Trapped $450m revenue: More woes for travellers

NIGERIANS traveling to Dubai in the United Arab Emirates for business and pleasure are in for a tough experience as information just reaching Sunday Tribune has indicated that the Emirates, the flag carrier on the route, has announced plans to reduce its 11 weekly flights into Lagos, Nigeria to seven. 

The frequency reduction, which commences on August 15, 2022, according to a statement issued by the airline, has been attributed to the airline’s $85 million funds trapped in Nigeria. 

This is just as many other foreign carriers affected by the trapped funds in the country like Emirates may soon reduce their flights into Nigeria. 

Information gathered has also indicated that some may be forced to withdraw their services from the country due to the problem the trapped funds has caused on their operational cost. 

According to a letter of notification issued by Emirates through one Sheikh Majid Mualla, Divisional Senior Vice-President (DSVP), international affairs for the carrier and addressed to Nigeria’s Minister of Aviation, Senator Hadi Sirika, dated 22nd July, 2022, the UAE-based airline declared: 

“It is with a heavy heart that I write to inform you of planned reductions in Emirates operations to Nigeria. With effect from August 15 2022, Emirates will be forced to reduce flights from Dubai to Lagos from 11 per week to seven per week. We have had no choice but to take this action to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria. 

“As of July 2022, Emirates 85 million US dollar funds are awaiting repatriation from Nigeria. This figure has been by more than US$10 million every month, as the ongoing operational cost of our 11 weekly flights to Lagos and five to Abuja continue to accumulate. 

“These funds are urgently needed to meet our operational costs and maintain the commercial viability of our services to Nigeria. We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate. 

“Emirates did try to stem the losses by proposing to pay for fuel in Naira which would have at least reduced one element of our ongoing costs. However, this request was denied by the supplier. 

“This means that not only are Emirates revenues accumulating, we also had to send hard currency into Nigeria to sustain our operations. Meanwhile, our revenues are out of reach and not even earning credit interest. 

“This is not a decision we have lightly. Indeed, we have made every effort to work with the Central Bank of Nigeria (CBN) to grind a solution to this issue. Our senior vice president met with the deputy governor of CBN in May and followed up on the meeting by a letter to the governor himself the following month. 

“However, no possible response was received. Meetings were also held with Emirates’ own bank in Nigeria and in collaboration with the International Air Transport Association (IATA) to discuss im- proving forex allocation, but with limited success. 

“Despite our considerable efforts, the situation continues to deteriorate. We are now in the unfortunate position of having to cut flights to mitigate against further losses going further. 

“While we appreciate that this issue is primarily a financial, any support you could hardly provide would be warmly welcomed by the Emirates. We are confident that your valuable involvement would make a real difference in improving this very difficult situation. 

“Should there be any positive development in the coming days, we will of course re-evaluate this decision. Meanwhile, thank you for your understanding and please feel free to contact me if you wish to discuss the matter further.” 

Prior to Emirates’ action, Sunday Tribune equally gathered that airlines like British Airways had earlier reduced their frequencies to Lagos unnoticed. Revealing this to Sunday Tribune in reaction to the development, one of the travel experts in the sector, who spoke under anonymity declared: 

“Other foreign airlines will be following the Emirates example very soon. The amount travellers are paying in Naira will increase. Some will be inconvenienced because flights and connections may not be readily available. Obviously, the volume of travel will decrease.” 

Stakeholders across have expressed worries over the latest in view of the impact they claimed Emirates’ action will have on the huge traffic on the Lagos/Dubai routes, concluding that this may be the beginning of similar actions from other foreign carriers operating into Nigeria. 

This, according to them, may spell doom for international flights between Nigeria and the home countries of the foreign airlines. 

The president of the National Association of Nigeria Travel Agencies (NANTA), Mrs Suzan Akporiaye, while comparing the situation to the era of the dark days of the pandemic, declared: 

“I am going to do a reminder letter to the CBN, to the Presidency on this very issue. It is really getting worse and it is not funny. It is like we are back to another era of the pandemic. 

“I am using this opportunity to call on the media in Nigeria to please help us. As an association in Nigeria, we may not be able to afford to come on NTA and all other broadcasting stations to speak where all of them sit, to listen to what we are going through. 

“Nevertheless, we are going to continue to make noise and I trust that one day we will get there. I don’t think they are ignorant of what is going on and the implications of what is going on, especially the Minister of Aviation. 

“The airlines are going to him for help. He is not doing anything and he is not listening to them. He is not even making any effort to help the foreign airlines get their trapped funds. 

“He is supposed to help fight for the airlines so that they can get and repatriate their funds, and these funds they are not asking for 100 per cent to be paid once. If they can just clear the backlog, that is what they are asking for. 

“It’s very sad and hurtful that we are not a priority as the citizens of this country. For those of us who are not willing to leave the country because we still believe in the country, must we suffer so much because we believe and choose to be patriotic? No. 

“Everyone is just paying attention and making noise about the coming elections. Meanwhile, look at us here faced with this kind of huge crisis that may lead us to closing our offices again. 

“It is actually disappointing and discouraging, especially with the Minister of Aviation. He is in the eye of the storm in aviation. He knows these things. Why is he not coming out to address us? Why is he not coming out to talk to the foreign airlines? 

“Even if he does not want to talk to the travel agents’ community, at least let him talk to the foreign airlines and let them know what he is doing. None of the airlines knows if and when they are getting their money back. So it’s a sad situation. 

“All the airlines have all reduced their frequencies in Abuja. So, if they are now facing Lagos to reduce their flights, it is not news they are just starting what they have started in Abuja already.” 

In his own reaction, the managing director of Centurion Aviation Security and member of Aviation Round Table (ART), Group Captain John Ojikutu, retired said: “The desperate Nigerian travellers would have to pay the high costs if they must travel on the airline.

“Emirates is not the only airline affected by the scarcity of forex at the CBN. The worry should be extended to the other foreign airlines that collectively are contributing over 70 per cent of the national earnings on commercial aviation. Should they all begin to reduce their frequencies and therefore capacities, our earnings will reduce. 

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“Reducing frequencies reduces capacity too except the airline has bigger aircraft for the replacement. If the frequency is reduced, passengers’ figures are reduced too and the earnings are reduced. 

“To sustain the increase in the cost of operations and scarcity dollar in the CBN, the airlines would have to increase airfares so as to buy dollar at the parallel market and return their earnings.” 

At the last count, over $450 million belonging to the over 27 foreign airlines operating into Nigeria have been trapped. 

Efforts made by the foreign carriers to get the funds released by the CBN, according to information gathered, did not yield positive results, forcing the airlines to introduce new measures that will cushion the effects of the trapped funds which have led to prohibitive rise in the prices of fares on the international routes. 

Nearly all the foreign carriers, out of frustration, have since stopped the Nigerian travel agents from selling cheap regime of fares in the country, leaving the Nigerian with the only choice of buying expensive fares.

Those who could not pay for the exorbitant fares have found alternatives in travelling to neighbouring countries like Ghana where cheaper fares are still being sold to connect flights to other parts of the world.

Reacting on behalf of the Nigerian Civil Aviation Authority (NCAA), its spokesman, Mr Sam Adurogboye, said the regulatory agency’s position was for the foreign airlines to be able to repatriate their funds to their home countries, saying: “NCAA’s position is for the airlines operating in and out of Nigeria being able to repatriate their funds.” 

The International Air Transport Association (IATA), the clearing house representing over 300 airlines across the globe, at the end of its recently concluded annual general meeting in Doha, Qatar had expressed regret over how the Nigerian government had failed to remit 450million US dollar of airlines’ sales proceeds from Nigeria.

Speaking at the AGM, the IATA Director-General, Willie Walsh, said over $1billion blocked funds of foreign airlines were trapped in Africa including Nigeria even as he bemoaned how the trapped funds were deeply impacting the airlines and their recovery, emphasising this to be responsible for why the continent was not getting additional capacity from the foreign carriers. 

His words: “We are looking at ways to get these funds out. It has not. It is really having impact on the airlines and the recovery of the market as well because airlines will be reluctant to bring capacity into markets where they can’t repatriate their money. 

“It affects national growth and additional capacity. If you can’t get your money out, I am sorry, it is a simple business decision, you are not going to get additional capacity. Airlines are looking to recover their money and they are not going to put their funds into markets that they have no confidence in. 

“I think this is a significant factor against recovery in the continent. It is unfortunate because it would affect the consumers they are not going to get the choice, they are not going to get the competition and they would not be able to get the choice that they have been getting if the funds were not blocked. They are big issues, really big issue,” he said