CEM REPORT, AVIATION | Nigeria presently sits as the country with the most foreign airline trapped funds in the world.
Foreign airlines’ trapped funds in Nigeria have risen to $818.2 million between March and April.
According to a statement by Willie Walsh, IATA’s Director-General, the total trapped funds in the world at $2.27 billion as of April 2023.
Nigeria accounted for $700 million as of March and rose to $818.2 million in March, a $118.2 million increase.
The International Air Transport Association (IATA) called on affected countries, especially Nigeria, to abide by the international agreements reached with various governments regarding ticket sales repatriation.
According to the global airline body, the top five countries account for 68 per cent of blocked funds. These comprise Nigeria ($812.2m), Bangladesh ($214.1m), Algeria ($196.3m), Pakistan ($188.2m), and Lebanon ($141.2m).
Walsh on his part has warned that rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets.
He emphasized that the industry’s blocked funds have increased by 47 per cent to $2.27 billion in April 2023 from $1.55 billion in April 2022.
He also explained that airlines could not continue to offer flight services in countries where they have found it difficult to repatriate their funds and called for quick action to address the situation.
“Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets.”
Regional Vice President, Africa and Middle East, IATA, Kamil Alawadhi, on his part, said the IATA was making progress with the Nigerian government on the repatriation of blocked funds.
He noted that the process was stalled by the preparations for the general election.
He revealed that the IATA will meet with representatives of the new administration to clear the backlog of blocked funds.
Alawadhi expressed confidence that the incoming administration will repatriate 50% of the trapped fund and then set up the necessary infrastructure to release the other 50% in a few months.
According to the IATA VP, airlines blocked funds have led to a negative perception of Nigeria in the global investment community, a situation that has made many investors shun the country.
The sad development, he said, had also led to high ticket prices in Nigeria.
“Every penny counts, airlines have been affected by the pandemic. Airlines need their funds to run their operations smoothly. We will engage the new government in Nigeria to get the blocked funds repatriated as quickly as possible.
”Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”
Since last year, foreign airlines have had difficulty repatriating their profits from operations in Nigeria home.
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Major airlines have been obliged to take harsh steps against Africa’s largest market as a result of the stranded cash, which climbed from $450 million in May 2022 to $464 million in July of that same year.
Emirates Airlines halted its service to Nigeria in November to make up for lost income from the previous year.
Similar action was taken by British Airways (BA), which stopped local travel companies from accepting reservations through their portals by closing inventory in Nigeria in the global distribution system (GDS).
The Central Bank of Nigeria (CBN) issued $265 million to international airlines operating in the nation to settle unpaid ticket sales after repeated meetings by the authorities to resolve the deadlock.
However, because the finances are still increasing, the issue has not yet been totally rectified.
