Delta Explains Ticket Sales in Dollars as Foreign Carriers Groan over Trapped Funds

Chinedu Eze

The International Air Transport Association (IATA) has said the amount of airline funds that is due for repatriation, but being blocked by governments has risen by more than 25 per cent ($394 million) in the last six months and that the total funds blocked now tally at close to $2.0 billion.

IATA therefore called on governments to remove all barriers to airlines repatriating their revenues from ticket sales and other activities, in line with international agreements and treaty obligations.

IATA is also renewing its calls on Venezuela to settle the $3.8 billion of airline funds that have been blocked from repatriation since 2016 when the last authorization for limited repatriation of funds was allowed by the Venezuelan government.

“Preventing airlines from repatriating funds may appear to be an easy way to shore up depleted treasuries, but ultimately the local economy will pay a high price. No business can sustain providing service if they cannot get paid and this is no different for airlines. Air links are a vital economic catalyst. Enabling the efficient repatriation of revenues is a critical for any economy to remain globally connected to markets and supply chains,” said IATA’s Director General, Willie Walsh.

IATA said airline funds are being blocked from repatriation in more than 27 countries and territories and the top five markets with blocked funds (excluding Venezuela) are:Nigeria: $551 million,Pakistan: $225 million,Bangladesh: $208 million, Lebanon: $144 million and Algeria: $140 million

IATA said the total airline funds blocked from repatriation in Nigeria has reached $551 million. It explained that repatriation issues arose in March 2020 when demand for foreign currency in the country outpaced supply and the country’s banks were not able to service currency repatriations.

But despite these challenges Nigerian authorities have been engaged with the airlines and are, together with the industry, working to find measures to release the funds available.

Regional Vice President for Africa and the Middle East, Kamil Al-Awadhi, said:  “Nigeria is an example of how government-industry engagement can resolve blocked funds issues. Working with the Nigerian House of Representatives, Central Bank and the Minister of Aviation, resulted in the release of $120 million for repatriation with the promise of a further release at the end of 2022. This encouraging progress demonstrates that, even in difficult circumstances, solutions can be found to clear blocked funds and ensure vital connectivity.”

However, in a press conference in Lagos on Monday this week, to mark 15 years of flight operation to Nigeria, Delta Air Lines confirmed that it now sells air tickets to Nigerian travellers in the United States dollars, saying this was part of the Bilateral Air Service Agreement (BASA) arrangements it has with the federal government.

Delta Air Lines’ Sales Director for Africa, Middle East and India, Mr. Jimmy Echelgruen, confirmed that the airline now sell air tickets to travellers emanating from Nigeria in dollars to avoid the continuous rise in its trapped funds in the country.

Echelgruen reiterated that the BASA agreement the United States Government signed with Nigeria allowed it to sell air tickets either in dollars or naira, stressing that the airline had not violated any known law in Nigeria.

He explained that the trapped funds of the airline in Nigeria were “enough to give us worry.”

Echelgruen, however, said that Delta Air Lines would not contemplating suspending flight services out of Nigeria because of the trapped ticket sales funds, stressing that the airline was committed to serve the Nigerian routes.

“What we have done is that we are now connecting through issuance of tickets in US dollars because that is the way that we can continue with our service uninterrupted. We are allowed to do that with the bilateral agreement between the US Government and the Nigerian Government and we are providing adequate availability to passengers from Nigeria to all over the world.

“With this, we have opened up more inventories allowing for passengers to travel with us, but they need to pay in dollars. We will continue to operate as normal and our load on our flight is still very good.

“There is no grey area and it is part of our agreement. The agreement says we can collect in either naira or US dollars. We now sell our seats in dollars and that is going to be the case until we are able to resolve this crisis,” Echelgruen said.

He was however, silent on the specific amount of funds of Delta Air Lines trapped in Nigeria.

No fewer than 25 foreign airlines operating into Nigeria are involved in the challenge of fund repatriation. 

Some of the major carriers affected by the crisis included British Airways, Etihad, Emirates, Lufthansa, Air France/KLM, Delta Air Lines, Virgin Atlantic, United Airlines, RwandAir and Ethiopian Airlines.

Meanwhile, the House of Representatives Committee Chairman on Aviation, Hon. Nnolim Nnaji has appealed to the International Air Transport Association (IATA) to prevail on its member airlines to show understanding as the various organs of government were making efforts to ensure that their tickets proceeds are duly remitted.

This is just as the members heard that $551 million out $1.1 billion blocked in Africa and Middle East is held in Nigeria.

Nnaji made the appeal while playing host to the IATA Regional Vice President for Africa and Middle East, Mr. Kamil Ala Wadhi who paid him a courtesy call in his office on Tuesday this week.

The committee Chairman reminded his guest that the prevailing situation was in consonance with the global economic meltdown assuring him that the Federal Government through the Central Bank of Nigeria (CBN) had put in place a mechanism for the liquidation of the blocked funds.

He also told the IATA Vice President that the federal government has made tremendous investments in the aviation sector to improve security and safety of air transportation in the country.

Nnaji also praised the association for its contributions to the safety of air travel through its operational safety programmes, (IOSA) which a number of Nigerian Airlines have benefited from.

Earlier in his speech, Ala Wadhi had acknowledged the interest shown by the Speaker of the House of the House of Representatives and its Committee on Aviation Hon. Nnaji, towards finding solutions to the member airlines’ blocked funds in Nigeria.

He disclosed that within his regions, “a total of $1.1billion airlines’ funds are blocked and half of these funds ($550,000,000) are held in Nigeria.”