Nigeria’s Central Bank Has Unblocked $ 265 Million Owes To Foreign Airlines

The Central Bank of Nigeria (CBN) said on Friday that it has released $ 265 million to airlines operating in the country to settle outstanding ticket sales. Nigeria’s ongoing foreign exchange crisis meant several airlines, including Emirates, had funds trapped in the country.

Trapped funds released

After some airlines, including Dubai-based carrier Emirates, had threatened to withdraw service to the country, the Central Bank of Nigeria has released around $ 265 million in funds to appease airlines unable to withdraw funds from the country.

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According to SaharaReporters, up to $ 600 million in ticket sales is trapped in Nigeria due to a scarcity of foreign exchange funds, with the Nigerian government blocking airlines from repatriating funds in an attempt to control the spiraling FX situation.

Will airline be appeased by the release of funds? Photo: Getty Images

The Central Bank of Nigeria said,

“With Friday’s release, it is expected that operators and travelers as well will heave huge sigh of relief, as some airlines had threatened to withdraw their services in the face of unremitted funds for the outstanding sale of tickets.”

The CBN has clarified that $ 230 million was released as a special FX intervention, while an additional $ 35 million was released through Retail SMIS auction. This is still believed to be less than half of the total funds trapped in the county.

The International Air Transport Association (IATA) became involved in the matter and criticized Nigeria’s refusal to release the funds, adding that it is in violation of Bilateral Air Service Agreements (BASA).

IATA said,

“IATA engages with the government authorities on matters of common interest to its member airlines. In this instance, IATA has been in regular contact and appealed to the Federal Government Nigeria and the Central Bank to release foreign airlines’ revenues generated in Nigeria.”

Airlines planned to withdraw services

Earlier this month, Emirates announced its intent to cease Nigeria flights next month as it had approximately $ 85 million trapped in the country. The Middle Eastern airline had already trimmed its service from 11 weekly flights to seven as it unsuccessfully chased up its money over several months.

However, the carrier didn’t cease service immediately and added that it is open to revising its decision should Nigerian authorities take sufficient action to release funds. Several other foreign airlines are reportedly planning to join Emirates in cutting service to the country.

Emirates is likely to make an announcement on its canceled Nigerian services soon. Photo: Emirates

According to the President of the National Association of Nigeria Travel Agencies (NANTA), Mrs Suzan Akporiaye,

“This is just the beginning. Emirates just started it, but there are plans from other airlines from information reaching me, other foreign airlines are planning the same thing. Like I said, you wouldn’t blame them. Some airlines are saying that, if by December there is no improvement, they will stop flying into Nigeria. “

Who is ripping off who?

As they have been unable to access funds trapped in the country, airlines raised their fares to compensate, leading to accusations of ripping off Nigerians. However, the reality is a lot more complicated than that, with many placing the blame squarely on the Nigerian government for its handling of the situation.

Airlines have claimed that carrying out operations in Nigeria is currently unfeasible given the financial situation. Foreign airlines make up around 80% of revenue in Nigeria’s commercial aviation industry, so any permanent withdrawal would be a disaster for the country.

Do you think airlines will be satisfied with the Central Bank of Nigeria’s actions this week? Do you see this situation getting any better this year? Let us know your insights in the comments.

Source: SaharaReporters

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