By Friday Nwosu
Emirates Airlines is suspending its evening daily flights from Lagos, Nigeria by July 1 as the country’s aviation woes continue. Emirates will keep only the daily afternoon flight out of Lagos. Emirates operated a double daily flight out of Lagos for over 5 years. And has been operating in Nigeria for over 10 years. It also had a daily flight out of Abuja.
Foreign airlines operating in the country’s aviation sector have been finding it difficult to repatriate their funds back to their home country due to the forex crisis in Nigeria.
A few weeks ago, United Airlines, one of the US carriers flying operating into Nigeria hinted its customers that it will soon cease flight operations to the country from the 30th of June 2016.
United airlines said the last flight from Houston to Lagos will operate on June 29th, 2016 and Lagos to Houston on June 30th.
Also, Iberia Airlines earlier halted its operation to Nigeria due to the forex policy in the country which is affecting foreign carrier.
Emirates is also expected to halt all its evening daily flights to Africa’s most populous nation as the forex crisis takes its toll on the airlines.
According to an Aviation Weekly publication “Of the roughly $5bn in trapped ticket sales that IATA says is awaiting repatriation, about $600m is in Nigeria, the most in any country bar Venezuela.
Foreign airlines have struggled to access their Nigerian sales since November last year due to a shortage of dollars in the local banking system caused by depressed oil revenues.
However, this week Nigeria’s central bank let the naira float freely again, after 16 months of fixing the rate at N197 per dollar.
Removal of the currency control is expected to ease access to future ticket sales, but big questions remain about the $600m IATA says is owed.
As expected, once free trading began the naira immediately devalued, rising to N280 per dollar, and some are predicting it will hit N350 before the end of the year.
Naturally, airlines want to exchange their naira revenues according to the (lower) rate at time of sale, but no-one knows who will pay the difference.
The situation is not as bad as in Venezuela, which many airlines have ceased flying to over almost $4bn of unpaid revenues, though two carriers – Iberia and United – have, respectively, pulled out and planned their departure from Nigeria. In addition, Emirates is to cut its Lagos service in half from July.
It is difficult to see how foreign airlines can pressurise Nigeria’s government for the full $600m without threatening to pull flights.
Almost all of Nigeria’s links to Europe and the US are provided by foreign carriers, with Emirates, Delta and British Airways among the biggest operators.
Local carriers Arik Air and Med-View provide a handful of links outside Africa, but neither is in robust health.
Thus forcing Nigeria’s decision-makers to rely on the pair for trips abroad might focus minds on the issue of trapped fares.
On the other hand, the dozen or so foreign airlines in Nigeria may well decide that $600m isn’t enough to justify such drastic action, and accept the haircut that will no doubt soon be on offer.
