Airlines, travel agencies jettison Naira, to sell tickets in dollars from April 19 

  • Cite $283 million trapped funds, forex scarcity for action
  • Airfares on international routes skyrocket

 

 

With effect from April 19, 2022, airlines on APG Interline Electronic Ticketing Agreements (IET) GP code 275 would start accepting issuing of tickets in United States Dollars and not Naira.

This new policy according to the group was caused as a result of the difficulty in repatriating airlines’ huge funds stuck in Nigeria and other countries coupled with foreign exchange

APG IET gives the travel agencies the facility to issue a much wider range of airlines and flight combinations than would otherwise be available via your GDS.

APG IET allows travel agencies to ticket a wide range of airlines not present on their local BSP and flight combinations with airlines where no interline agreements exist.

Notable carriers on the APG IET platforms aside from other global channels are South African Airways, South African Airways, FlyDubai, Kenya Airways, Middle East Airlines, Royal Air Maroc, Rwandair, Thai Airways, Turkish Airlines, French Bee, Egypt Air, ASKY, Air Seychelles, Air Algerie, Air Namibia.

Others are Air Panama, Air Burkina, Avianca, Bangkok Airways, Cabo Verde Airlines, Fiji Airways, Hong Kong Airlines, and Malaysian Air among over a hundred others.

APG in its travel advisory to its trade partners made available to Aviation Metric, entitled, APG IET: Restrictions of Sales in US dollars, says, “Dear travel partners, warm greetings from APG. This is to bring to your notice that with effect from April 19, 2022, GP would only accept issuing of tickets in US dollars and not Naira. This is mainly due to repatriation issues and Forex situation in the country”.

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APG advisory

“This would most likely be a temporary measure till the Forex situation improves. Our sincere apologies for any inconveniences this may cause to you and your business. Thank you for understanding”.

This may come as a huge blow to travelers as sourcing foreign exchange from Banks has become a herculean task; a situation that may have led to high fares as many can only resort to the black market to source foreign exchange at an exorbitant rate.

Investigation shows that airfares especially in Business Class of many the foreign airlines have almost doubled.

Now a Business class ticket on British Airways and Virgin Atlantic has risen to between N2.7Million and N2.8 million from N1.8Million and N1.9 million.

A travel agent who confirmed the development said the carriers sell the cheaper classes only if they are available.

He noted that airlines are selling higher so they can meet the demand of repatriating money home with a profit.

Nigeria is said to currently hold $283 million ((about N117.6 billion) worth of foreign airlines’ funds in the country. The funds are proceeds from sales of foreign airlines’ tickets among others that are trapped in Nigeria.

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IATA Director-General, Willie Walsh

Aviation Minister, Hadi Sirika made the disclosure during the commissioning of the new international terminal of the Murtala Muhammed Airport, Lagos last month.

The $283 million (N117.6 billion) foreign airlines’ trapped funds are huge but a sharp reduction from $800m trapped in the Central Bank of Nigeria (CBN) four years ago.

According to the Minister, the sector needs the support of the Central Bank of Nigeria (CBN) through the directives of President Muhammadu Buhari, to aid access of both local and foreign airlines to foreign exchange.

 He said, Aviation business suffers from issues of foreign exchange by local and foreign airlines and their inability to repatriate blocked funds. Nigeria currently holds $283 million worth of foreign airlines fund in the country. I humbly ask for the support of the Central Bank of Nigeria (CBN) through the directives of President Muhammadu Buhari, to aid access of both local and foreign airlines to foreign exchange”.

The stuck fund is proceeds of ticket sales made in local currency but blocked due to the non-availability of foreign exchange to recoup it.

Foreign airlines in flight

In line with the Bilateral Air Service Agreements (BASAs) with countries, airline tickets are mostly sold in naira while the airlines would repatriate the funds in dollars through the country’s central bank.

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The Federal Government under President Muhammadu Buhari’s administration had 2018 cleared $600m in blocked funds but the figure began growing with IATA lamenting the blockade.

Director-General, International Air Transport Association (IATA), Willie Walsh, had recently said the blockade of airline revenues “contravenes international conventions and could slow the recovery of travel and tourism in affected markets as the airline industry struggles to recover from the COVID-19 crisis.”

According to Walsh, Blocked airlines funds are pretty high in Africa. I think it is about $601 million in Africa across 17 countries. It is very much a case of Africa as a continent probably having the most blocked funds around the world.

 

African airlines

“We can see that it is a temporary blockage to get the funds repatriated. In Africa, there are a number of countries that have seen funds persistently blocked and it affects the decisions of the airlines to serve these markets it is important for governments to understand the impact it can have on airlines, especially on passengers that have fewer choices. People need to get access to markets”.

Wole Shadare