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Nigeria clears $600m airlines’ trapped funds

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Nigeria clears $600m airlines’ trapped funds

 

 

British Airways, Delta confirm clearance of blocked funds

 

$4.9bn still trapped in Venezuela, Angola, Sudan, others

 

 

 

The Federal Government has cleared $600 million backlog of airlines’ funds trapped in Nigeria, the International Air Transport Association (IATA) has said.
The Director-General of IATA, Alexandre de Juniac, disclosed this in an interview withNew Telegraph at the 74th Annual General Meeting (AGM) of the clearing house for over 280 global airlines.
He confirmed that the country had, indeed, cleared the amount that led to crisis in the sector in 2016, which threatened the pull-out of foreign airlines from Nigeria.

The IATA DG said he was encouraged by the recent developments in Nigeria.

De juniac, however, called on Nigeria to abide by international agreements and treaty obligations to enable airlines repatriate revenues from ticket sales and other activities.

 

According to IATA, the amount of airlines’ funds blocked from repatriation totalled $4.9 billion at the end of 2017, which was down seven per cent compared to year-end 2016.

He, nonetheless, noted that airline funds remained blocked in some 16 countries.

 

He listed the top five markets with blocked funds as Venezuela, where airlines have been unable to repatriate $3.78 billion; Angola, where approximately $386 million remains blocked; Sudan where $170 million is blocked; Bangladesh, where $95 million is trapped and Zimbabwe, where $76 million remains unrecovered.

 

His words: “The connectivity provided by aviation is vital to economic growth and development. Aviation supports jobs and trade and helps people to lead better lives. But airlines need to have confidence that they will be able to repatriate their revenues in order to bring these benefits to markets.

“We have some recent success. The $600 million backlog in Nigeria has been cleared and we made $120 million of progress from a peak of over $500 million in Angola. I encourage the government of Angola to work with airlines to help reduce this backlog further.”

He disclosed that given the deepening economic crisis in Venezuela, a resolution appears to be unlikely in the short term.

 

“We are encouraged by the recent developments in Nigeria and Angola and hope other states will also move quickly to address blocked funds,” he added.
At the height of the crisis in 2016, Spanish national airline, Iberia, withdrew from Nigeria and is yet to return.

 

Followed in quick succession was United States carrier, United, which stopped services between Houston and Lagos. Emirates scaled down its operations to daily flight into Lagos from the two daily flights it operated. The carrier stopped its Abuja operation.

Other carriers reduced capacity on the lucrative Nigerian route. Job losses in the aviation sector were unprecedented in the sector.

 

No fewer than 200 Nigerian employees of the foreign carriers lost their jobs within the period.

Seriously affected by the trapped funds were Emirates, British Airways, Delta Airlines, Air France-KLM and Ethiopian Airlines.

Airlines’ funds were released in tranches until the government cleared the entire backlog. That singular situation brought sanity to the sector.

The reason for the scaling back or pulling out of the market was because of the impact of the depreciation of local currencies and the drop in oil and commodity prices in those countries.

So, in Nigeria, for example, the airlines were forced to sell in the local currency, but, unfortunately, foreign currency was not readily available then for them to exchange and take it out of the country.

The clearing of trapped funds by the government has revived activities in the airline industry with some of the airlines that left in the aftermath of the crisis returning, while many other foreign carriers have their applications with the Ministry of Transportation, indicating their readiness to begin flight services to the country.

 

Commercial Director, West and East Africa, Delta Airlines, Bobby Bryan, confirmed that his airline had cleared all its trapped funds in Nigeria.

Regional Commercial Manager for West Africa, British Airways, Kola Olayinka, also confirmed the clearance of the trapped funds.

“We have cleared all blocked funds in Nigeria. There are no more blocked funds for British Airways. I can only tell you that we no longer have blocked funds in Nigeria and money is easily made available,” Olayinka told New Telegraph.

The IATA chief described aviation as challenging industry, noting that high taxes, costly and ill-conceived regulation, infrastructure capacity constraints, market shifts and the demands for labour are the normal repertoire.

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