The International Air Transport Association, a trade group representing international airlines and headquartered in Geneva, has voiced concerns about the possibility that foreign airlines doing business in Nigeria could lose up to $200 million due to depreciating exchange rates.
According to Kamil Al Awadhi, Regional Vice-President of IATA for Africa and the Middle East, the depreciation of the naira against the dollar is making the problem of trapped funds worse. He made these remarks during a CNBC interview that our correspondent watched.
The IATA Vice President’s remarks were made in light of the alleged $700 million in foreign airline ticket revenue that is still stuck in Nigeria.
The IATA swiftly responded, stating that foreign carriers operating in Nigeria still had over $700m trapped in the country, despite the Central Bank of Nigeria’s announcement last week that it had paid all verified debts owed to foreign airlines.
Under the auspices of the National Association of Nigerian Travel Agencies, local travel agents have demanded that foreign airlines operating in the nation release discounted fares from their inventory, failing which they risk facing harsh penalties.
This followed the CBN report on the settlement of debts owed to foreign airlines.
The CBN, however, was required to collect all unclaimed ticket revenue that was held in the nation, according to the IATA Vice President.
“The lower exchange rate should not unfairly penalize airlines,” the vice president of IATA cautioned last week in a statement.
But in an interview with CNBC, AlAwadhi stated, “You also have to consider the funds that have been blocked and their fair value. Airlines will have to make up more than $200 million in lost revenue if $720 million is blocked and the naira devalues by 30%.
“Under the current environment, airlines have lost a lot of money operating in and out of Nigeria,” he continued.
In recent weeks, the value of the naira in relation to the dollar has plummeted.
At the official market, the naira recently fell from roughly 900 to over 1,400 dollars.
According to Mr. Kingsley Nwokoma, President of the Association of Foreign Airlines and Representatives in Nigeria, the value of the naira was declining.
“I agree with IATA’s observation regarding the diminishing value of trapped funds,” Nwokoma said to The PUNCH. The value of the naira has changed over the past five years, or even just this past year. It is imperative that the government honors its payment commitments.
He suggested that the Nigerian government look into the possibility of coming to an agreement with the airlines, thinking that regular payments on a monthly or quarterly basis would be a workable solution.
“We have emphasized multiple times. He stated, “The amount of money that is still trapped in our system is still quite significant.
Nwokoma said that because of this, travelers were choosing to schedule flights from Ghana and Togo.
The Central Bank of Nigeria said last week that payments for all confirmed claims made by international airlines had been completed, and an additional $64.44 million had been distributed to the relevant parties.
With this latest payment, the verified amount disbursed to the aviation industry has now reached $136.73 million, the apex bank clarified, adding that all verified airline claims have been settled.
The reporter was previously informed by NANTA President Susan Akporiaye that the $61.64 million paid to foreign airlines represented a portion of the total debt.
According to Akporiaye, “When tickets are sold, the old debts are settled at the going rate, with the exchange rate being around N400/450 to one dollar.” The debt has decreased from its initial amount of approximately $800 million.