IATA Predicts More Airline Operation Suspensions Over Trapped Funds

The International Air Transport Association (IATA) has speculate that
more foreign airlines may suspend operations in Nigeria until revenue is released to the airlines.

This comes as the country owes $464million revenue to foreign airlines which is trapped in the Central Bank of Nigeria (CBN).

Nexus News recalls that Emirates airlines announced Thursday that it will suspend all flight operations in Nigeria come September 1.

According to a statement issued on Friday, the regional vice president, Africa and Middle East, Kamil Alawadhi, said IATA was dismayed that the amount of funds belonging to airlines, which were obstructed from repatriation by the Nigerian government has accumulated to $464 million in July.

He said government should discharge the trapped funds before more damage is done, adding that IATA has been vindicated with the planned suspension of flights to Nigeria by Emirates Airlines.

“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 realize the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, impacts jobs and peoples livelihoods.

“It’s time for the Government of Nigeria to prioritize the release of airline funds before more damage is done.”
Meanwhile, Aviation Safety Round Table Initiative (ARTI), has urged CBN to ensure prompt release of the foreign airlines’ trapped funds.” The statement read.

On his part, the secretary general of the Initiative, Olumide Ohunayo, expressed disappointment over the handling of the matter by the federal government, adding that the whole scenario portrays a sector that is in need of urgent intervention.

“ARTI is dismayed by the appalling handling of the accumulated foreign airline funds trapped in our banks, due to the non-allocation of forex to these airlines. In all Bilateral Air Services Agreement (BASA), an Article in the agreement — transfer of earnings, clearly states that ‘each designated airline shall have the right to convert and remit to its country on demand, local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing foreign exchange regulations.

“International trade is binded by agreements which are sacrosanct and respected. Nigeria cannot do otherwise if we crave the attention of investors in our industry. It’s important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go the parallel market to source, convert and remit as opined in some quarters, the central bank should do the needful as enshrined in the BASA agreements. These funds should have been remitted at the official rate on date of Sale immediately the Airlines get clearance after paying all the local obligations including taxes,” ARTI said.

Ohunayo noted further that the action of government on the matter has affected the country’s image as a country that is not investment-friendly.

“The damage that our action has done to the Nigerian image as an investment friendly nation is far reaching, while the citizenry is faced with high fares, reduced capacity and limited travelling options, which will worsen if we continue on this trajectory. We found ourselves in this unenviable situation because we lack capacity to compete, which would have reduced the remittance volume.

“The unborn Air Nigeria cannot produce this capacity, irrespective of the funds allocated, but by an aggregated process of developing our industry to produce vibrant flag carriers that will be courted for commercial partnerships which is the purveyor for successful international flight operations. We are also of the opinion that to kick start this process, a functional and credible data gathering methodology for the industry is a necessity. We cannot continue to blow hot air without verifiable data,” he added.

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