In a concerning development for Nigeria’s aviation sector, foreign airlines are contemplating an exit from the country’s airspace due to the challenging operating environment exacerbated by the trapping of over $792 million in funds.
This comes amid a series of exits by foreign businesses, with Procter & Gamble and GlaxoSmitKline being the latest casualties.
The primary hurdle faced by these airlines is the difficulty in accessing foreign currency for their operations, as a substantial amount of their funds is stuck within Nigeria.
Despite President Bola Tinubu’s directive to the Central Bank of Nigeria for quarterly reconciliatory meetings with foreign airlines, no progress has been made, leaving the airlines in a precarious position.
Even interventions from high-profile figures, such as President Tinubu, have failed to lure back airlines like Emirates, which exited Nigeria’s airspace last year and has yet to return.
The airlines, in response to the fund blockage, have taken drastic measures such as closing down lower fare inventories to travel agents to alleviate the backlog.
International Air Transport Association (IATA) Regional Vice President for Africa & Middle East, Kamil Al-Awadhi, expressed growing concerns about the situation.
During a media presentation in Geneva, he urged the Federal Government of Nigeria to address the matter urgently, emphasizing that the airlines are reaching a breaking point and may cease operations.
Al-Awadhi highlighted that Nigeria tops the list with the highest amount of blocked funds at $792 million, followed by Egypt, Algeria, AFI zone, and Ethiopia.
He called for engagement between relevant parties to find a resolution, stating that Ethiopia is actively seeking ways to address the issue.
Furthermore, Al-Awadhi shed light on the broader challenges faced by airlines in Nigeria, citing a 25 percent interest on loans, high airport taxes, and insurance premiums six times higher than the global average.
These factors, he argued, make it difficult for Nigerian airlines to turn a profit, creating an uneven playing field compared to international counterparts.
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