Airlines’ Inability to Remit $208m Threatens International Flights to Nigeria, Says IATA

By Chinedu Eze

The International Air Transport Association (IATA) has warned that flights to Nigeria may be hampered because of the $208 million blocked funds of foreign airlines that operate to the country.

These funds are ticket sales revenues which Nigeria was unable to remit to the airlines due to paucity of foreign exchange.

This was disclosed by the Regional Vice President for Africa and the Middle East (AME), IATA, Kamil Al-Awadhi who expressed fear that foreign airlines might withdraw their operation to Nigeria if the funds were not paid.

Al-Awadhi stated that at the onset of COVID-19, Nigeria’s air connectivity was severely damaged as aviation took its biggest hit in history, adding that in April 2020, Nigeria lost over 75 per cent of its international route connectivity compared to 2019, and passenger demand still has not recovered to pre-pandemic levels.

“But COVID-19 is not the only threat to connectivity, to aviation’s recovery in Nigeria, or to the country’s economic revival.  Airlines’ inability to access adequate foreign exchange in Nigeria is a rapidly increasing obstacle,” he said.

He disclosed that globally, $1 billion in airline funds was blocked by 20 countries worldwide and of this, about $700 million was tied up in 11 African countries, including $208 million being held back in Nigeria. He said the Nigerian debt was the highest by any single African country, saying that the blocked funds keep on rising every week.

“Cash flow is key for airlines’ business sustainability – when airlines are unable to repatriate their funds, it severely impedes their operations and limits the number of markets they can serve. “The consequences of reduced air connectivity include the erosion of that country’s competitiveness, diminished investor confidence and reputational harm caused by a perception that it is a high-risk place to do business.

“The airline industry is a competitive business operating on thin margins. So, the efficient repatriation of revenues is critical for airlines to be able to play their role as a catalyst for economic activity.

“It is unreasonable to expect airlines to invest and operate in nations where they cannot efficiently harness revenue from their services,” Al-Awadhi said.

He noted that IATA understood the economic challenges faced by countries with blocked funds including Nigeria, “but there is an urgent need for robust air connectivity and that is being hampered by airlines’ difficulty in repatriating funds.”

“Strong connectivity is an economic enabler and generates considerable economic and social benefits — something that struggling economies need more than ever. It is in everybody’s interest to ensure that airlines are paid on time, at fair exchange rates and in full.

“Prior to the pandemic, aviation in Nigeria supported 241,000 jobs and contributed $1.7 billion to the GDP.  Imagine the social and economic trickle-down benefits for Nigeria if it could sustain thousands of livelihoods by making it possible for airlines to fly people and goods between countries and continents,” he said.

However, Al-Awadhi added that IATA representing airlines was working with the Nigerian authorities and the Central Bank to find solutions to resolve this crisis.

“We call on the government to prioritise aviation in the access to foreign exchange on the basis that air connectivity is a vital key economic catalyst for the country.

“At stake is Nigeria’s important economic and social standing in Africa and on the global stage.  This is far too great to jeopardise by failing to safeguard its air connectivity,” he added.