Home » African Aviation: Foreign Airlines Accused of Using Forex Scarcity to Rip off Nigerians, FG

African Aviation: Foreign Airlines Accused of Using Forex Scarcity to Rip off Nigerians, FG

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By Chinedu Eze

Foreign airlines operating in Nigeria have been accused of devising a means of ripping off Nigerians and the federal government by taking advantage of the shortage of dollars in the foreign exchange market, and the gap between the official exchange rate and the parallel market rate, THISDAY investigations have revealed. According to sources in the industry and the Nigerian Civil Aviation Authority (NCAA), the airlines procure their foreign exchange from ticket sales at the official rate of 199/$1 from the Central Bank of Nigeria (CBN) for onward repatriation to their home countries, but allegedly use the parallel market rate of over N300 to the dollar when Nigerians and other passengers opt to pay for their dollar-priced tickets in naira instead of using the official exchange rate. In the process, the foreign airlines are making a kill from the 40 per cent spread between the official and parallel forex markets, and repatriating the cream off the top of ticket sales to their countries.

In particular, British Airways (BA) and Virgin Atlantic Airways, two major carriers patronised by Nigerians on the Lagos-London route, have been accused of engaging in the sharp practice, which industry sources say accounts for the astronomical and inexplicable hike in their airfares in recent months. The rise in airfares, sources added, has happened despite falling oil prices and the attendant lower cost of aviation fuel, a major component in the operating costs of all airlines worldwide, which should have been reflected in the airfares charged by the airlines. But the allegation has been denied by BA and Virgin Atlantic which described the act as illegal and insisted that the payment platform cannot be manipulated. However, an informed source told THISDAY: “We (foreign and domestic airlines) buy dollars at the CBN rate, and all our airfares are priced in dollars for the purpose of comparison. “But the problem is that foreign airlines use the parallel market rate to determine the naira airfare for passengers who opt to pay for the tickets in naira. “By doing this, they are cheating Nigerians and the federal government because by collecting the money from passengers at the parallel market rate, why do they want CBN to give them dollars at the official rate when they need to repatriate to their countries? They might as well source their dollars from the parallel market.”

Passengers use four options to pay for their international airfares in the country: one, they could book online and pay for their tickets using their dollar denominated credit or debit cards; two, they could make a booking online, get a reference number and take it to a designated Nigerian commercial bank used by the airline to pay for the ticket in dollars; three, they could do the booking online, get the reference number and opt to pay at the bank in naira; and four, they could use a travel agent and pay in naira or dollars. It is passengers who opt to pay in naira at the bank that are allegedly being ripped off by the airlines. A case in point, THISDAY learnt, was that of a senator (name withheld) who wrote a letter of complaint to the Consumer Protection Directorate of the NCAA against BA recently, alleging that he had booked a ticket online, but was made to pay for the ticket at the bank at the parallel market rate. The Director of Consumer Protection Directorate, Mr. Adamu Abdullahi, informed THISDAY that when NCAA got the letter from the senator, he wrote to BA to respond to the allegation. He said BA’s Regional Manager, West Africa, Mr. Kola Olayinka, wrote back denying the charge made by the senator. Excerpts of the BA’s letter to NCAA stated: “I can assure the distinguished senator through you sir, that our selling rate in Nigeria is regulated by the Central Bank of Nigeria, and have (sic) been moving between 197-200 in recent months, there is no opportunity to manipulate this as it’s a system generated rate, even if there is, I assure the senator, British Airways will be the last organisation to be involved in such pettiness!

“I hope the senator will be satisfied by these explanations and be reassured that in no way will British Airways as a company, be involved in any act that may even look like ‘fleecing our customers’ nor will we condone any such behaviour by any of our employees.” THISDAY, however, learnt that Nigerian airlines that fly international routes have so far adhered to the CBN rates in ticket sales to passengers. To ensure that Nigerian operators abide by the rules, a source disclosed that CBN encourages its officials to patronise Nigerian airlines and has ensured that Nigerian carriers sell their tickets in naira at the official exchange rate. A source with Arik Air also told THISDAY: “If you look at our premium class ticket fare, we are just about 16 per cent cheaper than the two other airlines that fly on the Lagos-London route. “But when you multiply our own dollar fare by CBN rate, it comes to about N650,000 but their own is N1.8 million so they are using the parallel market rate to charge passengers.” When contacted by THISDAY on the issue, Mr. Olayinka denied the allegation that BA sold its tickets using the parallel market rate, stating that the payment system could not be manipulated. “It is not possible because we sell through Global Distribution System (GDS) and we all go through the International Air Transport Association (IATA) and in Nigeria all the airlines go through Billings Settlement Plan (BSP), which in turn goes through IATA.

“It is illegal and impossible for us to do that. We all know the situation we are going through trying to remit our money. In Nigeria, we give discounts to those who wish to pay in dollars and the discount can be as high as 20 per cent. “Because we all go through the same platform with other airlines, our selling rate must be the same. It is not possible for us to sell at a different rate. If you go to a BA desk, we sell at the rate that is applicable, which at the moment is N197.50, but this could change so we add N1 or N2.” Olayinka said. Denying the allegation also, the spokesperson of Virgin Atlantic Airways, Kudirat Scott-Igbene, said the airline uses the system rate, which is automatically generated and therefore could not be manipulated. An IATA source also told THISDAY: “There is no way this can happen. It is absolutely not possible. The GDS is attached to the CBN rate. There have been allegations but they have not been substantiated. The system is electronically operated, so it cannot be manually manipulated.” Reacting to the allegation, a source with the CBN said the central bank has allowed foreign airlines to access forex from the interbank market since 2012, however, “if they have decided to sell at the parallel market rate, it is the responsibility of the NCAA which has the consumer protection directorate to ensure they do the right thing.”

Meanwhile, Spanish national airline, Iberia, announced yesterday that it was pulling out of Nigeria following protracted passenger drought since late last year. The airline, which was taken over by BA in 2010 and is part of the One World Alliance with the British airline, said it would wind down operations by May 12, 2016. In a statement by Olayinka, the airline said: “This is to notify you that our Spanish Airline, Iberia PLC will be suspending services into and out of Nigeria effective 12 May 2016.” The airline said this was in response to the difficult times and the inability of the airline to record high load factor as it used to as the economic crunch bedevilling the nation has depleted the finances of those who otherwise travel out of the country on business, tourism and for training. “This is a very tough decision that has been taken by our head office in view of the wide acceptance we have received from our passengers, especially those heading towards Spain and Latin America over the years. “Iberia’s commitment to Nigeria since we started operations in 2014 has never been in doubt, but over the last few months, we have witnessed dwindling passenger figures to Madrid our main hub and our business has faced very difficult and exceptional circumstances, which has brought about this very difficult decision,” the statement added. While thanking Nigerians for their steadfastness and support, the airline said to its customers: “You have truly been a partner and I hope you will understand the decision taken by Iberia in these very difficult times.” There are rising fears that other international carriers similarly affected by the economic contraction in the country might stop their operations or cut their services to Nigeria.
Source: thisdaylive.com

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