbe, Chief Exec­utive Officer (CEO), Belujane Konzult, said that the suspen­sion of operations by Emir­ates Airlines indicated that the nation’s economy was in downturn.

He said that the suspension of the Dubai route would have harrowing experience on the travelling public, while airfares would soar due to limited seats on the Dubai routes.

Aligbe warned that with the current situation, investors’ confidence in the Nigerian market would dwindle, while some may shut down opera­tions soon.

He said: “When airlines stop operating, those who want to travel will face increasing dif­ficulty in terms of airfares, but more importantly for our country, our image will keep go­ing down as we can no longer attract investments we should have attracted.

“Some people feel once they invest, they should be able to take out their funds, but they can’t do so. So, they won’t come to invest. It is an unhealthy sit­uation for our country and it is not good for the economy. There will be an increase in airfares and less direct routes. Dubai is another place where people have started going and it is our second home, but if people can no longer go there, they will find it difficult to go.”

Though Aligbe could not confirm if some of the for­eign airlines now pay service providers in naira, but said the operators could defend it, stressing that naira is a legal tender of Nigeria.

“Though, it makes a lot of difference to these service pro­viders when they receive in dollars, but the fact is that they can’t take out what they earn in your country. So, you cannot force them to pay in dollars,” he said.

Mr. Ikechi Uko, aviation an­alyst, regretted the situation.

Uko insisted that withhold­ing money that belongs to in­vestors was not good for Nige­ria, stressing that the situation was affecting the operations of foreign airlines coming into the country.

Though, Uko stated that the current quagmire was not limited to Nigeria alone, but lamented that it would affect foreign direct investment (FDI) into the country.

“You could claim it’s a glob­al challenge, but they say we are the highest in the world. So, that is not good for Nige­ria. It is not good for doing business and foreign direct investment.

“Already, without even stop­ping, the ticket prices have gone up and once there is a shortage of seats, everyone will sell at the maximum,” he said.

Emirates had on Thursday morning announced its plan to suspend flight services into Nigeria effective September 1, 2022.

A statement by the media consultant to the airline in Ni­geria alleged that all efforts to repatriate the funds had proved abortive and was compelled to take the decisive decision of suspending all flights into the country.

“Regrettably, there has been no progress. Therefore, Emir­ates has taken the difficult decision to suspend all flights to and from Nigeria, effective September 1 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. We remain keen to serve Nigeria, and our oper­ations provide much needed connectivity for Nigerian travellers, providing access to trade and tourism oppor­tunities to Dubai, and to our broader network of over 130 destinations.”

(Daily Independent )