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The International Air Transport Association (IATA), the Geneva-based trade association representing world airlines, has expressed fears that foreign airlines operating in Nigeria may lose about USD 200m to exchange rate depreciation.
The issue of trapped funds was being exacerbated by the depreciation of the naira, which had dropped significantly against the dollar, stated IATA Regional Vice-President for Africa and the Middle East, Kamil Al Awadhi. He stated this against the backdrop of the over USD 700m foreign airlines’ ticket revenue reportedly still trapped in Nigeria.
The Central Bank of Nigeria last week said it had paid all verified debts owed foreign airlines but IATA in a swift response said foreign carriers operating in the country still had over USD 700m trapped in Nigeria. Meanwhile, local travel agents under the aegis of the National Association of Nigerian Travel Agencies have asked foreign airlines in the country to release lower fares in their inventory or face severe consequences.
This came on the back of the CBN report of completing payments of foreign airlines’ debts. However, IATA VP had insisted the CBN needed to complete all outstanding ticket revenue trapped in the country and that airlines should not be unfairly penalised by the lower exchange rate.
One should take into consideration the blocked funds and the fair value of the blocked funds. USD 720m blocked and then devalued the naira by 30 per cent, it wipes out over USD 200m of airlines’ money, and who would compensate that. Airlines have lost a lot of money operating in and out of Nigeria and they continue to do so under the current environment.
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The naira has been in a free fall against the dollar in recent weeks. Recently, the naira plunged from about 900/dollar to over 1,400/dollar at the official market.
