$464m Blocked Funds: Foreign Airlines Ripping Off Nigerians – Stakeholders
Players in the Nigerian aviation industry have said that foreign airlines operating into the country are ripping its travelers with higher airfares when compared to passengers from other countries.
Investigation by Sunday Independent indicates that air travelers emanating from Nigeria pay about triple airfares for the same destinations when compared to their counterparts.
At present, Nigerian travelers pay over N1.2 million for an economy seat of about six to seven hours travel, while the business class ticket goes as high as N4 million.
Though, some of the airlines especially Emirates have threatened to suspend operations into Nigeria due to their inability to repatriate their ticket funds, but players in the sector insisted that despite the sordid situation in other countries, their air travelers still pay the right fares for flights unlike Nigeria.
Apart from Nigeria, findings reveal other countries with blocked funds as at June 2022 funds include Zimbabwe; $100 million, Algeria; $96 million, Eritrea; $79 million and Ethiopia; $75 million.
Also, it was learnt that Ghana, which was not listed by the International Air Transport Association (IATA) in June as among the countries with blocked funds had not allowed foreign airlines to repatriate their ticket sales in the past few months.
Commenting on the development, Grp. Capt. John Ojikutu (retd), the General -Secretary of Aviation Round Table (ART), said that before any anyone could blame the Central Bank of Nigeria (CBN) for the blocked funds, the aviation industry should first account for over $1 billion it earned from passenger service charge (PSC) and earning by aviation handling companies.
Ojikutu decried that Nigeria was not keeping to the tenets of the Bilateral Air Service Agreement (BASA), whereby foreign airlines pay royalties for their operations in Nigeria, especially when Nigerian carriers do not reciprocate the same service to the host countries of those airlines.
“First, why do we find ourselves among the countries that are not keeping to the articles of the BASAs? Secondly, what happens to our forex earnings on commercial aviation particularly those that earned by the aviation services providers like the PSC of $100 per passenger and those earned on landing and parking?
”What about the forex earnings by others like the ground handling services companies such as NAHCO (Nigeria Aviation Handling Company Plc), SAHCOL (Skyway Aviation Handling Company Plc) and the fuel marketers?
“My last calculations on all these is over $1billion, but where are they before we start blaming the CBN that can not account for the earnings and deposits from others earnings forex like Nigerian National Petroleum Company), NPA (the Nigerian Ports Authority (NNPC) Ltd, Nigerian Maritime Administration and safety Agency (NIMASA) and others.”
Ojikutu alleged that activities in the commercial aviation in Nigeria, regulations and administration were tailored towards exploitation of the system.
He however insisted that Nigeria would be the loser if the foreign airlines eventually suspend operations into the country, stressing that about 70 to 80 per cent of earnings in commercial aviation in the country were from the foreign airlines.
He warned that it the situation continued, many Nigerian travelers would go through other neighbouring African countries like Ghana, Benin Republic and Togo to fly to Europe and other destinations.
Also commenting, Mr. Olumide Ohunayo, Director, Research, Zenith Travels, Mr. Olumide Ohunayo said Nigerian travelers are being charged higher airfares by the foreign airlines because the country had the highest figure of blocked funds among debtor nations.
Besides, he observed that Nigeria lacked the capacity to reciprocate on several routes, stressing that this made the dominant carriers to determine airfares to be charged on each route.
He added:”Nigeria has a very strong travel population, so we have a lot of supply, which outweighs the demands currently as airlines cut frequencies. Also, the naira continuous spiral fall is affecting the overall costs of the tickets.“You see that there are more demands for the business and higher economy class. So, since these higher classes are being demanded here, these airlines tend to push fares in line with those demands so that the next available ones will also be a bit higher. So, the airlines are using this market forces to push prices as well.”
Kamil Alawadhi, IATA Regional Vice-President, Africa and Middle East, said recently that airfares charged by international carriers are three times higher than what obtains in other countries that do not retain airlines’ revenues.
Alawadhi also expressed fear that the fares might continue to rise until Nigerians would not be able to afford international travel and that would eventually weaken the nation’s economy.
Alawadhi explained that airlines were charging higher fares to Nigeria so that they could make profit from one leg of the trip, as most trips are charged on return ticket.
