How CBN stalled talks on $812 million airlines’ trapped funds, IATA seek Tinubu’s help

  • Nigeria, Ethiopia, Algeria, Lebanon, others keep carriers’ $2.3 billion monies
  • Abide by int’l treaties, pacts, airline body tells Nigeria

Wole Shadare (Istanbul, Turkey)

The International Air Transport Association (IATA) has attributed the lull in economic activities occasioned by the just concluded elections as the reasons international airlines’ blocked funds had continued to pile up to the tune of $812.2 million.

Kamil Al-Awadhi, Regional Vice President of Africa & Middle East for IATA who spoke to African journalists at the IATA 79th Annual General Meeting (AGM) in Istanbul, Turkey said that the rapidly rising levels of blocked funds are a threat to airline connectivity in the affected markets, noting that the industry’s blocked funds had increased by 47% to $2.27 billion in April 2023 from $1.55 billion in April 2022.

IATA

The IATA chief disclosed that Nigeria was cooperating with IATA and showed readiness to address the matter until six months ago when the CBN backpedaled on the matter, thereby, putting the carriers in a tough situation.

He said, “Airlines cannot continue to offer services in markets where they are unable to repatriate the revenues arising from their commercial activities in those markets. Governments need to work with industry to resolve this situation so airlines can continue to provide the connectivity that is vital to driving economic activity and job creation.”

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He listed the top six countries that account for 68.0% of blocked funds as Nigeria ($812.2 million);  Bangladesh ($214.1 million); Algeria ($196.3 million), Pakistan ($188.2 million), Lebanon ($141.2 million), Ethiopia ($125 million)

IATA ​​​​​urged governments to abide by international agreements and treaty obligations to enable airlines to repatriate these funds arising from the sale of tickets, cargo space, and other activities.

Al-Awadhi appealed to President Bola Ahmed Tinubu to direct the Central Bank of Nigeria (CBN) to hasten the release of airlines’ funds, stressing that the whole process to help the carriers to repatriate their funds stalled six months ago when all arrangements had been put in place by the administration of former President Muhammadu Buhari and the attitude of CBN Governor, Mr. Godwin Emefiele.

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Emefiele

“Nigeria had been responsible and responsive until the last six months when discussions broke down between the country and IATA over the blocked funds. The process takes ages, partly because of changes in government. We have $2.3 billion blocked funds globally. The airlines can no longer sustain their operation. This is painful because we never knew that Nigeria could resort to this. It is an embarrassment for the country and we call on President Bola Tinubu to wade into the matter”.

“The airlines need their money to pay their bills. They are putting some airlines into a difficult situation and they can no longer fund their operations anymore. We call on the new government to remedy the situation”.

While IATA insists that trapped funds have been piling up, some airlines that spoke to Aviation Metric said some of them have gotten part of their funds through a special Forex window that allows them to access their monies at rates almost at par with the parallel market’s rate.

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They stated that those that are yet to get their money are waiting to get it at the official rate so that they do not incur losses of getting their money at about N600 when in actual fact they sold tickets at N410 per dollar.

The airlines that took advantage of the new Forex window it was learnt did that because of the pressure they are faced with even at a huge loss.

To mitigate their loss, the carriers decided to close the lower ticket inventory for higher ones which automatically led to an astronomical rise in the price of air tickets with return Economy class return hitting the roof and going as high as N1 million and N1.3 million.

International Airlines

Economy class ticket to Europe before the airlines were faced with a blocked fund crisis, costs between N350,000 and N450,000.

Wole Shadare