As Fare Fee Hikes Get Worse, Foreign Airlines’ Stuck Fund May Reach $500 Million

As Fare Fee Hikes Get Worse, Foreign Airlines’ Stuck Fund May Reach $500 Million

There hasn’t been any relief from the crisis wracking the international travel industry three weeks after the Central Bank of Nigeria (CBN) released a portion of the foreign airlines’ trapped funds in the nation.

While the stranded money continue to grow and are now expected to reach $500 million by November, foreign airlines have continued to withhold the reasonably priced flight tickets from the Nigerian market.

The international carriers have partially recovered their stranded money, according to the travel agents that initially raised the alarm, but the disbursement procedure lacked transparency and their future on Nigerian routes is still in doubt.

Susan Akporiaye, President of the National Association of Nigerian Travel Agencies (NANTA), stated that the unfortunate result was that Nigerian travelers were still forced to pay, on average, between N1.5 million and N2.2 million for a six-hour Economy Class ticket. The Business Class model sells on average for N4 to N5 million, which is a 200 percent increase above the price at which it is offered elsewhere in the world.

The available tickets in Nigeria, according to Akporiaye, are expensive because the majority of airlines no longer provide cheap tiers.

“Some foreign airlines are blocking travel agencies from selling their tickets on the Global Distribution System (GDS) platform. The inventories are blocked on the platform, meaning travel agencies and even airline offices cannot issue because the inventory was blocked for Nigeria.

“The ones that have not closed inventories are restricting sales to the highest fares in each cabin (Economy, Business and First Class). You don’t even want to know what the prices are. It is just crazy and totally out of reach,” she lamented.

The International Air Transport Association (IATA) previously issued a warning that Nigeria and other nations withholding airline funding run the risk of seeing tickets increase by 200–300%. To the delight of IATA and the relief of travel agencies, the Central Bank of Nigeria (CBN) just released $265 million of the $464 million stranded in Nigeria as of July 2022.

Akporiaye said: “Since the last week of August, we have been visiting the airlines. The information reaching us is that the airlines have not got the money. Right now, there is the issue of transparency and trust.

“Information reaching us is that out of the 50 per cent of funds released, the airlines have just received only 25 per cent. Some have not even gotten at all. Even the ones that have the 25 per cent are even paid short of their expectations.

“For instance, if the 25 per cent is $20 million, at the end of the day, what hits their accounts is probably $12 million. This is creating a trust issue with the airlines. There is no transparency, so that airlines are not confident that we really mean to give them their money, hence the reason they are still holding forth. They are watching to see how it goes,” she said.

Yinka Folami, the association’s first Vice President, said that the result of international airlines charging more for restricted seats is that more Naira is spent, which raises the amount of unrepatriated money in the nation.

Folami claimed that as of July, the stuck fund was $464 million. The backlog has long since exceeded that amount, and given that the airlines are still making daily sales, it might even surpass $500 million by November.

“Nigeria is a huge travel market. So, airlines are exploiting our travel identity,” he said.

He continued by saying that the best course of action was for the Nigerian economy to properly engage with foreign airlines as trading partners.

“Actually, we (travel agencies) have been engaging the government but they have refused to open doors to us. We have gone even on appointments that were cancelled for whatever reasons.

“But the government needs to engage them. Even the airlines desire the government to engage them to acknowledge that there is a problem and have plans to resolve them. The airlines are saying that if they can hear that from the government, perhaps they can reconsider some of their actions. It is like saying ‘give us hope’.

“We (Nigeria) put ourselves in this situation in the first place; otherwise the airlines will not be blocking inventories. Lest we forget, we failed the airlines and failed in the BASA agreement that says the airlines should be able to repatriate their funds unhindered. So, we don’t have any legal right to penalise any airline. We should not be talking about that but calling them to the table to work together on stopping the sufferings of Nigerian air travellers,” he said.



Related post

CBN to Launch National Domestic Card

CBN to Launch National Domestic Card

The Central Bank of Nigeria has said it would launch a national domestic card scheme on January 16, 2023. The scheme…
CBN to Release New 1000, 500, 200 Naira Notes by December

CBN to Release New 1000, 500, 200 Naira Notes…

Central Bank of Nigeria (CBN), Mr Godwin Emefiele, on Wednesday, disclosed that plans were afoot to unveil new redenominated naira notes…
CBN Governor, Emefiele, Afreximbank President, Oramah, Others Under EFCC, NFIU Investigations Over $300million Paid To Acquire Union Bank

CBN Governor, Emefiele, Afreximbank President, Oramah, Others Under EFCC,…

On June 6 2022, Afreximbank announced that it had disbursed the sum of $300 million to help complement the total amount…