The International Air Transport Association (IATA) has warned the Central Bank of Nigeria that some foreign airlines may be compelled to quit the Nigerian markets if they are not helped concerning the $790m ticket revenue currently trapped in the country.
The IATA Regional Vice President, Africa & Middle East, Kamil Alawadhi, during a media presentation with African journalists at the IATA Global Media Day in Geneva, Switzerland, recently also said Lagos and Abuja airports had been ranked the most expensive gateways in the region despite the poor state of their infrastructure.
He said the government of Nigeria is currently holding the highest amount of airline-trapped funds.
Concerning the blocked funds, the IATA VP named Nigeria as the country with the highest amount of airlines’ blocked funds at $792m followed by Egypt ($348m); Algeria ($199m); AFI zone ($183m) and Ethiopia $128mn.
He said while Ethiopia has worked out modalities to defray the debt, Nigeria had yet to do anything on its own.
Al-Awadhi said: “Ethiopia is seeking a way to resolve this issue even though the blocked fund is rising. The first step for us to solve these blocked funds is for both parties to engage. If parties don’t engage, it is very difficult to move forward. I have not been able to engage with Nigeria’s CBN Governor. He said he would engage with me when he had a solution. He is not promising but I have engaged with the Aviation Minister who is very understanding, new to the position, or maybe wowed by the situation he inherited will help to resolve the matter.”
“The airlines in Africa are owed $34 million. That $34 million is blocked. Depreciation has set in on the money. They have already lost $10 million because of depreciation. That is not fair for the airlines because they have paid all the dues to the operators of the airports. Every due has been paid for. They carry Nigerian officials on these flights and they can’t get their money.”
He talked about the state of aviation in Nigeria and said with 25 percent interest on loans, high airport taxes and insurance premiums which was six times more than anywhere in the world would make it difficult for Nigerian airlines to make profit.
He stated that any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines.
He said: “Every airline has its challenges and it depends on where it operates. To answer this question, I will use Nigeria as an example. Nigeria has two most expensive airports; their fuel is higher than elsewhere in the world, and insurance is six times more expensive than anywhere else in the world.
“The interest on loans is 25%. It is ridiculous. It is the highest interest I have ever seen. When you set up these airlines, you are already disadvantaged. Any airline in Nigeria operating outside of Nigeria has a cheaper operating cost and better prices than Nigerian airlines. You can see why it is difficult for African airlines to make profit.
“IATA is identifying why these costs are high and we are trying to tackle them one by one by seeing how they can reduce the costs. We are expecting that the operating costs of the African airlines will be lowered and they can become profitable.”
