Of foreign airlines and trapped funds

RECENTLY, an international carrier, Emirates Airlines, wrote the Minister of Aviation, Hadi Sirika, indicating that it would,  from September 1, suspend operations in Nigeria, citing its inability to repatriate over $85 million trapped in the country. In a statement, the airline said: “Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria, and we have made considerable efforts to initiate dialogue with the relevant authorities for their urgent intervention to help find a viable solution. Regrettably, there has been no progress. Therefore, Emirates has taken the difficult decision to suspend all flights to and from Nigeria, effective September 1 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.” Naturally, the airline indicated that in the event of positive developments regarding the blocked funds, it would reevaluate its decision, being keen to serve Nigeria.

In recent times, there has been considerable tension in the aviation sector arising from the Federal Government’s failure to allow foreign airlines operating in the country’s airspace to repatriate their funds. As of July ending, the blocked funds belonging to over 20 foreign airlines had risen to over $600 million. In response to the development, the Nigerian Civil Aviation Authority (NCAA) acknowledged that the move by Emirates airline was legitimate. On his part, the Aviation Minister has stated that the Federal Government is doing everything possible to resolve the matter, a sentiment echoed by the Minister of Information, Mr. Lai Mohammed, on Monday. Sadly, according to media reports, dire implications await the Nigerian economy should foreign airlines make good their threat to withdraw flight services over their trapped funds estimated to have reached $464 million in July. The foreign carriers account for 80 per cent of commercial aviation earnings to the Gross Domestic Product (GDP) and their exit could hobble the projected growth of the air transport sector and cost Nigeria $1.36 billion yearly.

Meanwhile, international opinion on the debacle is signalled by the International Air Transport Association’s (IATA) statement  expressing disappointment with Nigeria for withholding the funds. According to IATA’s Regional Vice-President for Africa and the Middle East, Kamil Alawahdi: “IATA is disappointed that the 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.”

The question of unrepatriated funds is indeed a disturbing one. Every investment is for profit and the international airlines as investors in Nigeria’s aviation sector are entitled to the full benefits of their investments. Having committed time, human resource and facilities to Nigeria, it is only natural that they reap the fruits of their labour. Airline business is a serious and delicate undertaking and having fulfilled their own duties to Nigeria as required by law, the investors cannot be expected to sit back and relax while the Federal Government plays ping-pong with their funds, citing dollar scarcity. As things stand now, the  government either resolves the issue immediately or risks the ugly consequences of withdrawal of services by foreign airlines, further plunging the Nigerian economy into the mire and causing Nigerians who use their services severe anguish. This situation is bad for Nigeria’s image.

It is saddening that foreign airlines operating in Nigeria have been thrown into despair because of the lack of foreign exchange with which to repatriate their legitimate earnings. This is really very unfortunate and speaks to the gradual insolvency of the Nigerian economy. At the risk of sounding repetitive, the airlines are conducting legitimate businesses and have met all their other obligations to Nigeria under the law before having their remaining earnings slated for repatriation. This should be an otherwise seamless and hitch-free transaction that should not cause them any headache. There must be keen and urgent governmental remediation before the crisis degenerates further. A cessation of operations in Nigeria by the airlines would send very strong negative signals to the international system about the distress of the Nigerian economy, making further economic interactions with the international system difficult. It is therefore in Nigeria’s interest to address the issue as quickly as possible to fend off further negative consequences.

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