CEM REPORT | With the rising threats of airlines leaving the country the Central Bank of Nigeria has announced the release of $265m to settle outstanding ticket sales.
The released funds according to a statement will aid to check a fueling crisis in the nation’s aviation sector.
A breakdown of the figure indicated that $230m was released as special foreign exchange intervention while another $35m was released through the Retail SMIS auction.
According to the Director, Corporate Communications Department, CBN, Osita Nwanisobi, the CBN Governor, Godwin Emefiele, and his team were concerned about the development and what it portends for the sector and travellers as well as the country in the comity of nations.
Nwanisobi reiterated that the bank was not against any company repatriating its funds from the country, adding that what the bank stood for was an orderly exit for those that might be interested in doing so.
“With Friday’s release, it is expected that operators and travellers as well will heave huge sighs of relief, as some airlines had threatened to withdraw their services in the face of unremitted funds for outstanding sale of tickets.”
He added that, with the release, it is expected that operators and travellers will heave huge sighs of relief.
There have been serious concerns which have brewed reactions over hundreds of millions of dollars earned by foreign airlines operating in the country which they could not repatriate due to foreign exchange scarcity problems.
Commenting on the move, the secretary general, Aviation Round Table Initiative (ARTI), Olumide Ohunayo, said the move of the federal government hits as good news and appeals for such arm to be stretched to domestic operators.
“It is good news. It is also a win-win situation and in whatever name they want to call it, whether intervention or special fund, it is a good one for the company. It is the appropriate thing to do and I hope the foreign airlines as well as their association International Air Transport Association (IATA), see this as good news and forgive us for all our iniquities of the past and see how we can restore those foreign flights to their full schedules and where they are before to see if they can lower the fares now.
“Again, there was a call from British Airways and the government responded. This should be extended to domestic airlines to take care of their operational expenses that have been hanging. This is the time to support domestic airlines for their operational expenses to get those dollars at the official rates. The CBN should pay directly to organisations foreign airlines want to get the equipment from”.
Recall that in June, the International Air Transport Association (IATA) drew the attention of the world to the inability of Nigeria to release about 450 million Dollars then, which was 25 percent and the highest of the total amount of the trapped funds held by largely African countries, which were adversely affected by the global economic downturn.
Due to the trapped fund, Emirates Airlines announced the suspension of its flight from September 1st, 2022, thereby, making stakeholders call for the release of the trapped fund.
“Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective 1 September 2022, to limit further losses and impact on our operational costs that continue to accumulate in the market. We sincerely regret the inconvenience caused to our customers, however, the circumstances are beyond our control at this stage. We will be working to help impacted customers make alternative travel arrangements wherever possible.”
Emirates explained that it was owed over $95 million in Nigeria, which it could not repatriate due to the scarcity of Dollars.
The airline further added that if there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, it would re-evaluate its decision.
“We remain keen to serve Nigeria, and our operations provide much-needed connectivity for Nigerian travellers, providing access to trade and tourism opportunities to Dubai, and our broader network of over 130 destinations.
Also, in a meeting with travel agencies, British Airways indicated that it would suspend flight operations to Nigeria by December 2022 and urged that travel agencies should not sell British Airways tickets beyond December.
On Monday, during the facility tour of the new international terminal at the Murtala Muhammed Airport, Lagos, the Minister of Information and Culture, Lai Mohammed told newsmen that appropriate authorities in the federal government were looking into the issue of the trapped fund and expressed optimism that action would be taken soon.
Meanwhile, IATA’s Regional Vice President for Africa and the Middle East, Kamil Alawadhi, expressed his disappointment in the country ovwr the blocked funds.
“IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. This is airline money and its repatriation is protected by international agreements in which Nigeria participates.” IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market.
“Airlines cannot be expected to fly if they cannot realise the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, and impacts jobs and people’s livelihoods. It’s time for the Government of Nigeria to prioritise the release of airline funds before more damage is done.”