ASRTI urges CBN to do the needful on foreign airlines’ $464m trapped funds

 

 

Posted by Sade Williams

 

Aviation Safety Round Table Initiative (ASRTI) has urged the Central Bank of Nigeria (CBN) to immediately do the needful stop the crisis that has brewed as a result of foreign airlines’ $464 million funds trapped in the country.

In a statement by the non-governmental organisation signed by Olumide Ohunayo, ASRTI expressed dismay over the handling of the matter by the Federal government, adding that the whole scenario portrays a sector that is in need of urgent intervention.

”ART is dismayed by the appalling handling of the accumulated foreign airline funds trapped in our banks, due to the non-allocation of forex to these airlines. In all Bilateral Air Services Agreement an Article in the agreement — transfer of earnings, clearly states that “each designated airline shall have the right to convert and remit to its country on demand, local revenues in excess of sums locally disbursed. Conversion and remittance shall be permitted without delay in accordance with the prevailing foreign exchange regulations”.

”International trade is binded by agreements which are sacrosanct and respected. Nigeria cannot do otherwise if we crave the attention of investors in our industry. It’s important to state that foreign airlines sold these tickets at the official IATA rate and cannot be expected to go the parallel market to source, convert and remit as opined in some quarters, the central bank should do the needful as enshrined in the BASA agreements. These funds should have been remitted at the official rate on date of Sale immediately the Airlines get clearance after paying all the local obligations including taxes.”, it said.

It noted further that the action of government on the matter has dented the image of an investment friendly country.

”The damage that our action has done to the Nigerian image as an investment friendly nation is far reaching, while the citizenry is faced with high fares, reduced capacity and limited travelling options, which will worsen if we continue on this trajectory. We found ourselves in this unenviable situation because we lack capacity to compete, which would have reduced the remittance volume.

”The unborn Air Nigeria cannot produce this capacity, irrespective of the funds allocated, but by an aggregated process of developing our industry to produce vibrant flag carriers that will be courted for commercial partnerships which is the purveyor for successful international flight operations. We are also of the opinion that to kick start this process, a functional and credible data gathering methodology for the industry is a necessity. We cannot continue to blow hot air without verifiable data.”, it added.

The International Air Transport Association (IATA), has expressed disappointment with Nigerian government for ‘continuing withholding of foreign airlines’ revenues, which has prompted Emirates to plan to stop flying to Nigeria’.

Kamil Alawadhi, IATA’s Regional Vice President for Africa and the Middle East, said on Thursday that the the fund has grew to $464 million in July, urging government to prioririse the release of the funds.

“IATA is disappointed that the amount of airline money blocked from repatriation by the Nigerian government grew to $464 million in July. This is airline money and its repatriation is protected by international agreements in which Nigeria participates. IATA’s many warnings that failure to restore timely repatriation will hurt Nigeria with reduced air connectivity are proving true with the withdrawal of Emirates from the market. Airlines cannot be expected to fly if they cannot realize the revenue from ticket sales. Loss of air connectivity harms the local economy, hurts investor confidence, impacts jobs and peoples livelihoods. It’s time for the Government of Nigeria to prioritize the release of airline funds before more damage is done.”, he said.

Emirates airline had said it will from September 1, 2022, suspend all flights into Nigeria over its inability to repatriate $85 million trapped in Nigeria.

A statement from Emirates Airlines said the decision to do this was to avoid continuous losses being incurred as a result of the situation.