Trapped funds: Why some airlines are yet to be paid

  • CBN settles others on new Forex window



The crisis caused by the inability of foreign airlines to repatriate their funds which ran into over $700 million is yet to end. While some airlines have collected their funds that were trapped, others are yet to do so because of their insistence on accessing their fund at a lower Forex rate of between N450 and N470 to a dollar.

A European airline official and his Middle East counterpart who spoke to Aviation Metric on condition of anonymity, because they are not authorized to speak to the media on it, said technically, the Central Bank of Nigeria (CBN) is not owing them as they had been able to clear the backlog of their monies held by the apex Bank.


They said that what was remaining was a payment from January to April this year as the CBN had cleared so many of the backlogs to December last year.

The clearing of the backlog came at a loss to the carriers as they had to take advantage of the Forex window opened to them at nearly N600 to the dollar exchange rate rather than wait for ‘eternity’ to get their monies at N450 to a dollar which had been adduced to the reason that made their funds to pile up; a situation that caused embarrassment to the country.

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Both the International Air Transport Association (IATA), the umbrella body for over 250 global airlines and concerned airlines had raised concern over the situation and called for urgent release of the funds.

The practice is that there is 90 days clearance window to exchange the airlines’ money to dollars at the official Forex rate. But because of the scarcity of Forex, the CBN was in a fix to help the carriers repatriate their funds.

But with a new bidding window of N600, some of the carriers which were not comfortable with the huge amount of their funds trapped in the country decided to take the option which helps them to get their ticket sales within five days or less.

The implication is that the carriers have made a huge loss on tickets sold at the official Forex rate of N450 but getting their money in exchange for N600 or more.

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Another airline official based in the Middle East said he read a report in New Telegraph and one other online platform that the CBN had defrayed over $700 million in airlines’ trapped funds.

He said the truth of the matter is that “Some of us are liquid enough to continue to sustain our operations to the country despite our funds trapped in Nigeria. We declined to get our money at the new exchange rate window proposed to the airlines with a view to finding a solution to the lingering foreign airlines’ trapped fund saga with the Nigerian authorities.”

“It is very true that those who agreed to get their money in at N600 are being attended to and the CBN has cleared the backlog of monies owed them. We have not taken advantage of the new bidding Forex window because of the huge losses we are most likely going to incur.”

The source declined to disclose how much of his airline’s fund that is trapped in the country but said, ‘It is huge”.

Our correspondent learnt an airline based in Europe was owed over $150 million with more than $100 million already paid by the CBN.

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To make up for their losses, they closed lower ticket inventories by the carriers. Consequently, the action taken by the carriers to mitigate their losses by accessing Forex at a higher rate has led to an astronomic increase in airfares.

The rise in fares has not deterred Nigerians whose taste for international air travel hasn’t waned. Rather, there has been a huge increase in the number of people particularly, premium travelers taking to air travel.

For instance, Economy class return tickets to Europe that hitherto sold for between N400,000 and N500, 000 has skyrocketed to over N800,000 and N1.2 million.


President of the National Association of Nigeria Travel Agencies (NANTA), Susan, Akporiaye admitted that airfares have further spiked, with six-hour economy class tickets that erstwhile sold for N300,000 now selling above N1.5 million, adding that the airlines have left only the highest inventories open to bookings in Nigeria.


Wole Shadare