$450m foreign carriers’ trapped funds: Key player faults FG’s stoppage of foreign carriers from paying royalties

The controversial suspension of the collection of royalties from foreign airlines flying into the country by the Federal Government about 10 years ago has continued to generate criticisms amongst key players in the sector.

Royalties are funds paid to Nigeria by foreign airlines due to the inability of the country to reciprocate Bilateral Air Services Agreements (BASA).

Prior to the suspension of royalty collection by the government, the monies, including the BASA funds which were domiciled with the defunct national carrier, the Nigeria Airways, were often used to tackle some emergency needs like fixing of infrastructure.

The sudden suspension of the funds without consultations with key players was trailed by condemnations from different key players including domestic airlines who described the government’s action as inimical to the progress of the sector.

Since the suspension of the collection of the special funds which foreign airlines are expected to pay Nigeria through the additional flight operations they are enjoying outside the commercial BASA deals existing between their home countries and Nigeria, only few of the foreign airlines still pay.

The latest furore generated by the stoppage of the collection of the royalties is coming on the heels of the inability of the Federal Government to offset the $450 million trapped funds belonging to the foreign carriers coupled with the lack of accessibility to forex to help the airlines.

Joining in the condemnation of the stoppage of the collection of the royalty funds is the Managing Director of Centurion Aviation Security and a member of the Aviation Round Table (ART), Group Captain John Ojikutu (Rtd.), who blamed most of the challenges confronting the sector on the unavailability of the royalty and BASA funds.

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Ojikutu, while reacting to the foreign airlines’ trapped funds and the subsequent hike in fares on foreign routes and other crises confronting the sector, wondered why the royalty charges was suspended, saying if the account had been allowed to continue, the government would have used part of it to settle the foreign airlines and tackle other challenges.

The aviation security expert, who called for a domiciliary account to be opened for aviation where monies such as the BASA funds would be lodged said, “Stopping the BASA’s account did not make economic sense.

“People are coming into this country 20 to 30 times taking passengers out, out of BASA agreement. That is why we have commercial agreement so that all these monies could go there. You are putting a lot of stress on other social services that need forex, now  there is none. That is where the money is supposed to be and if FAAN and others had been putting the money there, the government would have gone there to access the money. If you need foreign exchange you don’t need to go to CBN.”

Despite the suspension of the royalty charges collection, it has been gathered that not all the foreign carriers have stopped paying as airlines like Emirates still comply with the payment.