Concerns as Foreign Airlines Rip off Nigerians with Outrageous Fares

*Stakeholders urge FG to enforce BASA 

*Aviation professionals seek settlement of $464m airlines’ funds 

Chinedu Eze

With the advertised fares on foreign airlines’ websites, Nigerians now pay three times more than other travellers for the same destinations amid a threat by the international operators to suspend flights, THISDAY’s investigation has revealed.

Stakeholders in the aviation industry have therefore urged the federal government to enforce the full implementation of the Bilateral Air Service Agreement (BASA), which stipulates that foreign airlines should pay royalties to the government, especially when the Nigerian carriers cannot reciprocate the same service to the host countries of their foreign counterparts.

This is coming as more pressure has been mounted on the federal government to settle the $464million trapped funds belonging to foreign airlines flying the Nigerian routes.

Aviation industry stakeholders have however described the exorbitant fares as a rip-off.
THISDAY’s investigation further showed that travellers from other countries where airlines are also yet to repatriate their revenues do not pay such outrageous fares.

Other countries in Africa that hold on to the huge amount of airlines’ revenues as of June 2022 include Zimbabwe – $100 million; Algeria – $96 million; Eritrea – $79 million, Ethiopia, $75 million and Ghana, which was not listed by IATA in June but had not allowed airlines to repatriate their earnings due to paucity of foreign exchange.

THISDAY gathered that the Nigerian travellers pay over N1.2 million for a one-way economy ticket for about six to eight hours flight and over N4 million for a business class ticket, while round-trip tickets are going for N3 million for the economy and N7 million for business class tickets, respectively.
Investigations further revealed that foreign airlines have not charged similar outrageous fares in other countries where airlines are yet to repatriate their earnings.

Regional Vice-President, Africa and the Middle East, International Air Transport Association (IATA), Kamil Alawadhi stated at a recent IATA conference in Doha, Qatar, that the airfares charged by international carriers are three times higher than what they charge in other countries that do not retain airlines’ revenues.
He expressed fear that the fares might continue to rise until Nigerians would not be able to afford international travel, stressing that such development could eventually weaken the nation’s economy.

Alawadhi explained that airlines were charging higher fares to Nigeria so that they could make a profit from one leg of the trip, as most trips are charged on return-ticket.

Industry expert and the Secretary-General of Aviation Round Table (ART), Group Captain John Ojikutu (rtd) said that before anyone should blame the Central Bank of Nigeria (CBN), the aviation industry should first account for over $1 billion it earned from passenger service charge (PSC).
He lamented that Nigeria is not keeping to the tenets of the Bilateral Air Service Agreement (BASA), which stipulates that foreign airlines should pay royalties for their operations in Nigeria, especially when Nigerian carriers do not reciprocate the same service to the host countries of those airlines.

“First, why do we find ourselves among the countries that are not keeping to the articles of the BASAs? Second, what happens to our forex earnings on commercial aviation, particularly those that are earned by the aviation services providers like the PSC of $100/pax and those earned on landing and parking? What about the forex earnings by others like the ground handling services companies such as NAHCO (Nigeria Aviation Handling Company Plc), SAHCOL (Skyway Aviation Handling Company Plc) and the fuel marketers?” he queried.

“My last calculations on all these is over $1 billion, but where are they before we start blaming the CBN that cannot account for the earnings and deposits from others’ earnings forex like NNPC (the Nigerian National Petroleum Company), NPA (the Nigerian Ports Authority), NIMASA (Nigerian Maritime Administration and Safety Agency) etc? (Chief Olusegun) Obasanjo said at the first public hearing on aviation ever held by any president in Aso Rock in around 2006 that forex earnings by aviation operators, including the NCAA (Nigerian Civil Aviation Authority) be domiciled in the CBN, Naira equivalent given to the operators but can be returned to the CBN when the needs arise; what happened to that presidential directive?

“What has been happening over the years in Nigerian commercial aviation policies, regulations and administration are 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 per cent to 80 per cent of our earnings in commercial aviation are from foreign airlines. What will happen further is that Nigerians will go to Accra, Cotonou, Lome, etc to connect the flights of these foreign airlines making them hubs over Nigeria. I saw these happening to us when a minister unilaterally cut off the commercial agreements between us and them and when we indirectly open the domestic routes and markets for some of them for multiple destinations. The consequences are staring at us all; now who will save us from ourselves?” Ojikutu further queried.

However, industry analyst and Director, Research, Zenith Travels, Mr Olumide Ohunayo explained that Nigerians are being charged higher rates because the country’s debt is the highest.

“Secondly, we cannot reciprocate of those routes; so, the dominant carriers determine the fares. Nigeria has a very strong travel population; so, we have a lot of supply, which outweighs the demands currently as airlines cut frequencies. Also, the Naira’s continuous spiral fall is affecting the overall costs of the tickets,” he added.

Meanwhile, pressure has been mounted on the federal government over the $464million trapped funds belonging to foreign airlines flying Nigerian routes.
This comes on the heels of Emirates’ stoppage of flights with effect from September 1 even as more airlines are said to be exploring all options to mitigate the effect of blocked funds.

A group of aviation professionals and stakeholders under the aegis of Aviation Roundtable (ART) expressed dismay “by the appalling handling of the accumulated foreign airline funds trapped in our banks, due to the non-allocation of forex to these airlines.”
The ARN in a statement by its Assistant Secretary, Mr Olumide Ohunayo, charged the CBN to do the needful by allocating dollars to the airlines to repatriate money made from the sale of tickets in line with the dictate of BASAs.

It said, “In all Bilateral Air Services Agreement an Article in the agreement — transfer of earnings, clearly states that “each designated airline shall have the right to convert and remit to its country on demand, local revenues over sums locally disbursed. Conversion and remittance shall be permitted without delay by the prevailing foreign exchange regulations”.
According to ART, international trade is bonded by agreements, which are sacrosanct and respected. It said Nigeria cannot do otherwise if we crave the attention of investors in our industry.

The statement added: “It’s important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go the parallel market to source, convert and remit as opined in some quarters, the central bank should do the needful as enshrined in the BASA agreements.
“These funds should have been remitted at the official rate on the date of Sale immediately the Airlines get clearance after paying all the local obligations including taxes.

“The damage that our action has done to the Nigerian image as an investment-friendly nation is far-reaching, while the citizenry is faced with high fares, reduced capacity and limited travelling options, which will worsen if we continue on this trajectory.
“We found ourselves in this unenviable situation because we cannot compete, which would have reduced the remittance volume,” the statement added.