> Some foreign airlines operating in the country have decided to make a rather disturbing move
> They are considering gradual withdrawal of operations from some Nigerian routes
> This is due to their inability to fully repatriate funds that are stuck in the economy
A report by The Guardian indicates that some foreign airlines operating in Nigeria are considering gradual withdrawal of operations from some Nigerian routes.
Minister of Aviation, Captain Hadi Sirika has a lot to do regarding foreign airlines operations in Nigeria
According to the report, the airlines decision is informed by their inability to fully repatriate funds that are stuck in the economy.
The report stated that the funds, being proceeds of ticket sales, have again accumulated to $400 million (N160 billion) as at November, after the airlines repatriated $300 million between June and September 19, 2016.
The airlines are also said to be distraught over th the Central Bank of Nigeria (CBN) new policy, which mandated the airlines to sell tickets at the rate of N308 to $1, but to have them repatriated at N386 to $1.
Some of the airlines might, therefore, begin to quit routes like Abuja, Port Harcourt and Kano to cut their losses, a source quoted in the report said.
“Most airlines do not want to leave Lagos as long as Nigeria is one of their destinations. But other routes, given their already low passenger traffic, can be scaled down to prevent further losses for the airlines. The airlines are running at a loss and that is the problem,” the source said.
It was gathered that the Turkish Airline has withdrawn from Mallam Aminu Kano International Airport, Kano. The airline followed the path of Emirates and Kenyan Airways that both closed down their Abuja offices in September.
The implication is that Nigerians outside Lagos will have greater difficulty and also spend more to connect international flights.
A regional manager of one of the African airlines who spoke about the issue on the condition of anonymity, said the withdrawals was due to losses the airlines were incurring in Nigeria, despite the slow pace of repatriation.
According to him, prior to the forex market reopening after CBN introduced the flexible policy in June this year, airlines were selling tickets between N165 to N200 per dollar. Following the new policy, airlines could only repatriate at N285, which means 40 per cent loss in revenue.
“As at today, we are selling tickets at N306/ 308, while the parallel market is N474. But when we want to exchange from naira to dollar, we still cannot get it at N306 that we sold tickets. We are still buying from CBN at N330/ N350. Why the imbalance?
“We would have preferred it to float, that is, if the market rate is N400, then we sell at N400. That is what the market entails and the CBN should make it dynamic.
“Right now, what they are telling us is that they don’t care, more so, we are not their priority. The loss is pinching us and putting the business at risk,” he said.
On his part, the General Manager of British Airways, Kola Olayinka said getting forex to repatriate funds remained one of the main challenges that forced the aviation sector on its kneels.
He urged the government to make forex available to the airline operators, adding that they should not be begging for it in the first place.
Meanwhile, the local office of the International Air Transport Association (IATA), confirmed the rather slow process and dissatisfaction of the airlines in repatriating funds from Nigeria.
An unnamed official of IATA was quoted as saying: “The issue is more of propaganda than actually repatriation on the part of the government. If airlines were actually repatriating their funds, the stuck funds would have been at zero by now.
“Truth is that some airlines, like Egypt Air have still not received anything. Some airlines were selected and they were given. Since then, more money is till there and has piled up despite losing revenue.
“No airline will come and add any frequency in this kind of system that does not allow them to get dollar, even where they do, it is at a colossal loss. We have made it known to the minister that the system is not working.
“No airline makes profit of 40 per cent. Where they are losing 40 per cent in revenue, then there is a big problem. That is why they are groaning, but nobody seems to care.
“Airlines will continue to move out from some routes. They cannot continue to run at a loss. If it continues like this, most of these airlines will close shop totally. This is business.”
Prior to the CBN’s introduction of flexible foreign exchange policy in June, the airlines had over $600 million stuck in the economy with IATA negotiating for its release to the airlines.
IATA confirmed that $300 million was approved by the CBN in June, in the first forex intervention given to the airlines.
The second intervention had another $300 million bill submitted on October 17, but only $69 million was approved by the CBN.
However, since October 17 when the last bill was presented, the stuck funds have again risen to over $400 million, as the foreign airlines in total make about N100 million in ticket sales daily.
In another development, flight tickets for the major airlines in Nigeria have jumped by almost 40 percent due to the increase in the price of aviation fuel.
According to a recent media report, a return ticket on the popular Abuja-Lagos route for the major domestic airlines is now between N70,000 to N88,000.
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