Africa: Are Foreign Airlines Ripping Off Nigerian Air Travellers Because Of $464 Aviation Trapped Fund?

emirates entebe A380 UAE travellers

Air travellers in Nigerian aviation sector are beginning to feel the pinch of the skyrocketing airfares as foreign carriers in the country begin to reduce their frequency due to huge amount of their funds trapped in Nigeria, affecting available airline seats in the sector.

Foreign airlines funds trapped in the country have risen to $464 million as at July 2022, forcing some of them to reduce their frequency to the country to forestall further loses.

According to an article by simpleflying.com, while quoting a Thisday Newspaper foreign airlines maybe taking advantage of the situation to hike their ticket price as a means of mitigating further loses in the sector.

If you only get paid for half the ride, the price goes up
THISDAY says that Nigerians now pay three times more than travelers from other countries for the same destinations. Their report links that to threats from foreign carriers to abandon services to Nigeria unless their funds are repatriated.

Currently, Nigerian travelers are paying around N1.2 million ($2,850) for a six to eight-hour one-way economy ticket and more than N$4 million ($9,500) for a business class fare. THISDAY says that industry stakeholders have described the fares as a rip-off, saying that passengers in other countries with trapped funds do not pay such outrageous fares.

International Air Transport Association (IATA) regional vice president for Africa, Kamil Alawadhi, told the IATA 2022 conference that resolving the issue of blocked funds was a key priority for the industry body. He explained that airlines were charging higher fares to Nigeria, earning a profit from one leg of the trip to cover the return leg where some tickets are sold in Nigeria, and the funds are trapped. He also expressed concern that fares might rise to the point where Nigerians would not be able to afford to travel.

On Thursday, Alawadhi said that IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. “This is airline money, and its repatriation is protected by international agreements in which Nigeria participates.”

READ: Africa: Middles East Carrier, Emirates Airlines To Suspend All Flight Operations Into Nigeria’s Aviation Sector From 1st September Over $100m Trapped Funds

“Airlines cannot be expected to fly if they cannot realize the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence and impacts jobs and people’s livliehoods. It’s time for the Government of Nigeria to prioritize the release of airline funds before more damage is done.”

Nigeria risks being cut off from global aviation
Last Thursday, Emirates announced it was suspending all flights to Nigeria, effective September 1, to “limit further losses and impact on our operational costs that continue to accumulate in the market. Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, we will, of course, re-evaluate our decision.”

Secretary-General of the Aviation Round Table, John Ojikutu, said that what has been happening over the years in Nigerian commercial aviation policies, regulations and administration is nothing but “what I call unilateral exploitation of the systems.

“We are going to be the loser if the foreign airlines withdraw their services because about 70% to 80% of our earnings in commercial aviation are from foreign airlines. Nigerians will go to Accra, Cotonou and Lome to connect to the flights of these foreign airlines, making them hubs over Nigeria.”

Africa accounts for around 67% of all airlines trapped funds, with twelve African countries stopping around $1 billion from repatriating. Nigeria is by far the worst offender, but others, including Zimbabwe ($100 million), Algeria ($96 million), Eritrea ($79 million) and Ethiopia ($.75 million), are also continuing to rack up debts. Its appetite for overseas travel, particularly for VFR (visit friends and relations) traffic to Europe and the UK, exacerbates Nigeria’s situation.

Nigeria struggles to reciprocate on those routes, so the abundant demand outweighs supply as airlines, like Emirates, cut frequencies. That leads to higher ticket prices, also spiraling due to the falling local currency, the Naira.

Of course, not everything is as simple as writing a cheque, and probably Nigeria’s leaders have other priorities than sending precious foreign currency to foreign airlines. If that’s the case, we can expect more airlines to follow Emirates’ example and stop flying there.

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