Trapped funds: SAA issues fresh modalities for tickets sale in dollars

The withholding of foreign airlines’ over $450 million funds by the Central Bank of Nigeria (CBN) is seriously affecting the carriers as South African Airways (SAA) is adjusting its tickets from Naira to Dollar with the ease of allowing its funds to remain in her country rather than go through the process of the difficulty in repatriating its funds from Nigeria.

Consequently, the carrier in a statement to its trade partners said from Wednesday, August 10, 2022, passengers can only issue Sold Inside Ticketed Inside (SITI), that is trips emanating from Lagos-Johannesburg-Lagos tickets in Naira.

What it means is that all tickets issued in Nigeria will be paid for in Naira in line with the CBN policy that tickets issued in the country should be paid for in Naira.

The carrier however stated that all other tickets such as Sold Outside Ticket Inside (SOTI) and Sold Outside Ticketed Outside (SOTO). The implication is that tickets issued outside ticketed inside Nigeria would be paid for in dollars.

Likewise, tickets sold outside and ticketed outside the country would be issued in dollars.

The carrier stated, “Please be informed that effective from Wednesday 10th August 2022, you can ONLY issue SITI (i.e. LOS-JNB-LOS) tickets in Naira. ALL other tickets, i.e., SOTI, SOTO has to be issued in USD”.

Aviation Metric had this week exclusively reported that more airlines are taking drastic actions to stem further piling up of their money in the country by devising means to ensure that air tickets are sold and paid for in dollars for ease of repatriation following the Forex crunch that had hit the country making it extremely difficult for them to get their funds.

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Just last week, Emirates took the painful decision to forestall the accumulation of debts owed them by the Nigerian Government, other airlines like British Airways, Lufthansa, Virgin Atlantic, and others are said to be monitoring the situation as efforts by the International Air Transport Association (IATA), the clearing house for global airlines to help repatriate the funds are said to have yielded no fruits.

The airline in a statement late Friday night said it would reduce its flight operations to Nigeria over the inability to repatriate about $85 million in revenue.

The airline said this in a letter addressed to Hadi Sirika, Minister of Aviation, dated July 22, 2020, and signed by Sheik Majid Al Mualla, Emirates airline’s divisional senior vice-president (DSVP), international affairs.

Emirates said the planned reductions in its operations in Nigeria would take effect from August 15, 2022

It added that flights would be reduced from 11 per week to seven per week at the Murtala Muhammed International Airport (MMIA).

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“We have had no choice but to take this action, to mitigate the continued losses Emirates is experiencing as a result of funds being blocked in Nigeria,” it said.

“As of July 2022, Emirates has $ 85 million of funds awaiting repatriation from Nigeria. This figure has been rising by more than US 10 million every month, as the ongoing operational costs of our 11 weekly flights to Lagos and five to Abuja continue to accumulate.”

It said the funds are urgently needed to meet its operational costs and maintain the commercial viability of its services to Nigeria.

“We simply cannot continue to operate at the current level in the face of mounting losses, especially in the challenging post-COVID-19 climate”.

Emirates did try to stem the losses by proposing to pay for fuel in Nigeria in Naira, which would have at least reduced one element of our ongoing costs, however, this request was denied by the supplier,” the statement reads.

This is reminiscent of what happened in 2016 when the United States-based carrier, United Airlines stopped operations when foreign airlines’ stuck funds hit $600 million.

Airlines on APG Interline Electronic Ticketing Agreements (IET) GP code 275 had in April 2022 stated that it would start accepting issuing of tickets in United States Dollars and not Naira.

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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.

But 24 hours after the announcement, the airlines recalled and canceled the notice it made to its trade partners including travel agencies to issue air tickets in United States Dollars.

The earlier notice it was learnt led to outrage by travelers and the Nigerian authorities and one that puts enormous pressure on APG and its allies to rescind the decision to sell tickets in Nigeria’s foreign currency.

Wole Shadare