Is the World Getting Smaller for Nigerians? International Airlines Threaten to Halt Operations in Nigeria

The uncertainty surrounding Nigeria’s airline industry has caused many airlines to increase the cost of flight tickets considerably, much to the distress of travelling Nigerians.

In a statement released in June 2022, the International Air Transport Association (IATA), revealed that Nigeria was withholding nearly $500 million in revenue from international carriers operating in the country. These ‘trapped funds’ were the result of a series of central bank policies aimed at restricting access to foreign currency in an attempt to ‘stabilize the naira’. Since the start of the year, Nigeria’s currency has lost over 10 per cent of its value against the dollar.  

On August 18, Dubai-based Emirates Airlines announced it would be suspending services to Nigeria, from September 1. According to the official statement on the airline’s website:  

Emirates has tried every avenue to address our ongoing challenges in repatriating funds from Nigeria and have 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 had raised alarm in July, drawing attention to the fact that the airline had about $85 million in funds awaiting repatriation from Nigeria. They claimed the figure was rising by over $10 million each month. Last week, media outlets reported that British Airways was also considering pulling out of the Nigerian airspace as a result of an accumulation of trapped funds.  

The uncertainty surrounding the Nigerian airline industry has caused many airlines to increase the cost of flight tickets considerably, much to the distress of Nigerian travellers. Frequently travelled routes, such as Lagos to London, have more tripled in cost; an economy class ticket on that route selling for between N400,000 and N650,000 in the first quarter of 2022, now sells for over N2,300,000.  

The Republic spoke to Shija Aondofa, a project manager with ties to the aviation industry, to get his perspective of the situation. According to Aondofa ‘Nigeria is currently cash strapped due to a reduction in demand for crude oil, and foreign reserves are dwindling daily.’ Aondofa believes the Nigerian government is failing to honour its agreements with these airlines, ‘because the Central Bank of Nigeria does not have enough dollars at its disposal.’ Nigeria’s weakening currency and the widening gap between the black or ‘parallel’ market rate and official rate for dollars have also exacerbated the airlines’ repatriation crisis. ‘Because there is no guarantee of when their funds will be released,’ Aondofa explained, ‘airlines are charging exorbitant return tickets as a form of insurance. Concurrently, the cost of aviation fuel is also on the rise. All these factors have made airline tickets very expensive.’  

WHAT THIS MEANS FOR NIGERIANS

The constraints on airlines have certainly affected the lives of ordinary Nigerians, who already navigating tough economic conditions and stringent travel restrictions as a result of their nationality. For such people, their world has simply gotten smaller. Exorbitant airfares have put travel to certain locations out of Nigerians’ reach. Aondofa explained further: ‘Today, it has become cheaper for Nigerian travellers to first travel to neighbouring countries like Ghana and then catch a connecting international flight from there, rather than travel directly from Nigeria.’  

WHAT’S NEXT?

In what could signal a turn of events, however, on August 26 the central bank confirmed that it has made $265 million available for release to international airlines. IATA has lauded the decision, and Nigerian travellers continue to hope that the rest of the withheld funds will be released. 

While the release of these funds is a step in the right direction, we are not out of the wood just yet. There are still questions concerning the $200 million+ in remaining funds, how soon they will be released. It is still not clear whether the released $265 million is a temporary stop gap, or a precursor to a lasting solution.

It remains to be seen whether this partial repatriation of funds will inspire international carriers like Emirates to reverse their decision to exit and trigger a reduction in the cost of air travel from Nigeria

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