Foreign carriers’ trapped funds rise to $4.7 in Nigeria, Venezuela

*IATA, report rank Africa as highest in airport taxes
*FAAN rakes $34 m annually from airport taxes
    
The International Air Transport Association (IATA) today ranked Nigeria and Venezuela as two countries with highest number of airlines’ funds trapped in their countries. This is coming at a time the clearing house for global airlines is engaging the Federal Government at all levels to ensure that issues with trapped funds are resolved.
IATA
The group at a press briefing in Abuja at a two day Africa Aviation Day with theme, “Driving Through The Power of Aviation,” disclosed that international airlines’ funds in Nigeria as at March 2016 stands at $575 million.
Speaking at the event, Area Manager, South West Africa, IATA, Dr. Samson Fatokun ranks Venezuella said trapped airlines’ funds stand at  $3.6 billion.
He stated that Venezuela’s pending dollar disbursements to airlines have fallen to around $3.6 billion after the government released some of the funds held up by the country’s currency controls.
Airlines have for months struggled to repatriate revenue from ticket sales due to delays in both Nigeria and the South American nation’s 12-year-old exchange controls, with trapped cash peaking at around $4.1 billion over the summer.
As a result of the problem, international airlines resorted to selling their tickets in dollars because of their inability to access their monies trapped in the Central Bank of Nigeria (CBN).
 International airlines normally sell their tickets in naira and then approach the CBN for the dollar equivalent to take back to their respective countries.
However, the CBN has in recent times been reluctant to give the airlines the dollar equivalent of their naira ticket sales at the official rate as the CBN seeks to conserve its fast dwindling external reserves for only what it considers essential imports or payments by Nigerians.
The result is that many international airlines have built mountains of naira cash which they cannot take back to their countries.
Fatokun equally disclosed that IATA has visited the Nigerian government to express concern over the trapped funds and what the government is doing to get them released.
In a related development, Vice-President, IATA , Raphael Kuuchi bemoaned the high taxes imposed on air travel in Africa, saying the taxes are above global standard. He noted that if not tackled, the phenomenon militates against the growth of the industry.
He faulted the $60 charged per international passengers; aside the $20 security and taxes on jet fuel which he noted increase the cost burden of airlines, which are already operating in a challenging environment and hinder the domestic growth of an industry that brings extensive socio-economic benefits.
Statistics shows that six million traffic was recorded by the Federal Airports Authority of Nigeria bringing revenue from taxes to $36 million annually.
His words, “Africa must not treat its aviation industry as an easy target for taxation if it is to be taken seriously. The negative impact on the economy of taxing air transport outweighs the revenue raised.”
   Equally worrisome is report by International Accountancy Network  that Nigeria’s air passenger taxes are among the highest in the world.
According to the report, Nigeria imposes a levy of $20 on short haul flights and $60 on long haul flights leaving the country through airport tax.
The report explained that these additional costs damage tourism, penalise SMEs trying to expand overseas, hamper remote regional cities and chip away at labour mobility. Although taxes on flying are often billed as ‘green taxes’, it noted that globally, it is exceptionally rare for the revenue they raise to be ring-fenced for environmental protection projects.
Taking a comparative study of passenger charges on an economy class flight by 21 governments around the world, the report added that the most expensive taxes are for long haul flights departing from a Russian airport, where unlike many other countries, airline tickets are subject to sales taxes. The highest taxes of any G7 economy are in the United States, which imposes US$23 worth of taxes on a short haul.
 Kuuchi therefore urged African government to recognize aviation as a socio-economic enabler and provide the appropriate infrastructure, lamenting that it does not make sense to increase taxes when infrastructure is at parlous state.
The IATA Vice President encouraged government to reduce taxes and charges on infrastructure in order to attract more capital inflow into the industry.
Ghana and Nigerian domestic aviation sector has been reeling under high operational costs, worsened by the high costs of jet fuel which has compelled some service providers to fuel their aircraft in neighbouring Nigeria.
Wole Shadare