Will Nigeria's Aviation Fall apart?

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DALLAS - In recent weeks, many foreign carriers seem to be planning a pull out of Nigeria given the situation over trapped funds. Emirates (EK) was the first to act by shutting down Lagos operations, and could the scenario turn into one where several airlines blacklist Nigeria?

The airline states, "Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria and has 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."

Emirates says it has, therefore, "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."

"Should there be any positive developments in the coming days regarding Emirates’ blocked funds in Nigeria, we will, of course, reevaluate our decision. We remain keen to serve Nigeria, and our operations provide much-needed connectivity for Nigerian travelers, providing access to trade and tourism opportunities to Dubai and to our broader network of over 130 destinations".

Emirates wasn't able to access its own funds in Nigeria, valued at US$85m.

Ethiopian Airlines ET-ASG Boeing 787-8 KIAH. Photo: Brad Tisdel/Airways

Comments from Nigeria's Aviation Minister

Via CNN, aviation minister Hadi Sirika said, "In the past, Nigeria has demonstrated the capacity and the willingness and fairness to resolve this type of issue. It happened when we took over power in 2015: There were lots of blocked funds, about $600 million at that time. It was at a time when the country was in a recession and there were dwindling revenues coming into the country, yet we honored our obligation to pay out all those blocked funds."

"Unfortunately, due to many factors and reasons, the money piled back up. The government is working hard to ensure that these funds are released, not only for Emirates but for all airlines affected," Sirika added.

British Airways (BA) has already reduced its flight frequencies to Nigeria, as the airline informed its passengers on Thursday of an imminent hike in the cost of its flight tickets.

The International Air Transport Association (IATA) had expressed concerns over the decision by the Nigerian government to block foreign airlines from repatriating ticket sales revenue amounting to US$450m (N188.6bn) into their respective countries.

British Airways (BA) has already reduced their flight frequencies to Nigeria. BA G-XLEB Airbus A380-841. Photo: Brandon Farris/Airways

So What's the Deal?

Nearly 90% of Nigeria's US dollars come in through the sale of crude oil, and it seems like the country is falling short of its promised production rate, apparently due to oil being stolen. This seems to have scarred the country's forex income; hence, the holding of several million funds of various airlines that fly to Nigeria — US$464m for July.

Kingsley Nwokeoma, President of the Association of Foreign Airlines and Representatives in Nigeria, stated that more international carriers would join EK soon if nothing was done to address their concerns regarding the trapped forex. “This is just the beginning. It is over US$1bn that is being held and they (foreign airlines) cannot repatriate it."

Featured image: Luca Flores/Airways